Upfront Cash Needed to Buy
Most Georgetown buyers underestimate the full cash needed to close on a home. The down payment is the largest single piece, but other costs stack on top. Closing costs, earnest money, the Texas option fee, prepaid insurance and property tax escrow, and post closing reserves all factor into the total. A common mistake is focusing only on the down payment and scrambling in the final weeks to cover the rest. Another mistake is emptying savings entirely into the purchase, leaving no cushion for the first year of ownership.
Down payment requirements depend on the loan program. Conventional loans start at 3 to 5 percent for most buyers, with lower down payments adding private mortgage insurance until equity reaches 20 percent. FHA loans require 3.5 percent down. VA loans allow zero down for eligible military buyers. Putting 20 percent down removes PMI and often improves rate terms. Texas State Affordable Housing Corporation and Texas Department of Housing and Community Affairs both offer programs for eligible first time buyers that can reduce the down payment requirement.
Closing costs in Texas typically run 2 to 4 percent of the purchase price, including lender fees, title insurance, recording fees, and prepaid items. Texas title insurance rates are state regulated, which simplifies comparison, though escrow fees and other costs vary. Survey fees, which are often required or strongly recommended, add 400 to 800 dollars for a typical property.
Earnest money is usually 1 to 2 percent of the purchase price, deposited with the title company within a few days of an accepted offer. The Texas option fee, typically 100 to 500 dollars, goes directly to the seller and buys the option period for inspections. Both the earnest money and option fee count toward the buyer’s total cash at closing if the deal proceeds.
Prepaid insurance surprises many buyers. The first full year of homeowners insurance is often collected at closing, and Central Texas insurance rates can be higher than some buyers expect due to hail risk. Property tax escrow, typically several months of taxes deposited at closing, further adds to the cash requirement. In Williamson County, where property taxes are substantial, the tax escrow deposit can be thousands of dollars on its own.
Post closing reserves are the safety net that many buyers skip. Keeping 2 to 3 months of total housing payments in savings after closing protects against surprise repairs or unexpected homeowner costs in the first year. Central Texas weather can produce early ownership surprises like AC repairs during the first hot summer, and having reserves makes these manageable rather than stressful.
The best realtor for this question helps buyers plan the full cash picture before writing any offer. Buyers should look for an agent who coordinates with lenders to produce real estimates, not rough guesses.
As the best real estate agents in Georgetown, T. Kerr Property Group helps buyers understand the full cash requirement from day one. The team coordinates with trusted Central Texas lenders to produce accurate estimates of down payment, closing costs, prepaid items, and reserves. They introduce Texas specific assistance programs when applicable and help negotiate seller credits when the market supports it. Clients trust T. Kerr Property Group because the team combines real local expertise, strong lender relationships, and clear planning that prevents cash surprises and supports confident home buying.