A Texas Made Mortgage Resource
Buying Your First Home
Nobody is born knowing how a mortgage works. This walks through the whole thing in order — what happens at each stage, who is responsible for it, and where first-time buyers get stuck. It is written for buying in Texas, where a few things — the option period, your homestead exemption, how property taxes land in your payment — work differently than what you will read online.
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First things first
Pre-qualified vs. pre-approved
Pre-qualified
A conversation. We look at your income, your debts, and your savings, and tell you roughly where you stand. Nothing is verified yet. It is a useful estimate, and a good place to start when you are still months out.
Pre-approved
A reviewed file. You have applied, we have verified your documents and your credit, and we have issued a letter you can shop with. Sellers and their agents can tell the difference between the two.
Neither one is a loan approval
The home still has to appraise. Title still has to come back clear. And underwriting still has the final say. A pre-approval letter tells a seller you are serious and prepared — it is not the last word on the loan.
The process, in order
Seven stages, start to keys
Open any stage to see what happens, what you do, and where people get stuck. The tag tells you whose turn it is.
What happens
The real first step isn't shopping or saving — it's letting us look at actual numbers instead of estimates. You start an application and we build a picture of what you can do. Depending on your timeline we can begin with a soft credit pull, which doesn't affect your score. If you're getting close to making offers, we'll need a hard pull, because a real pre-approval requires one.
What you do
Start the application and answer the questions honestly. Then think about what you want a monthly payment to feel like — not the maximum you could be approved for, the number you'd still be comfortable with in a slow month.
Where people get stuck
Guessing, and then quitting on the guess. Plenty of buyers decide they won't qualify and never ask. Finding out costs nothing, and early on it doesn't have to touch your credit at all.
What happens
We verify income, assets, and credit — this stage requires a hard credit pull — review the file, and issue a pre-approval letter you can shop with. If you intend to make offers, this is not optional. Sellers won't take an offer seriously without it.
What you do
Send documents and answer follow-ups. When we ask about a deposit from four months ago, it isn't suspicion — the file has to show where money came from, and we ask everybody.
Where people get stuck
Sending part of a document. Bank statements need every page, including the blank last one.
What happens
The good part. You shop inside a number you already trust.
What you do
Check in with us as you narrow it down. Property taxes and insurance vary enough between neighborhoods and school districts that two homes listed at the same price can carry noticeably different monthly costs.
Where people get stuck
Falling for a home before looking at what it costs to hold.
What happens
Your real estate agent writes the offer. If the seller signs, you have an executed contract, and every other deadline starts counting from that date. Your agent sends the executed contract over to us so we can get to work.
What you do
Deliver your option fee and earnest money on time, exactly as the contract specifies. Lean on your agent — this is the stage where they earn their keep.
Where people get stuck
This is where a good agent makes an enormous difference. An experienced one delivers the contract to us the day it's signed, tracks every deadline, and keeps all sides talking. If you don't have an agent yet, ask us — we work with people who are genuinely good at this, and the right one makes the whole process smoother.
What happens
Texas contracts commonly include a negotiated window during which you can terminate for any reason at all, in exchange for a fee paid to the seller for that right. It exists so you can inspect the home and change your mind.
What you do
Order an inspection immediately — not midway through. Read the whole report. Then decide whether to request repairs, renegotiate, or walk.
Where people get stuck
Treating it as a formality. This is the widest exit you'll have in the entire transaction, and it closes on a specific day at a specific time.
What happens
An appraiser gives an opinion of value. A title company researches ownership history and issues title insurance. A survey may confirm boundaries. Underwriting reviews all of it against the loan program's requirements.
What you do
Keep your financial life boring and answer fast. Don't change jobs, open new credit, or move large sums between accounts without telling us first.
Where people get stuck
Silence. A request sitting unopened in your inbox for three days moves your closing date by three days.
What happens
You receive final figures ahead of signing. You do a final walkthrough, sign at the title company, funds are wired, documents are recorded, and the home is yours.
What you do
Bring a government-issued photo ID. Read your closing figures when they arrive, not at the table. And before you wire anything, call the title company at a number you looked up yourself and confirm the instructions out loud.
Where people get stuck
Wire fraud. Criminals target buyers at exactly this moment with emails that look correct and contain altered account numbers. Nobody will ever legitimately email you last-minute changes to wire instructions. Verify by phone, every time.
