The Lone Star State of Texas is an ideal place to buy a home, with no state income tax and beautiful cities, buying a house in Dallas, Texas, is a great decision! Along with being the ninth most-populous city in the United States and the third-largest city in Texas, the city of Dallas has many opportunities for establishing a home, with more than a dozen distinct neighborhoods and communities divided into several geographical areas, each with their own vibe and attractions. You’re never far away from museums, performing arts, or buzzing nightlight options.
Dallas is a cosmopolitan city and known for having a wide variety of restaurants and shopping centres, making it a convenient area to live in. If the bustling city is too busy for you, just head to the outskirts and suburbs.
As with the home buying process in any state, there are specific laws and issues to be aware of before you start house hunting. So if you’re wondering “how to buy a house in Dallas”, you’ve come to the right place. Choosing and buying a home can be overwhelming, but if you follow the steps for buying a home in Texas, you will be unlocking your front door and moving in before you know it!
The Steps to Buying a House in Dallas
Since buying a home is probably the biggest investment you’ll ever make, it’s important that you start with understanding how much you can afford and how much it costs to buy a house in Dallas. You don’t want to buy a home that you can’t afford! In addition to considering the home’s purchase price, you also need to factor into your home buying budget things like property taxes, homeowner’s insurance, your down payment, inspection and appraisal fees, and ongoing home maintenance expenses.
Home Affordability Calculator
As a general rule of thumb, you should not spend more than 28-30% of your gross income on your rent or mortgage. So if you earn $3,500 per month before taxes, your mortgage should be $1,050 per month or less. This leaves you with enough money to pay your utilities, groceries, and other expenses after the mortgage is paid.
To get a better understanding of whether or not you can afford a home, input your details into a home affordability calculator like this one to see if your income and current level of debt can stretch to afford a mortgage and all the related housing expenses. Most homebuyers put 10 – 20% down when purchasing a home, so you’ll want to make sure you have money available to make your down payment in addition to being able to afford your monthly mortgage. (There are first time home buying programs and grants available to help reduce the down payment requirements).
Dallas Real Estate Market
It’s a competitive market, with homes in Dallas selling within 15 days on the market and fewer homes for sale this year compared to last. Be prepared to pay over the list price, as the average home sells for an average of 4% above the list price, with hot homes selling for about 10% over listing price. Your real estate agent will help you determine how much to offer in comparison to the listing price based on similar properties in the area and the current state of the real estate market.
Dallas home prices are up 12.8% in 2022 compared to 2021 with a median selling price of $439,000. Of course, Dallas home prices vary greatly depending on the suburb, neighborhood, and type of home. Here’s what you can expect a home to cost in several of the most desirable Dallas neighborhoods:
Dallas Neighborhood Home Prices
- Uptown Dallas: $477,500 ($322/square foot)
- South Dallas: $235,000 ($184/square foot)
- Bishop Arts District: $438,750 ($252/square foot)
- Lake Highlands: $450,000 ($226/square foot)
- Preston Hollow: $1,625,000 ($384/square foot)
- Northwest Dallas: $627,500 ($295/square foot)
- Casa View: $483,000 ($288/square foot)
- Swiss Avenue: $393,000 ($292/square foot)
- Junius Heights: $257,500 ($250/square foot)
- Vickery Place: $1,169,400 ($404/square foot)
Find the Right Mortgage and Get Pre Approved
You need a mortgage pre approval before you can officially begin house hunting. Pre approvals show the sellers that you are able to get a mortgage to buy the home you put an offer on, so your offers are more likely to be accepted. Many sellers will not entertain any offers from prospective buyers who have not taken the step to get a mortgage pre approval.
Pre approvals also help you set your home buying budget since the pre approval letter will indicate the amount of loan you are approved for. If you’re pre approved for $300,000, you won’t want to waste your time looking at homes in the $500,000 price range.
Find a mortgage lender and fill out the application for mortgage pre approval. You’ll need to verify your assets and liabilities, income and job history, credit scores, income tax returns, and more. If you’re self-employed, be prepared to provide even more documentation.. Most lenders will want your mortgage payment under 28% of your monthly pre-tax income and that you have a debt-to-income ratio of no more than 36%.
