How Much Money Do I Need to Buy My First Home in Garland TX?
How Much Money Do I Really Need to Buy My First Home in Garland, TX?
If you're thinking about buying your first home in Garland, TX, one of the biggest questions you probably have is:
How much money do I actually need?
A lot of first-time buyers assume the answer is 20% of the purchase price.
That's one of the first misconceptions I like to clear up.
You may not need a 20% down payment to buy a home. Depending on your financial situation and the loan program you qualify for, there may be options requiring considerably less. But your down payment is also not the only money you need to plan for.
There may be earnest money, an option fee, inspections, an appraisal, closing costs, prepaid expenses, title-related charges, HOA-related costs, moving expenses, and other items associated with buying a home.
That can sound overwhelming when it's all listed at once.
But once you understand what each bucket of money is for and when you may need it, the process becomes much easier to plan for.
I'm Ginger McCallum, a Realtor serving Garland, TX and the surrounding DFW communities, and I help first-time homebuyers understand the process so they can make confident decisions rather than feeling like they're supposed to already know how everything works.
Let's break it down.
Do I Really Need 20% Down to Buy My First Home?
No—not necessarily.
This is probably one of the most common misconceptions I hear from first-time buyers.
Some buyers believe that if they're looking at a $300,000 home, for example, they need $60,000 sitting in the bank just for a down payment before they can even think about buying.
That isn't universally true.
There are different types of mortgage programs, and some allow qualified buyers to purchase with substantially less than 20% down. Depending on the buyer, there may also be programs or assistance options worth discussing with a lender.
The right loan and down-payment strategy depends on factors such as your finances, credit, income, property, loan program, and long-term goals.
That's why one of the earliest steps I recommend for a first-time buyer is talking with a knowledgeable lender.
Not because you're committing to buy a house that day.
You're gathering information.
Instead of assuming:
"I can't buy because I don't have 20%."
Find out what your actual options are.
You may be closer than you think—or you may discover exactly what you need to work toward.
Both are useful answers.
Your Down Payment Is Only One Part of the Money You'll Need
This is where first-time buyers sometimes get surprised.
They've saved money for a down payment and assume that's the entire financial piece of purchasing a home.
Then we start talking about earnest money, the option fee, inspections and closing costs.
So let's separate them.
1. Your Down Payment
Your down payment is the portion of the home's purchase price that you're paying rather than financing through your mortgage.
For example, if you're buying a home and putting a certain percentage down, your lender will calculate the required down payment based on the purchase price and your loan program.
Different loan programs have different requirements.
Putting more money down can affect things such as:
The amount you're financing
Your monthly payment
Mortgage insurance, when applicable
The amount of cash you'll need at closing
But more isn't automatically better in every situation.
I don't want a first-time buyer assuming they should empty their savings account just to maximize the down payment.
Your lender can help you compare options and understand how different down-payment amounts affect the overall loan.
2. What Is Earnest Money?
This is one of the terms I find many first-time buyers don't understand.
Earnest money is money a buyer puts forward as part of the real estate contract to demonstrate their seriousness about purchasing the property.
In a Texas transaction, the contract will specify the earnest money amount and the deadline for delivering it to the appropriate escrow agent, typically the title company handling the transaction.
One important thing to understand:
Earnest money isn't necessarily just an extra fee that disappears.
If the transaction successfully closes, earnest money is generally credited as part of the buyer's funds in the transaction.
What happens to earnest money if a contract terminates depends on the contract, the circumstances of the termination, and whether the applicable contractual requirements and deadlines were met.
That's one reason your contract deadlines matter so much.
As your Realtor, part of my job is helping you understand those deadlines and what happens next.
3. What Is the Option Fee?
Texas buyers may also encounter something called an option fee.
The option fee is associated with the buyer's termination option under the contract.
The option period provides a defined amount of time during which the buyer may have the unrestricted right to terminate the contract under the applicable contract terms.
This is typically when we conduct inspections and learn more about the condition of the property.
