Every first-time buyer in Austin walks in with the same three questions, in some order: how much down payment do I actually need, what’s this going to cost me, and what am I going to mess up along the way. Fair questions. Here’s the real answer to all three.
What “first-time buyer” actually unlocks
You don’t need 20% down, and you probably already knew that. What trips people up is not knowing which low-down-payment path fits their actual situation:
- FHA loans are the workhorse for first-time buyers: 3.5% down with a qualifying credit score, more flexible credit and debt-to-income guidelines than conventional financing, and they allow gift funds from family for the down payment. FHA does carry mortgage insurance, typically for the life of the loan, which is the trade-off for the flexibility.
- Conventional low-down-payment programs (as low as 3% down for qualified first-time buyers) can beat FHA on monthly cost for borrowers with stronger credit, because mortgage insurance on conventional loans can be cancelled once you build enough equity — FHA’s generally can’t.
- Down payment assistance isn’t something I lead with, because it isn’t the right fit for every file — but where a buyer genuinely needs it, I do have investor relationships that offer down payment assistance options. I evaluate that against straightforward FHA or conventional financing case by case, because sometimes the “assistance” comes with a higher rate or extra strings that cost more than they save.
Which of these is actually cheaper for you depends on your credit, your timeline, and how long you plan to stay in the home — not a one-size answer, which is exactly why I run real numbers instead of a rule of thumb.
The step-by-step process, start to finish
- Step 1 — Get pre-approved first, not last. Before you tour a single house. This tells you your real budget and makes your offer credible the moment you find the one. Full breakdown in How to Get Pre-Approved in Texas.
- Step 2 — Shop with your agent using a real number, not a guess. A pre-approval letter from a broker who answers the phone carries weight with listing agents.
- Step 3 — Under contract, the appraisal and underwriting run in parallel. This is where I manage the file so nothing surprises you two weeks before closing.
- Step 4 — Closing. Typically 30 or so days from contract to keys, sometimes faster.
Grab the full walkthrough, including the paperwork you’ll want ready before you start, in my free First-Time Homebuyer’s Guide.
The mistakes that actually cost people money
- Shopping before you’re pre-approved. You end up falling for a house $30,000 outside your real budget, or losing it to a buyer whose offer looked stronger on paper.
- Opening new credit or financing a car mid-process. Underwriters re-check credit right before closing. A new car payment or credit card can change your qualifying number overnight — don’t finance anything between pre-approval and closing without asking me first.
- Assuming the lowest advertised rate is the real rate. Advertised rates usually assume a specific credit score, points paid up front, and a specific loan type. Ask for a number based on your actual file, not a billboard.
- Skipping the home inspection to compete. In a tighter market than 2021–2022, you have more room to keep this protection — use it.
- Picking a lender by rate alone and ignoring who actually answers the phone. The lender who’s a half-point cheaper but unreachable during underwriting week is not the deal it looks like on paper.
Why this is where a broker earns their keep
I run your file across 40+ wholesale lenders instead of one bank’s shelf — the full mechanics are in How Mortgage Brokers Shop Rates — and my lender fee is zero, covered in Does a Mortgage Broker Cost More? For a first-time buyer, that means the FHA-vs-conventional-vs-assistance decision gets made on real numbers for your file, not a generic script.
Don’t be mad at money. Shop your rate.
Ready to find out your real number? Ten minutes, free, zero lender fee, zero pressure. Call or text (512) 423-4663, or start on my pre-approval page.
Russell Stout | Texas Mortgage Consultants, PLLC | NMLS #220896 | Company NMLS #1843758 | Equal Housing Lender. Program availability and terms vary by borrower qualification and are not guaranteed; figures are illustrative estimates as of July 2026, not a loan offer or quote. All loans subject to credit approval.
Frequently Asked Questions
How much down payment do I need as a first-time buyer in Austin?
FHA loans allow as little as 3.5% down, and some conventional programs allow as little as 3% down for qualified first-time buyers. The right choice depends on credit score, monthly cost over time, and how long you plan to keep the home.
Is FHA or conventional better for a first-time buyer?
It depends on credit and long-term plans. FHA offers more flexible qualifying but generally keeps mortgage insurance for the life of the loan. Conventional low-down-payment programs can cost less over time for stronger-credit borrowers because mortgage insurance can be cancelled once enough equity is built.
Is down payment assistance available for first-time buyers?
In some cases, yes, through investor-provided down payment assistance programs — but it isn’t automatically the cheapest path and is evaluated case by case against straightforward FHA or conventional financing.
What’s the biggest mistake first-time buyers make?
Shopping for a home before getting pre-approved, and opening new credit or financing a purchase between pre-approval and closing — both can derail a purchase that otherwise would have closed smoothly.
