Following the case of a family that started looking for a home in Austin with a budget of $540,000, we can see how recent market trends directly impact down payment plans.

According to Redfin, as of May 2026, the median home price in Austin is $542,000. This figure is 2.3% lower than the same period last year, which means the down payment burden for this family has become somewhat lighter.

The first calculations this family made were for down payments based on different types of loans. An FHA loan at 3.5% requires $18,970, while a 10% down payment amounts to $54,200. A Conventional loan at 5% requires $27,100, and a 20% down payment of $108,400 can be done without PMI.

After much consideration, the family chose a 10% down payment. This decision took into account their savings and the timing of closing, opting to move in sooner rather than taking on PMI.

One thing the family almost overlooked was property taxes. The average effective tax rate in Texas is around 1.58% (propertytaxrates.org, as of 2026), which may feel significantly higher for a family coming from a state with income tax.

The assistance program the family looked into was TDHCA's My First Texas Home. This program allows for a maximum of 5% of the loan amount to be provided interest-free, with repayment deferred until the sale or refinancing, requiring a credit score of 620 or higher and a three-year history of being without a home.

Such assistance can often resolve situations where down payment funds are insufficient, and thanks to this program, the family was able to meet their own funding requirements.

The most significant factor in the approval process was the credit score. As of July 2026, a score above 780 had a rate of 6.59%, 760s at 6.66%, 740s at 6.75%, and 700s at 6.91% (themortgagereports.com). The family improved their score by paying off credit card debt.

DTI should ideally be below 43% for backend, between 36% and 45% for Conventional, and below 28% for frontend (Consumer Financial Protection Bureau). Getting pre-approved first and avoiding new loans or job changes during the review process also helped.

The family received part of their down payment as a gift from their parents, and by preparing a gift confirmation letter in advance and timing the deposit two months before closing, they were able to proceed without additional documentation requests. In the income review, the last two years of employment history were crucial, and since the family moved to Austin, they needed to gather documents proving the employment type and income stability at their new job.

They did not just look at one lender but compared rates and fees from two or three places. In competitive markets, there are instances where the appraised value falls short of the offer price, so they left room in their down payment plan to cover that difference in cash. After pre-approval, they locked in the interest rate to reduce the risk of fluctuations until closing, confirming that the lock period typically ranges from 30 to 60 days to align with their closing schedule. Not only did they compare rates and fees from multiple lenders, but this also benefited the family.

They also checked their reserve funds, as being able to cover several months of payments after closing was important. In a competitive market like Austin, having extra funds can also be advantageous in negotiations, a realization the family came to later. Areas preferred by Korean families often have higher prices, so it's worth considering this when planning a down payment. However, school district boundaries change frequently, so it's advisable to verify the assigned school before purchasing. This article is not investment or legal advice, and consulting a professional before making any actual contracts is recommended.