For a first-time buyer, I think of this period as one of the most important stages of the transaction.
You're no longer evaluating the house based only on:
"Do I like it?"
Now we're investigating:
"What am I actually buying?"
The amount of the option fee, length of the option period, delivery requirements, and other terms are part of the contract negotiation.
We'll talk about those before you make an offer so you understand what you're agreeing to.
4. Budget for Your Home Inspection
Once you're under contract, you'll typically want to have the home inspected during the appropriate contractual period.
The inspection is generally an out-of-pocket expense paid by the buyer.
The cost can vary depending on the property, inspector, size of the home, and any additional inspections or services you choose.
For example, depending on the property or what the initial inspection reveals, there may be reasons to consider additional evaluations by specialists.
I don't want first-time buyers spending every available dollar just getting under contract and then feeling financially squeezed when it's time to investigate the home they're buying.
Your pre-closing budget needs some breathing room.
5. What About the Appraisal?
If you're financing the purchase, your lender may require an appraisal.
An appraisal is different from a home inspection.
The inspection helps you understand the condition of the home.
The appraisal is primarily used by the lender to evaluate the property's value in connection with the loan.
The appraisal fee may be paid before closing or handled as directed by your lender.
And occasionally, an appraisal creates another decision point.
What happens if the home doesn't appraise at the contract price?
That can depend on the contract, financing, appraisal provisions and circumstances involved.
In fact, appraisal issues are one of the negotiation points we'll be covering separately in this First-Time Home Buyer Resource Center, because buyers should understand what can happen when financing and value intersect during a transaction.
6. What Are Closing Costs?
This is another phrase buyers hear constantly:
"Closing costs."
But what does that actually mean?
Closing costs aren't one single charge.
They're a collection of costs and adjustments associated with completing your purchase and financing.
Depending on your particular transaction, you may see items related to:
Your mortgage
Title services
Escrow services
Recording or other governmental charges
Homeowners insurance
Lender-required items
Prepaid expenses
Escrow funding
HOA-related items, if applicable
Other transaction-specific charges or credits
The exact amount varies.
That's why I don't like giving first-time buyers one blanket percentage and telling them that's what closing will cost.
Your lender should provide loan disclosures showing estimated costs associated with your financing, and you'll receive closing documentation before completing the purchase.
Ask questions about anything you don't understand.
You're not supposed to magically know what every line means.
7. What Are Title Costs?
Title is another area that can be confusing for first-time buyers.
A title company plays an important role in a Texas real estate transaction.
Among other things, title work helps determine the status of ownership and identify certain matters affecting title to the property. The title company may also act as the escrow agent and facilitate the closing.
You may see various title-related items associated with the transaction.
Who pays particular title-related costs can depend on the contract and the specific transaction.
That's important because buyers sometimes hear:
"The seller pays title."
Or:
"The buyer pays title."
Real estate transactions aren't always that simple.
Look at what your actual contract says and what appears on your closing documents.
We'll review the transaction together, and your title company can explain title-specific charges and documents.
8. What About HOA Costs?
Many homes in Garland and the surrounding DFW area are located within homeowners associations, although certainly not all of them are.
If you're purchasing a home within an HOA, there may be HOA-related financial considerations.
Depending on the association and transaction, these can include things such as:
Regular assessments
Transfer-related charges
Resale certificate-related charges
Other association fees or adjustments
Who is responsible for a particular HOA-related cost may depend on the contract, the association, and the circumstances of the transaction.
But I want first-time buyers to understand something beyond the closing costs:
An HOA may also become part of your ongoing cost of owning the home.
When we're comparing homes, don't look only at the purchase price.
We need to understand the bigger monthly and annual ownership picture.
9. How Do Property Taxes Work When Buying a Home in Texas?
Property taxes can be especially confusing for first-time Texas buyers because Texas property taxes are paid in arrears.
That means the tax bill for the year is generally paid later in that same year rather than being paid in advance at the beginning of the year.
So what happens when a home changes owners in the middle of the year?
