You do not necessarily need 20% down to buy a house in Austin. But you do need more than the down payment.
Short answer: Plan for your down payment, closing costs, earnest money and option fee, inspections, moving expenses and cash left after closing. For a $500,000 Austin home, a buyer putting 5% down might need roughly $40,000 to $55,000 before seller or lender credits. That is an example, not a quote. Your real number depends on the loan, taxes, insurance, lender fees, negotiated credits and the property itself.
I am Leila Showery, an Austin REALTOR® with Compass, and this is one of the first numbers I want buyers to understand. A lender can tell you the maximum loan you qualify for. That is not automatically the same as the price or cash requirement that feels comfortable.
What makes up the cash needed to buy an Austin home?
The total is usually a combination of six buckets:
- Down payment
- Closing costs and prepaid expenses
- Earnest money and option fee
- Inspections and specialist evaluations
- Moving and immediate ownership expenses
- Cash reserves after closing
Some of these amounts are paid before closing. Others appear on the final settlement statement. Earnest money is generally credited back toward the transaction at closing, so do not count it twice when estimating your total.
How much should you expect for a down payment?
Twenty percent is not a universal requirement. Some conventional programs allow qualified buyers to put as little as 3% down. FHA loans commonly require at least 3.5% for qualifying borrowers, while eligible VA and USDA buyers may have zero-down options.
The smallest possible down payment is not always the best choice. A larger down payment can reduce the loan balance and monthly payment. Putting less than 20% down on a conventional loan will commonly mean private mortgage insurance.
I tell buyers to compare the whole structure, not chase a percentage. If putting 20% down empties your savings, a lower down payment with a healthy reserve may be the safer plan. Your lender should price multiple scenarios using the same property price so you can compare cash to close, monthly payment and total loan cost.
How much are closing costs in Austin?
The Consumer Financial Protection Bureau says closing costs typically range from 2% to 5% of the purchase price, excluding the down payment. The actual number can vary significantly.
Buyer closing costs may include:
- Lender origination and underwriting charges
- Appraisal and credit-related fees
- Title and settlement charges
- Recording and government fees
- Homeowners insurance
- Prepaid interest
- Initial tax and insurance escrow deposits
- Discount points or rate-buydown costs, if selected
Texas property taxes and insurance can make the prepaid portion important. The closing month, insurance premium and escrow setup may change the final cash requirement even when the price and down payment stay the same.
Use the Estimated Cash to Close on the Loan Estimate as the working number. The CFPB explains that this figure includes the down payment and closing costs, then subtracts deposits already paid, seller credits and other adjustments.
What are earnest money and the option fee?
In a Texas resale contract, earnest money shows the buyer's good-faith commitment to the transaction. The option fee purchases the buyer's unrestricted right to terminate during the negotiated option period.
The amounts are negotiated, not fixed by law. Under the current TREC contract, the deadline written into Paragraph 5 controls delivery, and the standard contract generally requires the funds to reach the escrow agent within three days after the effective date.
These funds matter because buyers need them available immediately after the contract is signed. Earnest money is typically credited toward the buyer's amount due at closing. The option fee is also credited at closing when the transaction closes.
For planning purposes, do not leave every dollar in an account that is difficult to access. Confirm wiring instructions directly with the title company through a trusted phone number because real estate wire fraud is very real.
How much should you budget for inspections?
Inspection costs vary with the size, age and features of the home. A general inspection is the starting point, but it may not be the only evaluation worth ordering.
Depending on the property, a buyer might also consider:
- Sewer camera
- Structural engineer
- Roofer
- Electrician or plumber
- HVAC evaluation
- Pool inspection
- Wood-destroying insect inspection
These costs are usually paid during the option period and generally do not appear in the lender's cash-to-close number. That is why I keep an inspection budget separate from the down payment and closing-cost estimate.
My guide to buying an older Austin home explains which systems can become the biggest surprises before the option deadline.
