First-Time Buyers
The twenty percent rule is not real, and most of the vocabulary is simpler than it sounds.
The twenty percent thing is not true
It is the single most common reason people put off buying, and for most first-time buyers in Bell County it is simply wrong. Between state down payment assistance, USDA loans in the rural parts of the county, VA loans for anyone who has served, and FHA at three and a half percent, the amount you actually need to bring is usually far smaller than the number in your head.
The full detail, with current figures and links to the official sources, is on the down payment assistance page. What follows is the part that trips people up.
What you will actually need at closing
Four separate things, and people usually only budget for one:
- The down payment. Zero on a VA or USDA loan. Three and a half percent on FHA. Often covered in whole or part by state assistance.
- Closing costs. Lender fees, title, and the prepaid taxes and insurance that go into your escrow account. These are frequently negotiated for the seller to pay, and that is one of the more useful things a buyer’s agent does for you.
- The option fee and the earnest money. Both are paid shortly after the contract is signed, not at closing. The option fee buys your right to walk away. Earnest money is generally credited back to you at closing.
- The inspection. Paid out of pocket, during the option period. Do not skip it to save money. It is the cheapest protection in the entire transaction.
The words nobody explains to you
Option period. A short window, negotiated in the contract, during which you can terminate for any reason and get your earnest money back. You pay a fee for it. Inspections happen here. Miss the deadline and the right is gone.
Earnest money. A deposit held by the title company showing you are serious. Credited toward your costs at closing. You generally get it back if you terminate within the option period or if a contract contingency is not met.
Survey. A drawing of the property boundaries showing where the house, fences and easements actually sit. It is how you find out the neighbour’s shed is on your land, or that a utility easement runs through where you wanted the pool.
Title commitment. The title company’s statement of what it will insure and what it will not. Read the exceptions. They list easements, restrictions and anything else attached to the property.
Escrow. The account your lender uses to collect property taxes and insurance monthly and pay them annually. It is why your payment is bigger than the principal and interest figure, and why it changes when tax rates change.
PMI and MIP. Mortgage insurance, which protects the lender, not you. Conventional loans have PMI that can eventually be removed; FHA loans have MIP that on most loans stays for the life of the loan. VA loans have neither.
Seller’s disclosure. The form where the seller tells you what they know is wrong with the house. Read it closely and ask about anything vague.
Mistakes I watch first-time buyers make
- Buying at the top of the approval. What you are approved for assumes nothing else in your life costs money. Work from the monthly payment you are comfortable with and back into the price.
- Forgetting taxes vary. Two similar houses in different jurisdictions can carry noticeably different monthly costs. Killeen’s city rate is materially higher than Harker Heights’ or Nolanville’s, and a MUD adds another line.
- Opening credit during the process. Financing a sofa between the approval and the closing has genuinely cost people their loan. Buy the furniture afterwards.
- Assuming the school district from the mailing address. It does not work that way here. Confirm by address with the district.
- Waiving the inspection to compete. There are better ways to strengthen an offer, and I will show you them.
- Not asking about insurance early. Roof age, flood zone and the 2022 storm history in parts of the county all affect what you will pay. Get a quote during the option period, not after.
Common questions
Do I really need twenty percent down?
No. VA and USDA loans require no down payment at all, FHA is three and a half percent, and Texas runs down payment assistance programs that provide two to five percent of the loan amount. Through TSAHC that assistance can be a true grant with no second lien and nothing to repay.
What credit score do I need?
Both Texas assistance programs set a minimum middle credit score of 620 for their standard options, and 640 for conventional financing through TSAHC. Loan programs themselves vary. If you are below that today, it is usually fixable within a few months, and it is worth finding out early.
Does a first-time buyer program mean I can never have owned a home?
Usually it means you have not owned and occupied a primary residence in the previous three years. That requirement is waived entirely for qualified veterans, and TSAHC’s programs have no first-time requirement at all.
How long does the whole process take?
From accepted offer to keys is commonly around thirty to forty-five days, driven mostly by the lender. Finding the right house takes as long as it takes.
Do I pay you as a buyer?
Compensation is negotiable and is set out in a written agreement before we start working together, so you will know exactly what it is and who is paying it. I will walk you through that document rather than sending it to you cold.
Have a look around
Browse live listings across Bell County. No account, no pressure.
Listings open on the JD Walters Real Estate search site. Enquiries made there are handled by the brokerage.
Ask the basic question
There is no such thing as too early and no such thing as too simple. If you are not sure whether you can buy, that is exactly the question to ask.