At closing, property taxes are generally prorated between the buyer and seller based on the closing date.
In practical terms, the seller is generally responsible for their share of the year's taxes for the period they owned the home. Because the year's tax bill has not yet been paid, that amount is typically accounted for as a credit to the buyer at closing.
The buyer then owns the home when the year's tax bill ultimately becomes due and is responsible for ensuring the bill is paid.
If you have an escrow account through your mortgage company, the mechanics can look a little different from your perspective because your lender may collect money for taxes as part of your monthly mortgage payment and maintain an escrow account.
That leads us to another important distinction.
10. Tax Prorations and Your Escrow Account Are Not the Same Thing
First-time buyers can easily confuse these because both involve property taxes.
Tax proration at closing deals with allocating responsibility between the buyer and seller for taxes associated with their respective periods of ownership.
Your lender's escrow account, if you have one, is used to collect funds toward certain future expenses, commonly property taxes and homeowners insurance.
Your lender may need to collect money at closing to establish that escrow account.
That can affect the amount of cash you need to bring to closing.
So when your lender gives you an estimate, don't look only at the down payment.
Ask:
"What is my estimated total cash to close?"
That's the number that helps you understand the bigger picture.
11. Don't Forget Homeowners Insurance
If you're financing your home, your lender will generally require homeowners insurance.
You'll usually need to arrange coverage before closing.
Depending on the transaction and your loan, there may be insurance premiums or escrow-related amounts that need to be paid or collected as part of the closing process.
Insurance costs can also affect your ongoing monthly housing expense.
That's another reason I encourage buyers to think beyond:
"What price house can I buy?"
We also need to think about:
"What will this home realistically cost me to own each month?"
Those aren't always the same question.
12. Keep Some Money for After Closing
This may be one of the most important pieces of advice in this entire article.
Don't plan to spend every dollar you have getting into the house.
Homeownership comes with surprises.
Maybe you move in and discover you need:
A lawn mower
A refrigerator
Window coverings
A minor plumbing repair
New locks
Furniture
Moving supplies
Utility deposits
A trip to the hardware store—or several
Your first month of homeownership shouldn't begin with panic because your bank account is at zero.
Whenever possible, I want buyers to think about maintaining some financial reserves after closing.
Your home should give you stability—not immediately create financial stress.
A Realistic First-Time Buyer Scenario
Let's imagine you're preparing to buy your first home in Garland.
You've saved some money, but you don't have 20% of the price of the homes you're considering.
You assume that means you're not ready.
Instead of giving up, you talk to a lender.
You discover there may be a financing option available to you with a lower down-payment requirement.
Great.
But now we look at the rest of the picture.
We discuss:
Your down payment
Earnest money
The option fee
Inspection expenses
Appraisal costs
Estimated closing costs
Title-related items
HOA-related costs, if applicable
Insurance
Tax and escrow considerations
Money you want to keep available after closing
Now you have something much more useful than a random savings target.
You have a plan.
Maybe you're ready now.
Maybe you need another three months.
Maybe six months.
That's okay.
The goal isn't to rush you into buying.
The goal is to help you understand what needs to happen for you to buy confidently.
Common Money Mistakes First-Time Homebuyers Make
Mistake #1: Waiting Until They Have 20% Down
If you're delaying homeownership solely because you believe 20% is mandatory, talk with a lender and find out whether that's actually true for your situation.
Don't make a major financial decision based on an assumption.
Mistake #2: Saving Only for the Down Payment
Your down payment is important, but it isn't the only expense.
Build your plan around the entire transaction.
Mistake #3: Not Understanding Earnest Money
Know how much earnest money you're offering, when it's due, where it's going, and how the contract affects it.
Don't transfer money simply because someone tells you it's "part of buying a house" without understanding what it is.
Mistake #4: Forgetting About Inspections and Other Upfront Expenses
Some expenses occur before you ever reach the closing table.
Make sure your budget accounts for them.
Mistake #5: Looking Only at the Purchase Price
Two similarly priced homes may have very different ongoing ownership costs.
