How Much Down Payment Do You Really Need in Austin?

How much do you actually need for a down payment to buy a home in Austin, Texas? It’s one of the most common questions we hear from first-time homebuyers, growing families, and even seasoned investors looking to purchase in the Central Texas market. The short answer: it depends. The better answer? Keep reading.

At Holley Homes Realty, our mission is to educate and empower buyers so you can make informed decisions that move you toward long-term wealth and stability. As a seasoned Austin, Texas Realtor and broker, Brandon Holley has guided hundreds of clients through this exact question. Let’s break it down clearly, realistically, and in a way that works for your goals.

What Is a Down Payment, and Why Does It Matter?

A down payment is the amount of money you pay upfront toward the purchase price of a home. The rest is typically financed through a mortgage loan.

In Austin, Texas, the average home price has fluctuated in recent years, but let’s use $450,000 as a reference point. A 20% down payment on that would be $90,000. That sounds steep, right? But here’s the good news:

You do not need 20% down to buy a home in Austin.

Common Down Payment Options in Austin, Texas

Depending on your loan type, credit score, and goals, your down payment could be significantly lower than 20%. Here are the most common loan options buyers use in the Austin, Texas real estate market:

1. Conventional Loan​

• Typical down payment: 5% to 20%
• Minimum for some buyers: As low as 3%
• PMI (private mortgage insurance) required if under 20% down

2. FHA Loan (Federal Housing Administration)​

• Minimum down payment: 3.5%
• Great option for buyers with lower credit scores

3. VA Loan (Veterans Affairs) 

• Down payment: 0%
• For eligible veterans, active-duty service members, and surviving spouses

4. USDA Loan (U.S. Department of Agriculture)​

• Down payment: 0%
• Available in eligible rural areas (some outskirts of the Austin metro qualify)

Pro Tip:We can help you connect with a lender to explore which loan programs you qualify for, especially those that reduce upfront costs.

So, How Much ShouldYou Put Down?​

There’s no universal answer, but here are a few scenarios to consider:

Scenario 1: First-Time Buyer, Limited Savings​

• Use an FHA loan with 3.5% down
• On a $350,000 home, that’s $12,250

Scenario 2: Conventional Loan Buyer​

• Put down 5% on a $400,000 home = $20,000
• PMI applies but can be removed later when equity increases

Scenario 3: Veteran Using VA Loan​

• $0 down on a $450,000 home
• Still responsible for closing costs, but no down payment needed

The best move? Start with a budget and financial plan that works foryou and build from there. We’ll help you understand the true costs of buying a home in Austin—not just the down payment.

Additional Costs to Budget For

Even with a low down payment, don’t forget to budget for these out-of-pocket expenses:

• Earnest Money Deposit (typically 1% of the home price)
• Option Fee (usually $100-$500)
• Closing Costs (2% to 5% of the purchase price)
• Home Inspection ($300-$600)
• Appraisal Fee (often $500-$700)
• Moving Expenses, Utilities, and Furniture

We often help buyers negotiate seller contributions to cover part of the closing costs—especially in today’s shifting Austin, Texas real estate market.

What If You Want to Avoid PMI?

Private mortgage insurance (PMI) is required for most loans with less than 20% down. But it’s not forever.

How to manage or eliminate PMI:

• Choose a lender that cancels PMI when you hit 20% equity
• Consider a "piggyback loan" (80/10/10) to avoid PMI upfront
• Refinance once your home appreciates or you’ve paid down enough principal

A strong lender-partner can walk you through each option. Brandon Holley and Holley Homes Realty work with trusted local lenders who explain costs clearly and transparently.

Are There Down Payment Assistance Programs in Austin?

Yes—and many buyers don’t even realize they qualify.

Popular Down Payment Assistance (DPA) Options:

• Texas State Affordable Housing Corporation (TSAHC)
• My First Texas Home Program
• City of Austin DPA programsfor income-qualified buyers

Most of these programs offer grants or second loans that cover part or all of your down payment. Some are forgivable after a few years of occupancy. We help our buyers explore these options every day.

Can You Use Gift Funds?

Yes! Many lenders allow buyers to use monetary gifts from family or close friends for all or part of the down payment.

You’ll need:

• A signed gift letter
• Bank documentation showing transfer

Gift funds can help you get into a home sooner without draining your emergency savings.

Final Thought: Bigger Isn’t Always Better

Putting 20% down can lower your monthly payment, remove PMI, and improve loan terms—but it’s not always necessary. In some cases, it’s smarter to:

• Keep more cash on hand for home improvements
• Invest the difference elsewhere
• Get into the market sooner to build equity faster

The key is understanding your options and weighing them against your financial goals.

Let’s Talk Numbers Together

Whether you’re working with a tight budget or planning a large down payment, Holley Homes Realty is here to help you run the numbers and explore every available path.

Call or text Brandon Holley directly at512.487.9242

Email: brandon@holleyhomesrealty.com

Watch the latest videos at Holley Homes Realty YouTube

When it comes to buying a home in Austin, Texas, you don’t have to figure it out alone.