Texas First-Time Buyer Playbook for a 7% Market: Pre-Approval, Down Payment Help, and Seller Concessions

A mortgage rate near 7% can make buying your first home feel out of reach. That worry is understandable. At the same time, the latest Freddie Mac weekly survey shows the average 30-year fixed rate eased to 7.32%. Its first drop in about two months. The 10-year Treasury is around 5%, a benchmark that can influence mortgage rates, though it doesn’t set your personal rate.

Here’s the bigger picture: Texas buyers have more room to negotiate than they did in a tighter market. Texas A&M’s latest metro figures show about 4.4 months of supply in DFW, 5.3 in Houston, 5.2 in Austin, and 6.1 in San Antonio. Nationwide, sellers outnumber buyers by a record gap, and price cuts and seller concessions are common.

That doesn’t mean every home is a bargain. It does mean you may have options beyond simply accepting the asking price. Let’s look at how to approach first time home buyer loans with a plan, and how to decide whether buying now could work for you.

Should you get pre-approved before touring homes?

Yes. A pre-approval helps you understand your financing options before you start making offers. It also gives sellers a clearer picture of your readiness to buy.

A useful pre-approval is more than a number on a letter. Ask your mortgage advisor to review:

• Your estimated monthly payment, including taxes, insurance, mortgage insurance, and HOA fees

• Your down payment and estimated cash to close

• Loan options that fit your situation

• Whether you may qualify for down payment assistance

• The payment at the full, permanent interest rate

Pre-approval isn’t a commitment to borrow or buy. It’s a way to get clear answers before you spend weekends touring homes.

How much house can you actually afford?

Start with the monthly payment that feels manageable, not the largest loan amount a lender may approve. Your budget should leave room for everyday expenses, savings, repairs, and the costs of owning a home.

In Texas, property taxes and homeowners insurance can make a meaningful difference to your monthly payment. Ask for estimates tied to the home and location you’re considering. A payment estimate that leaves those costs out can be misleading.

A lower advertised rate may also come with points or fees. Compare the full loan offer, including the interest rate, annual percentage rate (APR), fees, cash to close, and monthly payment. The goal is not just to find a home you can qualify for. It’s to find a payment you can live with comfortably.

Do you need 20% down, or perfect credit?

No. Those are two common first-time buyer myths.

Some low-down-payment options include:

• Conventional loans: Some programs allow as little as 3% down for eligible buyers.

• FHA loans: Eligible borrowers may be able to put 3.5% down.

• VA loans: Eligible veterans and service members may qualify for 0% down.

A smaller down payment can mean mortgage insurance or other costs, and eligibility depends on the loan program and your circumstances. But you don’t need to assume that 20% down is the entry fee for homeownership.

Perfect credit isn’t required either. Your credit profile affects the options and pricing available to you, but lenders and loan programs have different requirements. If you’ve been turned down elsewhere, asking about another option, or getting a second opinion, is a reasonable next step.

Could Texas down payment assistance help?

Possibly. The Texas State Affordable Housing Corporation (TSAHC) and the Texas Department of Housing and Community Affairs (TDHCA) offer assistance options through participating lenders.

Depending on the program and your eligibility, assistance may be structured as a grant or as a second lien. Some second liens may be forgivable after meeting program requirements; others may need to be repaid when you sell, refinance, or pay off your first mortgage. Income, purchase-price, credit, and other rules can apply, and program terms can change.

So ask early. Find out which programs are currently available for your county and situation, how the assistance works, and how it affects your rate, payment, and cash to close.

Can the seller help with closing costs or lower your rate?

In today’s Texas market, it’s worth asking. A seller concession is a credit that can help cover eligible costs at closing. Depending on your loan program and the seller-credit limits, it may help with certain closing costs, prepaid expenses, or a rate buydown.

Two common buydown approaches are:

• Temporary 2-1 buydown: The rate is reduced by two percentage points for the first year and one point for the second year, then returns to the full note rate in year three. At an illustrative 7.32% note rate, that would mean 5.32% in year one, 6.32% in year two, and 7.32% after that.

• Permanent buydown: Discount points are paid upfront to reduce the rate for the life of the loan.

A temporary buydown can ease the initial payment, but it doesn’t change the permanent note rate. You should understand, and be able to manage, the full payment when the temporary reduction ends. A permanent buydown may suit a different budget or plan. Your lender can compare both with a seller credit toward other eligible costs.

Seller credits have program limits and must be structured correctly. Ask your lender to confirm what your loan allows before you make an offer. A credit is useful only if it fits your loan and your actual closing costs.

Is waiting for lower rates always the safer move?

Not necessarily. Rates may rise or fall; nobody can promise where they’ll be next month. But waiting also has a cost that can be easy to overlook.

If rates fall, more buyers may return to the market. That can mean more competition for homes and less room to negotiate. In the current market, some sellers are reducing prices or offering concessions. Advantages that could become harder to secure if demand increases.

Buying now should make sense for your finances and your plans, not just because a market statistic looks favorable. If the payment works and you find a home you want to own for the long term, it may be worth exploring your options. If it doesn’t work yet, getting prepared now can help you move with more confidence later.

Is renting always cheaper than buying?

No. Renting can cost less in some situations, especially if you may move soon or homeownership costs would strain your budget. Buying can offer stability, but it also comes with taxes, insurance, maintenance, and upfront costs.

Compare the full costs for the home you’re considering and how long you expect to stay. Don’t rely on a simple rent-versus-mortgage comparison that leaves out the expenses of owning a home.

What should you expect from a mortgage partner?

I believe you deserve clear answers and steady communication, not a confusing, transactional process. Our team brings 30 years of combined experience in real estate and mortgage brokerage, plus access to 100+ wholesale lenders and no extra overlays of our own.

Our service standards include:

• a 12-day clear to close

• 96% approval rate

• 98% on-time closing record

• Tuesday and Thursday transaction updates

• Calls returned in under 60 minutes

• Availability from 8 AM to 8 PM, 365 days a year

Those standards don’t guarantee a particular loan approval or closing date. They do reflect how we work: stay responsive, explain the next step, and keep you informed.

Could a first home be within reach even with rates near 7%? Good question, and it’s worth asking. Let’s look at your budget, compare home purchase loans, and check whether assistance or seller concessions may fit. You can book a free mortgage consultation or visit Home Loans by Markus. Already have a loan offer? Ask for a second opinion before you decide.

Rate disclaimer: Mortgage rates change daily. The 7.32% figure and the market context in this article reflect information available in late October 2026; they are examples, not an offer, approval, or personalized rate quote. Your rate and loan terms depend on your qualifications, loan program, property, and other factors.