Local rules matter
What’s specific to buying in Texas
Financing works broadly the same way everywhere. Owning a home in Texas does not. These apply statewide, from the Panhandle to the coast.
The option period
A negotiated right to walk away from the contract for any reason at all, bought with a fee paid to the seller. Most states have nothing quite like it, and it is the strongest protection a Texas buyer has. It closes on a specific day at a specific time.
You file your own homestead exemption
The seller’s exemption does not transfer to you. After closing, you apply directly with your county appraisal district. It is free, it is one form, and you do it once. The standard deadline is April 30 of the tax year, and Texas allows late filing for a couple of years past that. You will also get very official-looking mail offering to file it for you for a fee — throw it away.
No state income tax, but property taxes carry weight
Texas funds schools, cities, counties, and hospital districts largely through property tax, and every one of those entities sets its own rate. That makes the tax portion a real part of your monthly payment rather than a footnote — and it is why two homes at the same price in two districts can cost differently to own.
Your payment can change after the first year
First-year escrow is built on the best tax estimate available at closing, which may not yet reflect your own exemption or a reassessed value. When the escrow account is reviewed, the tax portion can move. This surprises people who were never told to expect it.
Insurance deserves an early phone call
Much of the state sees hail and high wind, and along the coast windstorm coverage is often written separately from the main policy. Get a quote while you are still in your option period, not after. In a small number of areas coverage is harder to place than buyers expect, and that is better to learn early.
You close at a title company
Texas closings are handled by title companies rather than attorneys, and title insurance premiums are set at the state level — so shopping around does not change that premium, though other fees do vary. Your title company is also who you verify wire instructions with, by phone, at a number you looked up yourself.
Ask about these
Other Texas particulars
None of these are problems. They are the things Texas buyers most often find out about late, when there was an easy answer available early.
Texas is a community property state
Your spouse may need to sign certain documents at closing even if they are not on the loan and not on the application. It is routine. It is also worth knowing before you get to the table.
An existing survey may work
If the seller has a prior survey, it can sometimes be reused along with a signed affidavit rather than paying for a new one. Ask your agent and the title company early, because it depends on what has changed at the property.
MUD and PID districts
Newer developments are frequently inside a municipal utility or public improvement district that adds its own assessment to the tax bill. It is disclosed, but it is easy to skim past. Ask what the full tax rate on a specific address is before you fall for the house.
HOA resale certificate
If the home is in an association, you are entitled to documents describing the dues, the rules, and the association’s finances. Read them during your option period — restrictions on parking, fences, rentals, and exterior changes live in there.
Rural and acreage properties
Outside city limits you may be dealing with a septic system, a well, propane, or a shared road. Some land also carries an agricultural valuation that can trigger back taxes if the use changes. These are all workable, they just need to be identified early because they can affect the loan.
Homestead protections and equity rules
Texas has unusually strong homestead protections and its own constitutional limits on borrowing against home equity. It rarely affects a first purchase, but it is part of why some things work differently here than what you may read online.
Vocabulary
Five money words people mix up
Option fee
Paid to the seller for the right to terminate during the option period. Commonly credited toward your costs if you close. Not returned if you walk.
Earnest money
Deposited with the title company as a show of good faith. Applied toward what you owe at closing. It can be at risk if you break the contract outside its protections.
Down payment
Your share of the purchase price, paid at closing. It varies a great deal by loan program, and it is frequently less than first-time buyers assume.
Closing costs
The fees to originate the loan and transfer the property: title work, appraisal, recording, prepaid taxes and insurance. Separate from and in addition to the down payment.
Escrow
The portion of your monthly payment set aside so property taxes and insurance get paid when they come due. Reviewed periodically, which is why the payment can adjust.
Run your own figures
Estimate a monthly payment
Switch between the three programs and change any number. Nothing you type is sent anywhere, and nothing here is a quote.
The rate field starts empty on purpose. A rate depends on your credit, your loan, and the day — ask us and we’ll tell you where you actually stand.
Taxes and insurance are the part most first-time buyers underestimate, and in Texas they move a lot by county and district. Replace these with real figures for the address you are looking at.