Austin cash-to-close examples
These examples use a broad 3% closing-cost estimate for illustration. They do not include inspections, moving expenses or post-closing reserves, and they do not account for seller or lender credits.
| Purchase price | Down payment | Estimated closing costs | Approximate cash before deposits/credits |
|---|---|---|---|
| $400,000 | 3% = $12,000 | $12,000 | $24,000 |
| $400,000 | 5% = $20,000 | $12,000 | $32,000 |
| $500,000 | 5% = $25,000 | $15,000 | $40,000 |
| $600,000 | 10% = $60,000 | $18,000 | $78,000 |
Closing costs could land above or below 3%. The point is to show why “I have the down payment” and “I have enough cash to close comfortably” are not always the same statement.
Can the seller pay some of your closing costs?
Yes, when the contract, appraisal and loan program allow it. A seller credit can reduce the buyer's cash needed for eligible closing costs, prepaid items or a rate buydown.
It is not free money. The price, competing offers, property condition and seller's net all affect whether the seller will agree. Some buyers benefit more from a closing-cost credit than the same dollar amount as a price reduction because the credit preserves cash now.
The smartest comparison is not “credit versus no credit.” Ask the lender to show the monthly payment, cash to close and long-term cost for each structure. My guide to Austin seller credits and rate buydowns breaks down the tradeoffs.
Is down-payment assistance available in Austin?
The City of Austin currently advertises assistance of up to $40,000 for qualifying first-time buyers purchasing an eligible single-family home or condominium within Austin's Full Purpose city limits. The published program includes income limits, homebuyer education, approved-lender requirements and a maximum purchase price of $440,000.
Programs, funding and eligibility can change. Verify availability with the City and a participating lender before building your purchase plan around it.
How much should you keep after closing?
Do not aim to arrive at closing with exactly zero dollars left.
Even a well-inspected home can need locks changed, utility deposits, window coverings, appliances, yard work or a repair nobody predicted. A lender may also require documented reserves depending on the loan and property.
There is no universal reserve number, but I want buyers to decide what would make them feel safe if an HVAC repair, plumbing issue or insurance deductible appeared during the first few months. That cushion should be part of the budget before choosing the maximum price.
How do you get your real number?
Start with a lender before falling in love with a house. Ask for scenarios at two or three price points and have each one show:
- Down payment
- Estimated closing costs
- Estimated prepaid taxes and insurance
- Mortgage insurance, if applicable
- Seller or lender credits
- Monthly payment
- Estimated cash to close
Then add inspections, moving costs and the reserve you refuse to spend.
I can help you compare the property price with the actual cash strategy, negotiate credits when they make sense and make sure the contract timeline does not create a surprise before closing.
Interested in working together? DM me or email leila.showery@compass.com.
This article is general information, not lending, financial, legal, tax or insurance advice. Loan requirements, assistance programs, rates and property costs change. Confirm your numbers with a qualified lender and the appropriate professionals.
Frequently asked questions
Do I need 20% down to buy a house in Austin?
No. Qualified buyers may have conventional options starting around 3% down, FHA options starting around 3.5%, or eligible zero-down VA or USDA financing. The right structure depends on qualification, payment goals and available savings.
Are earnest money and the option fee extra closing costs?
They are paid soon after the contract becomes effective, but they are generally credited toward the transaction at closing. Include them in the amount of accessible cash needed upfront, but do not count them twice in the total.
Can a seller pay all of my closing costs?
Possibly, but loan-program limits, eligible expenses, the appraisal and the negotiated contract all matter. Your lender must calculate the maximum usable credit for the specific loan.
Is the inspection included in closing costs?
Usually no. Buyers generally pay inspectors and specialists during the option period, so maintain a separate inspection budget.
What is the best first step if I do not know my budget?
Speak with a lender and request written scenarios at several prices. Then compare cash to close, monthly payment and the savings you would retain after closing.
