How to buy your first home in Austin, Texas

Figure out what you can actually afford

Before you talk to a lender, do the honest math yourself. Take your gross monthly income, multiply by 0.28. That is roughly the max monthly payment (including taxes and insurance) that keeps you in safe territory. In Austin, property taxes run 2.1-2.4% of assessed value, which is higher than most states and significantly affects your monthly payment.

A $412K home with 3.5% down (FHA), a 6.5% rate, and 2.2% property taxes means a monthly payment around $3,100 including taxes, insurance, and PMI. That requires roughly $133K in household income to stay at the 28% rule. If that number is higher than your income, look at Williamson County, Hays County, or Caldwell County where medians are significantly lower.

• Calculate your comfortable monthly payment (gross income x 0.28)
• Factor in Austin's property tax rate (2.1-2.4%) from the start
• Check if your target price works in city limits or if you need to look metro-wide
• Account for HOA fees if looking at condos or newer subdivisions

Get pre-approved (and check Texas down payment programs first)

Most first-time buyer guides skip this: Texas has state-funded down payment assistance that most agents and lenders do not proactively mention. Before you get pre-approved with any lender, check if you qualify for TSAHC programs. It can mean thousands less out of pocket.

• Take the TSAHC eligibility quiz before talking to any lender
• Get pre-approved with a TSAHC-approved lender (not all lenders participate)
• Ask specifically about the grant option vs. forgivable second lien
• Get pre-approved, not just pre-qualified (pre-approval means the lender verified your finances)

Pick the right part of Austin (not the right house)

First-time buyers focus on the house. Experienced buyers focus on the location. In Austin, where you buy determines your property tax rate, school district, commute, and long-term appreciation more than the specific house does.

If schools matter, compare Austin ISD, Round Rock ISD, Leander ISD, and Hays CISD based on what matters to your family, not just ratings. Do not fall in love with a neighborhood you cannot afford.

• Define your must-haves: commute time, school district, walkability, yard, price ceiling
• Research 3-4 areas that fit your budget before looking at individual homes
• Drive the commute during rush hour before committing to a neighborhood
• Check what is being built nearby (data centers, subdivisions, commercial development)

Make an offer (the market favors you right now)

In the 2021-2022 frenzy, buyers waived inspections, bid $50K over asking, and lost 10 offers before landing one. That market is over. The current market gives you leverage. Use it.

Homes averaging 50-60 days on market means sellers are motivated. You have room to negotiate on price, ask for closing cost assistance, request repairs after inspection, and take your time with due diligence. Do not waive the inspection. Do not skip the appraisal contingency.

• Offer at or slightly below asking on homes that have been listed 30+ days
• Ask for seller-paid closing costs (2-3% of purchase price)
• Always get an inspection. Always.
• Keep the appraisal contingency in your contract
• Ask your agent about the seller's motivation (days on market, price reductions, etc.)

Close the deal (and file your homestead exemption immediately)

Closing in Texas typically takes 30-45 days from accepted offer. During that time: the lender processes your loan, an appraiser values the home, a title company searches for liens, and you do your inspection. Do not make any major financial changes during this period (do not change jobs, do not open new credit cards, do not make large purchases).

The most important thing you do after closing: file your homestead exemption with your county appraisal district (TCAD for Travis County, WCAD for Williamson, HCAD for Hays). This caps your assessed value increases at 10% per year and exempts a portion of your value from school district taxes. It is free.

• Do not change jobs, open credit, or make large purchases during the closing period
• Budget 2-5% of purchase price for closing costs (or negotiate seller concessions)
• File homestead exemption within 30 days of closing (TCAD, WCAD, or HCAD)
• Set a reminder for the following May to protest your property tax assessment