Buying a Home in Austin, Texas

Buying a Home in Austin, Texas

Are you thinking about moving to Texas? Here is information about buying a home in Austin, Texas. Find out how to qualify for a mortgage today.

Are you looking to buy a home in Austin, Texas? Recently, U.S. News & World Report ranked Austin as one of the best cities to live in. 

The process of buying a home in Austin can be difficult, but with opportunities like DSCR loans, for example, it becomes easy. 

But first, you have to qualify for a mortgage.

There are many elements to consider before you start shopping for real estate. Going through a real estate agency and considering different loans is in your best interest.

This guide will show you the steps to take when moving through the buying process.

Buying a Home in Austin, Texas

First-Time Homeowners

As a first-time homeowner, there are a few things to take care of before applying for a mortgage. Your credit score and financial history determine your eligibility when applying for a loan. 

Here is some of the information you'll have to submit to apply for a mortgage:

  • Income
  • Assets
  • Credit Score

Not only do mortgage lenders need this information, but also the size of your downpayment. Your downpayment will impact your mortgage rate. 

Mortgages are either conforming or non-conforming loans. The key difference is that non-conforming loans don't have as strict guidelines as conforming loans. You can be approved for these loans with a lower credit score or even with no money down. 

Non-conforming loans are also applicable to those who have bankruptcy on their record. 

Different Types of Loans

There are many different types of loans and it's important to find the best one for your financial situation. Here is a list of a few types of loans:

  • VA loans
  • FHA loans
  • DSCR loans
  • Jumbo home loans

VA loans are for veterans as well as members of the armed forces and National Guard. If you qualify for a VA loan, you may be able to buy a home with no money down. 

FHA loans are non-conforming loans. With a credit score as low as 580 and only a 3.5% downpayment, you may qualify for this loan.

FHA loans during bankruptcy act in your favor because you have a larger chance of qualifying. For a first-time homebuyer with limited access to financial assets, an FHA loan is a great option. But it is important to consult with a mortgage broker before you make any decisions.

An experienced mortgage broker will explain your best options and choose the right loan for you. 

DSCR (debt-service coverage ratio) loans allow you to use rental income to apply instead of your personal income. In other words, mortgage lenders are measuring your current cash flow rather than your financial history. 

When the price of the home is too expensive for a conforming loan, that's when you get a Jumbo home loan. Just like its name, there is a larger amount of money at stake and that makes it riskier for lenders. 

The criteria for jumbo home loans are stricter because of the risk. Here is what you'll need to consider if you're applying for a jumbo home loan:

  • Credit score higher than 700 (and sometimes 720)
  • Debt-to-Income Ratio (some lenders cap at 45% DTI)
  • Cash reserves in your bank accounts
  • Full tax returns, W-2s, and 1099s
  • One to two home appraisals 

Moving to Austin

The Central Texas area has great appeal because of its high quality of life. The towns included are Austin, Killeen, College Station, Fort Hood, and Waco. Combined, these cities attract families, college students, and the military.

In fact, home values have increased by 25% in recent years.

There is a very different experience between buying and renting in Austin. The average rate in Austin is about $1,750 a month, while the average home value is $590,000. 

If you're planning to live in Austin for at least three years, you will get more bang for your buck if you buy a home. This is because of growing equity.

Your home is an investment. When you make a mortgage payment, a portion of it goes to your loan down each month. 

Different Areas of Austin

If you choose not to live in the bustling city, there are plenty of suburbs around the Austin area. Many families who want to settle down and can commute to work consider the suburbs.

Buda is southwest of downtown Austin. It is one of the fastest-growing suburbs, which means that available homes are running out quickly. If you manage to find your dream home, you can expect a price of no less than $230,000.

Round Rock, on the other hand, is north of downtown Austin. It is the "Sports Capital of Texas" with multiple baseball, softball, and soccer fields. For those who work in technology, it is home to the Dell Headquarters.

Though there are plenty more suburbs, there are great areas within Austin, as well. The neighborhoods of Allandale, Hyde Park, Rosedale, Windsor Park, and Travis Country should all be taken into account. 

Wherever you move to Austin, you will experience all of the benefits it has to offer. With 0% income tax and great weather, you are sure to have a great time. 

Buying a Home in Austin

Buying a home in Austin can seem tricky, but with the help of a mortgage broker, your job is easy. Instead of searching for the best loans yourself, your mortgage broker finds them for you.

Now that you know what materials you need to prepare, along with the different types of loans available, you can start to make your move. 

If you're interested in hiring a mortgage broker, contact us so that we can help you! 

About the Author

Brian Quigley
Brian Quigley
 NMLS# #244003

Brian Quigley has been in the Denver mortgage industry since 2003. Customer satisfaction has been his top priority while guiding clients through the home loan qualification process. He is proficient in all types of mortgage financing including FHA/VA, Conventional, USDA, Jumbo, Portfolio, 1031 Exchanges, Reverse Mortgages, Refinancing, Construction loans, and FHA 203K loans.

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