The lender reviews your application and either offers a pre approval letter, a pre approval with conditions, or denies the mortgage pre approval.
Types of Mortgages
There are several types of mortgages, including:
- Conventional loan – best option for borrowers with good or excellent credit scores and access to money for down payment
- Government-insured loan – mortgage option for borrowers with lower credit scores and limited funds for down payments
- Jumbo loan – best mortgage for borrowers with excellent credit who plan to buy an expensive home
- Adjustable-rate loan – best mortgage option for borrowers looking to stay in the home for a few years before selling or for individuals comfortable with the risk of having larger payments in the future
- Fixed-rate loan – best mortgage for borrowers who want the same payment every month throughout the entire mortgage
Dallas First-Time Homebuyer Programs
As a first-time homebuyer, you’re no doubt concerned about getting approved for a mortgage and having enough money for a down payment. Luckily there are down payment assistance programs and first-time homebuyer programs available in Texas to help!
- Texas Department of Housing and Community Affairs’ – My First Texas Home Program. This program provides 30-year mortgages with low interest rates and up to 5% interest-free down payment assistance. Mortgages may be FHA, VA, or USDA loans.
- Homebuying grants for first time homebuyers in Dallas-Forth Worth area
- FHA’s grants in Texas
- Dallas Homebuyer Assistance Program – for income eligible homebuyers
Find a Dallas Real Estate Agent
Real estate agents, also known as the buyers agent, are not required in Texas, but having help from experienced real estate agents minimizes errors or problems when you’re trying to buy a house in Dallas. There are many benefits of working with a buyers agent, including:
- Getting assistance from a realtor without paying for it (buyers agents are paid commission at closing)
- Buyers agents are committed to helping you buy the right home at the right price, handle all the paperwork, and connect you with inspectors and contractors as needed
- Buyers agents help find properties that meet your needs, and they have access to homes going up for sale before they are listed
- Buyers agents help negotiate the price of your home
Because the buyer’s real estate agent is so useful in the home buying process, it’s important that you select someone with experience. See if anyone you know can make referrals for real estate agents they had a successful experience with. If not, compare real estate agents online and meet with at least three agents before making your decision. You can use a service like Homelight to narrow down your choices.
Go House Hunting in Dallas
House hunting is the best part of buying a home! You can make a list of everything you want in your home, where the house should be located, and what aspects are important to you – such as location, school district, size of the lot, number of bedrooms, and more. Discuss your list with your buyers agent so they can help find homes that meet your needs. They often have access to home listings before the general public, so you can get a showing before someone else discovers the home. In a competitive housing market like Dallas, this is important as many homes sell within two weeks of being listed.
To increase your odds of finding a home in the area you desire, you can also search the internet for homes, set up alerts, and make a list of any that you’d like to see in person. Ask your real estate agent to schedule showings for the homes.
Find Your Dream Home? Submit an Offer!
When you find a home that has everything you want and need it’s time to submit an offer to the sellers. Your buyer’s agent will check comparable properties in the area to help you determine an appropriate offer, and will physically submit your offer to the seller’s agent. In Texas, home offers must be in writing.
The sellers can accept your offer or make a counter offer. If they counter with a different offer, you can choose whether to accept or reject it, and your buyers agent helps you negotiate until you reach an agreement or your offer is rejected. When the seller accepts your offer, you’ll make a good faith deposit.
At this stage of the home buying process, you’ll need to get the house appraised and inspected as part of the requirements in Texas. The inspector assesses the standards of the property and the appraiser determines the value of the property.
Close on Your New Dallas Home
If all goes well with the inspection and appraisal, and your mortgage is finalized and approved, the next step is to schedule the closing. You will have a final walk through of the home with your agent.
During the closing, there are funds that transfer from seller to buyer and buyer to seller related to the escrow of taxes and other items. You will sign all of the paperwork, receive your final escrow statement, and receive the keys to your new home!
Congratulations! All of your hard work is worth it and now that you found and purchased your new home, you’ll need expert Dallas movers to help you settle into your place as soon as possible. When you’re ready to move, give us a call at 469-772-4708.