Texas down payment requirements depend on your loan type, not state law

Texas has no state-mandated minimum down payment. What you pay upfront is set by your lender and the type of loan you get — conventional, FHA, VA, or USDA — not by Texas law. Most buyers put down between 3% and 20% of the home price, but the actual floor depends on which program you may have access to for and which lender you work with.

A conventional loan from a bank or mortgage company typically requires 3% to 5% down, though some lenders go lower. FHA loans, backed by the Federal Housing Administration, allow 3.5% down. VA loans for military members and veterans often require zero down. USDA loans in rural areas can also require zero down. The catch: lower down payments mean higher monthly payments and mortgage insurance costs that add up over time.

Key Takeaways

  • Texas has no state minimum down payment requirement; your lender sets the floor based on loan type.
  • Conventional loans typically require 3% to 20% down; FHA loans require 3.5%; VA and USDA loans may require zero down.
  • Putting down less than 20% on a conventional loan triggers private mortgage insurance (PMI), which increases your monthly payment.
  • Your down payment affects not just the upfront cost but also your interest rate, monthly payment, and total loan cost over 15 or 30 years.
  • Texas property taxes and homeowners insurance are separate from down payment and add significantly to your monthly housing cost.

Conventional loans: the 3% to 20% range

A conventional loan is a mortgage not backed by a government agency. Most conventional lenders in Texas will accept 3% down, though some require 5% or more depending on your credit score, debt-to-income ratio, and the property itself. The lower your down payment, the higher your interest rate tends to be, because the lender takes on more risk.

If you put down less than 20%, you pay private mortgage insurance (PMI) on top of your regular mortgage payment. PMI typically costs 0.5% to 1.5% of your loan amount per year, divided into monthly payments. On a $300,000 home with 5% down ($15,000), you would borrow $285,000 and pay roughly $120 to $360 extra per month for PMI alone. That insurance protects the lender, not you, and it stays on your loan until you reach 20% equity or refinance.

FHA loans: 3.5% down with mortgage insurance built in

FHA loans are designed for first-time buyers and people with lower credit scores or limited savings. The Federal Housing Administration insures the loan, which means lenders can offer lower down payments. In Texas, FHA loans require a minimum 3.5% down payment, and you can sometimes use gift money from family to cover it.

FHA loans come with two mortgage insurance premiums: an upfront premium (1.75% of the loan amount, usually rolled into your loan) and an annual premium (0.55% to 0.8% of the loan amount per year, paid monthly). On a $300,000 home with 3.5% down, the upfront insurance alone adds $5,250 to your loan balance. The annual insurance stays on the loan for the full 30 years if you put down less than 10%, or until you reach 20% equity if you put down 10% or more. Unlike conventional PMI, FHA mortgage insurance does not automatically drop off.

VA and USDA loans: zero down in many cases

If you are a veteran, active-duty service member, or surviving spouse, you may may have access to for a VA loan through the Department of Veterans Affairs. VA loans often require zero down payment and no mortgage insurance. You pay a one-time VA funding fee (1.4% to 3.6% of the loan amount, depending on your service history and down payment), which can be rolled into the loan. VA loans are available throughout Texas with no property type restrictions.

USDA loans are for rural and some suburban areas in Texas and require zero down if you meet income limits. Like VA loans, USDA loans have an upfront may provide fee (1% of the loan amount) and an annual fee (0.35% of the loan amount), both usually rolled into the loan. USDA loans are slower to process than conventional or VA loans because the USDA must verify the property location and your income may be able to access.

How down payment size affects your total cost

The size of your down payment ripples through your entire loan. A larger down payment means a smaller loan amount, lower monthly payments, and less interest paid over time. It also means you avoid or reduce mortgage insurance costs. On a $300,000 home at 7% interest over 30 years, the difference between 3% down and 20% down is roughly $200 to $250 per month in principal and interest alone, plus the PMI difference.

However, putting down a large amount upfront means less cash in your pocket for closing costs, repairs, emergencies, and other expenses. Many financial advisors suggest putting down 10% to 15% if you can afford it without draining your savings, because it balances lower monthly payments against keeping cash reserves. The "right" amount depends on your income, job stability, emergency fund, and local home prices.

Closing costs and other upfront expenses in Texas

Down payment is only part of what you pay upfront. Closing costs — the fees charged by lenders, title companies, appraisers, and inspectors — typically run 2% to 5% of the home price in Texas. On a $300,000 home, that is $6,000 to $15,000. Closing costs include the loan origination fee, appraisal, title search, title insurance, survey, homeowners insurance, property taxes, and attorney fees (if used).

You also need a home inspection (typically $300 to $500) before closing, and you may need a pest inspection or radon test depending on the property. Some of these costs can be negotiated or paid by the seller, but most fall on the buyer. Budget for closing costs separately from your down payment, or you may find yourself short at closing.

Texas property taxes and insurance add to your monthly payment

Texas has no state income tax, but property taxes are high relative to other states. The statewide average is around 1.6% to 1.8% of home value per year, though it varies by county and school district. On a $300,000 home, that is roughly $4,800 to $5,400 per year, or $400 to $450 per month. Some counties run higher; others lower.

Homeowners insurance in Texas ranges from $800 to $2,000 per year depending on the home, location, and coverage level. Lenders require you to pay property taxes and insurance into an escrow account each month as part of your mortgage payment, so these costs are not optional. When you calculate whether you can afford a home, include property taxes and insurance in your monthly housing budget, not just the mortgage payment itself.

Frequently Asked Questions

Can I use a gift from family for my down payment in Texas?

Yes. Most lenders allow gift money from family members for down payments and closing costs. You will need a signed gift letter stating the money is a gift, not a loan, and the lender may ask for bank statements showing the gift was deposited. Some programs, like FHA, have specific gift letter requirements, so ask your lender for their form.

What happens if I put down less than 3%?

Most conventional lenders in Texas require at least 3% down. If you have less, your options are FHA (3.5% minimum), VA (zero down if you may have access to), or USDA (zero down in may be able to access areas). Some lenders offer 1% or 2% down programs, but they are rare and come with higher interest rates and stricter credit requirements.

Can I remove PMI from my conventional loan?

Yes, once you reach 20% equity in the home, you can request PMI removal. Equity builds through monthly payments and home appreciation. You can also refinance to a new loan with 20% down, which removes PMI but involves new closing costs and a new interest rate. Ask your lender about their PMI removal policy when you close.

Do I have to put down 20% to avoid mortgage insurance?

On a conventional loan, yes — 20% down eliminates PMI. On FHA loans, you need 10% down to eventually remove mortgage insurance (after reaching 20% equity), but it takes longer. VA and USDA loans have no mortgage insurance regardless of down payment size.

How do property taxes affect my down payment decision?

Property taxes do not affect your down payment amount, but they do affect how much home you can afford overall. A larger down payment lowers your monthly mortgage payment, which may free up budget room for property taxes and insurance. Calculate your total monthly housing cost — mortgage, PMI, property tax, insurance, and HOA fees if any — before deciding on a down payment size.