First-Time Homebuyer FAQs

Does credit score affect mortgage rates?

Yes. Credit score impacts interest rates, mortgage insurance costs, and loan options. Higher scores generally qualify for better terms, while lower scores may still qualify with higher monthly costs.

What credit score do I need to buy a home in Texas?

Minimum credit score depends on the loan type. FHA loans may allow scores as low as 580, while conventional loans typically start around 620. Higher scores unlock better pricing and flexibility.

How much do I need for a down payment?

Down payments vary by loan program. FHA loans typically require 3.5% down, conventional loans may start at 3–5%, and VA loans may require no down payment for eligible buyers. Assistance programs may be available depending on location and income.

What qualifies someone as a first-time homebuyer?

You are generally considered a first-time homebuyer if you have not owned a home in the past three years. Some programs also consider buyers who have only owned a home with a former spouse or who previously owned but no longer do.

Do first-time buyers need perfect credit?

No. First-time buyers do not need perfect credit. Many loan programs allow moderate credit scores, and there are options to improve credit or structure financing if credit is a concern.

How much money do I really need to get started?

You typically need funds for the down payment, closing costs, and some reserves. In many cases, this can be far less than expected, especially with low-down-payment loan programs and potential seller concessions.

Are there special loan programs for first-time buyers?

Yes. First-time buyers may qualify for FHA loans, conventional low-down-payment programs, VA loans (for eligible buyers), and various down payment assistance programs depending on income and location.

What is down payment assistance?

Down payment assistance programs help cover part of the down payment or closing costs. These programs often have income limits and specific eligibility requirements, which vary by city and county.

Should I talk to a lender or a real estate agent first?

Either is fine, but early coordination between both helps avoid mistakes. A lender helps define budget and loan options, while an agent helps guide timing, strategy, and next steps.

How long does the first-time homebuying process take?

From preparation to closing, the process may take several months. Once under contract, most homes close within 30–60 days, depending on financing and inspections.

Is renting cheaper than buying as a first-time buyer?

It depends on your situation. While renting may have a lower upfront cost, buying can build equity over time. The decision should be based on finances, stability, and long-term plans rather than monthly payment alone.

How much can I safely afford without being “house poor”?

Affordability is not just about lender approval. It should account for comfort, lifestyle, savings, and future expenses. A conservative approach often leads to better long-term financial stability.

What is earnest money, and how much is typical?

Earnest money is a deposit showing serious intent to buy. The amount varies by price range and market conditions and is usually credited toward closing costs.

What is the option period, and why does it matter?

The option period allows buyers time to inspect the home and cancel the contract for any reason within a negotiated timeframe. This period is especially important for first-time buyers.

What happens during a home inspection?

A licensed inspector evaluates the condition of major systems such as the roof, foundation, electrical, plumbing, and HVAC. The inspection helps identify issues before final commitment.

Can I ask the seller to pay some of my closing costs?

Yes. In many cases, buyers negotiate seller contributions toward closing costs. This depends on the market, price, and overall offer strength.

What if something breaks right after I buy the home?

Homeownership comes with responsibility. Some buyers purchase home warranties for added protection, but having an emergency fund is strongly recommended.

Will my monthly payment ever change?

Your principal and interest payment is typically fixed with a fixed-rate loan. However, property taxes and insurance may change over time, which can affect your total monthly payment.

How do property taxes work in Texas?

Texas property taxes are based on assessed value and vary by city, county, and school district. Areas like Plano, McKinney, Frisco, Richardson, and Garland can differ significantly even at similar price points.

What is PMI or mortgage insurance?

Mortgage insurance is required on many low-down-payment loans. It protects the lender, not the buyer, and the cost depends on loan type and credit profile.

Can I buy a home with student loans?

Yes. Student loans are included in affordability calculations, but they do not automatically disqualify you from buying a home.

Can I buy a home while single?

Yes. Many first-time buyers purchase homes on their own. Qualification is based on individual income, credit, and debts.

Should I wait for interest rates to drop?

Trying to time the market can be risky. The right time to buy is often based on readiness, not rates alone. Refinancing may be an option later if rates improve.

What mistakes should first-time buyers avoid?

Common mistakes include skipping pre-approval, opening new credit before closing, underestimating total costs, and making emotional decisions without understanding the numbers.

When should I start preparing to buy my first home?

Ideally, preparation should begin months in advance. Early planning helps improve credit, build savings, and reduce stress during the process.

Final note for first-time buyers

Buying your first home is a major milestone. Having clear information, realistic expectations, and the right guidance can make the experience far smoother and more confident..