How Much Is a Down Payment on a House in Texas?

A down payment is a portion of a home’s purchase price paid upfront, reducing the amount financed through a mortgage. This initial payment lowers the overall loan amount and demonstrates a buyer’s financial commitment. The size of a down payment varies based on the buyer’s financial situation, loan type, and Texas market conditions. It establishes an equity stake from the outset.

Understanding Typical Down Payment Amounts

The amount of a down payment for a home in Texas is influenced by the type of mortgage loan secured. While a 20% down payment has been common, many buyers put down less, with the average down payment in Texas aligning closely with the national average of 18.5% as of 2025. This percentage can fluctuate based on location, with cities like Houston averaging 19% and Dallas averaging 20%.

Conventional loans, which are not government-backed, require a minimum down payment of 3% for some programs, though 5% is more common. To avoid private mortgage insurance (PMI), a 20% down payment is needed for conventional loans. Federal Housing Administration (FHA) loans are designed to make homeownership more accessible and require a minimum down payment of 3.5% for borrowers with a credit score of 580 or higher. If a borrower’s credit score is between 500 and 579, a 10% down payment is required for an FHA loan.

Loans backed by the Department of Veterans Affairs (VA loans) are available to eligible veterans, active-duty service members, and certain surviving spouses, requiring no down payment. USDA loans also require no down payment for eligible rural properties and borrowers who meet income limits.

Factors Influencing Your Down Payment

Several factors beyond the loan type can influence the size of a down payment required by a homebuyer. A buyer’s credit score plays a role in lender requirements, as lower scores might necessitate a higher down payment for certain loan types or restrict access to low-down-payment programs.

The type of property being purchased also affects down payment requirements. For example, multi-unit dwellings or investment properties may require a larger down payment compared to a single-family primary residence. Lender-specific policies also influence the required down payment, as some lenders may have more conservative requirements than program minimums.

The purchase price of the home directly impacts the dollar amount of the down payment, even if the percentage remains constant. A 5% down payment on a $300,000 home ($15,000) is a significantly different sum than 5% on a $500,000 home ($25,000). This means that in areas with higher home values, the absolute cash required for a down payment will be greater.

Texas Down Payment Assistance Programs

Down payment assistance (DPA) programs help homebuyers in Texas reduce their upfront costs. These programs are designed to make homeownership more accessible, especially for first-time buyers or those with moderate incomes. The Texas Department of Housing and Community Affairs (TDHCA) offers several statewide programs, such as My First Texas Home, which provides down payment and closing cost assistance.

Assistance programs come in various forms, including grants not needing repayment, second liens as a second mortgage, or deferred loans not requiring repayment until the primary mortgage is paid off or the home is sold. Eligibility involves specific income and purchase price limits, and sometimes a first-time homebuyer requirement.

Beyond statewide initiatives, some local municipalities and non-profit organizations in Texas also offer their own DPA programs. These local options provide additional resources tailored to local housing needs and economic conditions. Prospective homebuyers are encouraged to investigate both state and local resources to determine what assistance might be available to them.

How Down Payment Size Affects Your Mortgage

The size of your down payment impacts your mortgage’s financial structure and cost. For conventional loans, putting down less than 20% of the home’s purchase price triggers private mortgage insurance (PMI). PMI is a monthly fee added to mortgage payment that protects the lender if you default, but it does not directly benefit the borrower. This insurance can be removed once the borrower reaches 20% equity in the home, either through principal payments or increased home value.

A larger down payment directly reduces the amount of money financed, lowering the monthly mortgage payment. For example, a smaller loan amount means less principal to repay monthly, resulting in a more manageable payment. This reduction in the loan amount also leads to less interest paid over the life of the loan, as interest is calculated on the outstanding principal balance.

A substantial down payment establishes more equity in the home. Equity is the portion of the property you own outright, calculated as home value minus outstanding mortgage balance. A larger initial equity stake provides a greater financial cushion and offers more future flexibility.