Taxes, insurance, HOA assessments, maintenance, and other expenses matter.
Mistake #6: Draining Your Savings at Closing
Buying the house is the beginning of homeownership—not the end of your expenses.
Leave yourself some room for life after closing whenever possible.
How Much Money Should I Have Saved Before I Start Looking?
There isn't one number that works for every first-time buyer.
And I don't want to give you a fake number just because it sounds simple.
Instead, I want you to know these four things:
1. What financing options do I qualify for?
2. What down payment would those options require?
3. What are my estimated upfront and closing expenses?
4. How much money do I want left after I close?
Once you have those answers, we can work backward and create a realistic savings goal.
That's much more useful than assuming you need 20%.
When Should I Talk to a Lender?
Earlier than many first-time buyers think.
You don't need to wait until you've found the perfect house.
And you don't necessarily need to wait until you believe every part of your finances is perfect.
A lender can help you understand where you stand.
You may hear:
"You're ready."
Or you may hear:
"Here's what I recommend you work on first."
Either answer gives you direction.
Then, when you're ready to shop seriously, we can build your home search around numbers that make sense for your actual financial situation.
Frequently Asked Questions
Do first-time homebuyers need 20% down in Garland, TX?
Not necessarily. Down-payment requirements vary by loan program and buyer qualifications. Talk with a lender about the financing options available for your particular situation rather than assuming 20% is required.
Is earnest money part of my down payment?
Earnest money is handled as part of the transaction and, when the purchase successfully closes, is generally credited toward the buyer's funds in the transaction. Your contract determines the earnest-money requirements and deadlines.
What is the option fee in Texas?
The option fee is associated with the buyer's contractual termination option. The amount, deadline, and length of the option period are negotiated as part of the contract.
Are inspections included in closing costs?
Inspection expenses are generally paid separately by the buyer rather than simply waiting until closing, so they should be included in your overall home-buying budget.
What do closing costs include for a Texas homebuyer?
Closing costs can include lender-related costs, title and escrow items, recording charges, prepaid expenses, insurance-related amounts, escrow funding, HOA-related items when applicable, and other transaction-specific charges or credits. Your exact costs depend on your loan and transaction.
How are property taxes handled when I buy a home in Texas?
Texas property taxes are paid in arrears. At closing, taxes are generally prorated between buyer and seller based on the closing date. The seller's share is typically accounted for in the closing transaction, while the buyer becomes responsible for the property and ultimately for the tax bill when due. Your lender may separately collect funds for an escrow account.
Should I use all my savings for my down payment?
Not necessarily. Consider your total cash needed for the transaction as well as the reserves you'd like to have after closing. Your lender can help you compare how different down-payment amounts affect your loan.
The First Step Isn't Saving 20%—It's Knowing Your Numbers
If there's one thing I want a first-time buyer to take away from this article, it's this:
Don't decide whether you can afford to buy a home based on a rule you've heard somewhere.
You may not need 20% down.
But you also need to understand that buying a home involves more than a down payment.
The goal is to understand the entire financial picture before you fall in love with a house.
That's part of how I guide buyers through my Confident Move Method™—education first, then decisions.
If you're thinking about buying your first home in Garland, you don't have to know all of this before you reach out.
That's what we're here to work through together.
Related Resources
If you're just getting started, these resources may also help:
I Don't Know Where to Start as a First-Time Home Buyer. What Should I Do First?
Best Neighborhoods in Garland TX (What You Should Know Before You Buy)
Thinking about buying or selling a home? I'd love to help.
Ginger McCallum is a Realtor serving Garland, TX and the surrounding DFW communities. She helps buyers, sellers, first-time homebuyers, and homeowners navigating divorce make confident real estate decisions through local expertise and the Confident Move Method™.
📘 Buying your first home? Ask for my FREE First-Time Home Buyer Guide.
📍 Ginger McCallum – Realtor
1002 Raintree Cir
Allen, TX 75013
📞 469-879-3484
