If you have been dreaming of buying a home, you might be held back by common Texas mortgage myths.
Many potential Texas homebuyers remain on the sidelines renting because they believe homeownership is reserved for those with massive savings accounts and perfect credit scores. The reality? The path to buying a home in Texas is often much more accessible than most people realize.
Let’s clear the air. Here are the top 5 mortgage myths stopping Texans from buying a home—and the truth behind the financing.
Myth 1: You Need a 20% Down Payment
The Truth: You can buy a home with as little as 3% to 3.5% down.
The idea that you must put 20% down is perhaps the most persistent myth in real estate. While putting 20% down helps you avoid Private Mortgage Insurance (PMI), it is absolutely not a requirement to buy.
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Conventional Loans: Many qualified buyers can purchase a home with just 3% down.
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FHA Loans: These are popular among first-time buyers and require a minimum of just 3.5% down.
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VA & USDA Loans: If you are a veteran or buying in a designated rural area, you might qualify for 0% down.
Furthermore, Texas has robust Down Payment Assistance (DPA) programs. Organizations like the Texas State Affordable Housing Corporation (TSAHC) offer grants and forgivable loans that can cover your down payment and closing costs. When you combine low-down-payment loan programs with state assistance, your out-of-pocket costs can be significantly lower than you imagined. This is one of the biggest Texas mortgage myths we see, and it prevents qualified people from applying. Discover your affordability today.
Myth 2: You Need “Perfect” Credit to Get Approved
The Truth: You don’t need a 740+ score to qualify for a mortgage.
Many renters assume that if their credit score isn’t in the high 700s or 800s, a bank won’t talk to them. This is false. While a higher score can get you a better interest rate, it is not the only factor in approval.
Many loan programs generally accept credit scores in the low- to mid-600s. Government-backed loans, such as FHA loans, can offer approvals for even lower scores depending on the scenario.
Mortgage lenders look at your “whole file,” not just a single three-digit number. We look at:
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Your income stability.
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Your debt-to-income ratio.
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Your cash reserves.
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Your payment history on rent and utilities.
If the rest of your financial picture is strong, a less-than-perfect credit score is often not a dealbreaker.
Myth 3: Assistance is Only for First-Time Buyers
The Truth: Repeat buyers are often eligible for Texas assistance programs.
There is a common misconception that Down Payment Assistance (DPA) or special loan programs are exclusive to those buying their very first home.
While “first-time buyer” programs exist, many Texas-specific programs are open to repeat buyers as well. Eligibility for these programs is usually based on:
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Income limits.
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Purchase price limits.
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The location of the property.
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Your profession (programs specifically for teachers, firefighters, and police officers).
If you have owned a home before but are currently renting or looking to move, do not assume you are disqualified from aid. Check with your loan officer to see which statewide programs you fit into.
Myth 4: All Texas Lenders Offer the Same Deal
The Truth: Rates, fees, and terms vary significantly between lenders.
It is easy to think that mortgage rates are set in stone and every lender in Texas will offer you the exact same numbers. However, mortgages are products, and lenders price them differently based on their business model, product mix, and cost structures.
One lender might offer a slightly lower rate but charge higher upfront “points” or origination fees. Another might have a slightly higher rate but offer a lender credit to help with your closing costs.
Don’t just chase the lowest advertised rate. Look at the total cost of the loan. Ask for a Loan Estimate and compare the Annual Percentage Rate (APR), which includes the interest rate plus the fees. Shopping around can save you thousands of dollars over the life of your loan.
Myth 5: You’ll Always Be Penalized for Paying Off Early
The Truth: Many modern mortgages have no prepayment penalties.
Borrowers often hear horror stories about “prepayment penalties”—fees charged by the lender if you sell your home, refinance, or pay off the mortgage earlier than the 30-year term.
While these penalties were common in the past (and still exist on some non-standard loan products), the vast majority of standard residential mortgages in Texas today—including most Conventional, FHA, and VA loans—do not carry prepayment penalties.
To be sure, always ask me directly: “Does this loan have a prepayment penalty?” You can also verify this by looking at your Loan Estimate disclosure; there is a specific section that clearly states whether a penalty applies.
If you are considering saving money with a refinance, check your numbers and consult with me to verify your savings.
Ready to stop renting and start owning? Don’t let myths keep you from building equity. The market is full of opportunities for buyers who know the facts. Contact me today to review your unique financial situation and see how much home you can really afford.
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