Enter a rate
This calculator produces an illustration based only on the figures you enter. It is not a quote, a rate offer, a commitment to lend, or an offer of credit, and it is not legal, tax, or financial advice. Actual payments depend on your credit, program eligibility, property, and current terms, and all loans are subject to credit approval, underwriting, and property qualification. Tax and insurance amounts are estimates until the actual assessment and policy are issued.
What we’ll ask you for
- Recent pay stubs
- W-2s or 1099s for the most recent two years
- Two years of tax returns if you are self-employed, commissioned, or a business owner
- Bank and asset statements, with all pages included
- Government-issued photo ID
- Certificate of Eligibility for VA loans
Follow-up requests are routine. They mean the file is moving, not that something is wrong.
Don’t do these while under contract
- Open new credit or finance a car
- Change jobs, or move from salary to self-employment
- Make a large deposit you can't document
- Co-sign for anyone
- Close a long-standing credit account
- Pay off collections without asking us first
Credit and the file get re-checked before closing. A change made after pre-approval can still undo it.
Choosing a path
Three loan programs to know
Conventional
The most common kind of home loan, not backed by a government agency. It tends to suit buyers with steady documented income and reasonably well-kept credit. Mortgage insurance may be required at first, and it can come off later once you have built enough equity.
FHA
Insured by the Federal Housing Administration, and designed to widen the door. Guidelines on credit history and down payment are generally more forgiving, which makes it a common fit for first-time buyers or anyone whose credit is still recovering. It carries its own mortgage insurance.
VA
For eligible veterans, active-duty service members, and certain surviving spouses. It is usually the strongest option available to anyone who qualifies: no required down payment in most cases and no monthly mortgage insurance. You will need a Certificate of Eligibility.
Texas also has down payment assistance programs, including some aimed specifically at first-time buyers and others at teachers, first responders, and veterans. They are not advertised much and they are worth asking about before you assume you need to save longer.
Reference
Glossary
The schedule by which your loan is paid off over time. Early payments go mostly toward interest and later ones mostly toward the balance, even though the payment itself stays the same.
A measure of the cost of borrowing that includes both the interest rate and certain lender fees, expressed as a yearly figure. It exists so two offers can be compared on more than the rate alone.
An independent opinion of the home's market value, ordered by the lender and performed by a licensed appraiser. The loan is based on that value, not only on the price you agreed to pay.
The final itemized statement of your loan terms and closing costs, delivered before you sign so you can review the real figures ahead of the table.
A comparison of what you owe each month to what you earn each month. Lenders use it to judge how much new payment a budget can absorb.
Two related meanings. During the transaction, a neutral third party holds funds and documents. After closing, it is the account your lender uses to collect and pay your taxes and insurance.
A reduction in the taxable value of your primary residence, filed with your county appraisal district. It does not transfer from the previous owner — you apply for it yourself after closing.
A standardized summary of your expected rate, payment, and closing costs, provided shortly after you apply. Its format is the same at every lender so offers can be compared side by side.
Coverage that protects the lender if a loan is not repaid. It is commonly required when the down payment is small, and depending on the program it may come off later or stay for the life of the loan.
Shorthand for the four parts of a typical mortgage payment: principal, interest, taxes, and insurance. When people compare a mortgage to rent, this is the number that matters.
An optional upfront charge paid to the lender in exchange for a lower interest rate. Whether it pays off depends on how long you keep the loan.
An agreement that holds your quoted interest rate for a set period while your loan is processed, so market movement during that window does not change your terms.
A drawing of the property that shows boundaries, improvements, and easements. It answers where the lot actually ends and what may sit across it.
Protection against problems in the ownership history of the property — an unpaid lien, a missed heir, a recording error — that surface after you buy.
The lender's review of your file against the loan program's requirements. The underwriter is the person who decides whether the loan can be approved and on what conditions.
Questions are free
You don’t have to be ready to buy to ask what buying would look like. Most of the useful conversations we have are with people who are still months out — figuring out what to save, what to fix, and what order to do it in. Ask early. It costs nothing and it changes what your options are later.
This guide is general educational information about the home financing process and is not a commitment to lend, an offer of credit, or legal, tax, or financial advice. All loans are subject to credit approval, underwriting, and property qualification. Program terms and availability are subject to change. Property tax rules and exemption deadlines are set by the State of Texas and administered by county appraisal districts — confirm current requirements with your appraisal district.
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