How to Get a Mortgage in Texas: Step by Step

The Texas Mortgage Process: An Overview

Getting a mortgage in Texas involves the same core steps as any state — pre-approval, search, offer, contract, inspection, appraisal, underwriting, closing — but with Texas-specific elements that affect timing, cost, and strategy. The full process from initial pre-approval to keys in hand takes 45–75 days on average. The biggest mistakes Texas buyers make happen at the beginning (applying without understanding what they can afford including Texas taxes) and in the middle (waiving inspection contingencies under competitive pressure). A clear sequence and realistic timeline prevents both.

Step 1: Financial Preparation Before Any Application

Before contacting a lender, do your own financial inventory. Pull your credit reports at AnnualCreditReport.com (free, all three bureaus). Identify any negative items that need explanation or dispute. Calculate your DTI manually using your gross monthly income and current minimum monthly debt payments — your qualifying score and DTI together will determine what programs and price ranges are available to you before you talk to any lender.

Gather documents now rather than scrambling during underwriting: two years of W-2s and federal tax returns (1040s), one month of current pay stubs, two to three months of bank statements on all accounts being used for down payment and reserves, photo ID, and documentation of any income sources beyond your primary employment. Self-employed borrowers need two years of business tax returns in addition to personal returns. Having documents ready reduces underwriting delays — a file that goes into underwriting complete processes faster than one that dribbles in missing pieces over two weeks.

Step 2: Pre-Approval — The Right Way

Pre-qualification (lender estimates based on self-reported information, no credit pull) is not pre-approval. Texas listing agents and sellers treat them differently, and in competitive situations a weak pre-qualification letter is worse than none. Get a genuine pre-approval: the lender pulls your credit, reviews your documents, and runs your application through automated underwriting. The resulting letter specifies the maximum loan amount, the program (FHA, VA, conventional), and any conditions that must be met before final approval.

Apply to two lenders simultaneously, not one. The credit inquiries for mortgage shopping within a 14–45 day window are treated as a single inquiry by FICO scoring models — shopping multiple lenders doesn’t compound credit damage. The benefit: you have a real rate comparison and leverage to negotiate. A 0.25% rate difference on a $380,000 loan is $57/month and $20,520 over 30 years. The 90 minutes to compare two Loan Estimates is high-return time investment.

If you’re eligible for VA: apply specifically to VA-approved lenders and confirm they participate in the Texas VLB program. VA pre-approval requires your Certificate of Eligibility — your lender can obtain it through VA’s ACE system during application using your SSN, or you can request it in advance through VA eBenefits.

Step 3: Understanding What You Can Actually Afford in Texas

National mortgage calculators almost universally understate what Texas homes cost because they use national-average property tax rates. Texas’s average effective rate is approximately 1.74% — versus the 1.10% national average. On a $400,000 home, that gap is $256/month ($640 Texas vs. $384 national average). Using national-average calculators gives you a purchase power estimate that’s 10–15% higher than your actual Texas qualifying power.

Build your own Texas PITI estimate: purchase price × your estimated local tax rate ÷ 12 = monthly taxes. Herring Bank’s mortgage team can give you accurate county-specific tax rate estimates for specific areas you’re targeting. Add estimated insurance ($2,500–$4,500/year for most Texas homes depending on value, age, and location) and your estimated P&I based on your loan amount and program rate. This total PITI, combined with your existing monthly debts, divided by your gross monthly income gives you your back-end DTI — the primary qualifying metric.

Step 4: Working With a Texas Real Estate Agent

Texas uses the Texas Real Estate Commission (TREC) standard contract forms, and TREC-specific provisions — the option period, the Third Party Financing Addendum, the Survey Amendment — affect how you structure your offer. Work with an agent who regularly practices in your target area and understands Texas contract law, not just the national basics.

Key Texas contract features to understand before your first offer: the option period (typically 7–10 days, funded by a non-refundable option fee of $100–$500, giving you the unrestricted right to terminate for any reason and receive your earnest money back); earnest money (typically 1–3% of purchase price, held by the title company, refundable during option period and under specific contract conditions afterward); and the customary Texas practice that the seller pays for the buyer’s owner’s title insurance policy at promulgated rates (approximately $1,935 on a $350,000 purchase — confirm this is addressed in your offer).

Step 5: Home Inspection and the Option Period

Never waive the Texas option period on a resale home — it’s your primary risk management tool. The option period is when you conduct your inspection, review disclosure documents, and decide whether to proceed, negotiate repairs, or terminate without losing your earnest money. A standard home inspection costs $300–$600 and covers visible and accessible systems and components. For Texas homes, prioritize these additional inspections beyond the general inspection:

Foundation assessment by a licensed structural engineer: Expansive clay soils create differential foundation movement throughout North Texas, Central Texas, and Houston metro. A general inspector can note visible symptoms; a licensed structural engineer provides a professional opinion on severity, cause, and recommended remediation. $300–$500 well spent on any home over 15 years old in these markets. Foundation repair costs range from $3,000 (minor) to $60,000+ (significant differential movement).

HVAC inspection by licensed HVAC contractor: System capacity verification, refrigerant level check, coil condition, blower motor assessment, and remaining life estimate. Beyond what a general inspector typically covers. In Texas’s climate, knowing whether the system has 2 years or 12 years of remaining life is material to your offer terms.

Wood-destroying insect (WDI) inspection: Required for VA loans; strongly recommended for all purchases in central and east Texas where termite and carpenter ant activity is common. Treatment costs $400–$1,500; structural damage from undetected activity can be substantial.

Step 6: Appraisal, Underwriting, and Preparing for Closing

After option period expiration, your lender orders the appraisal through an AMC. The appraisal establishes value using comparable sales and evaluates the property against loan program requirements. Appraisals typically take 7–14 days from order to delivery. If the appraisal comes in below contract price: negotiate a price reduction, pay the gap in cash, challenge the appraisal with better comps, or terminate with your financing contingency intact (Third Party Financing Addendum language governs your right to terminate).

Underwriting review follows the appraisal. Respond to any conditions requests (Letters of Explanation, updated bank statements, clarifying documentation) within 24–48 hours — underwriting delays are usually borrower-caused by slow responses to conditions. Once “clear to close” is issued, the title company schedules closing.

Texas closings occur at title companies with an escrow officer, not at attorney offices (attorney closings are not required for Texas residential transactions). Bring government-issued photo ID and a wire transfer for your cash to close (personal checks not accepted at most Texas title companies). Review your Closing Disclosure carefully for accuracy — amounts must match within tolerance of your Loan Estimate. Close to end of month if you’re cash-constrained: closing on the 28th saves approximately 3 days × daily interest on your loan amount versus closing on the 5th.

Step 7: After Closing — Texas-Specific Actions

File your homestead exemption: Form 50-114, available from your county appraisal district website, due by April 30 of the year following your purchase. The $100,000 school district value reduction saves $800–$1,200/year beginning in year two. Also activates the 10% annual assessment cap, protecting you from rapid tax escalation in appreciating markets. Late filing means waiting another full year — set a calendar reminder for January 1 of the year following your closing.

Transfer your homeowners insurance: confirm the policy is in your name, effective as of closing date, with the lender listed as mortgagee/additional insured. Most closings handle this — verify the binder is correct before leaving the title company. Review your first mortgage statement: confirm the principal balance, escrow amount, and servicer contact information are accurate. Escrow shortfalls in year one (before the homestead exemption takes effect) are normal and expected — don’t be alarmed if your first escrow analysis in year two results in a payment reduction.