The first number checked in a mortgage review is not the down payment but the DTI, or debt-to-income ratio. This refers to the proportion of your monthly income that goes toward loan repayments, and the higher this ratio, the more difficult it is to get approved. According to the Consumer Financial Protection Bureau, a backend DTI of 43% or lower is recommended, while an ideal frontend DTI, which only considers housing costs, is 28% or lower. For those looking for a home in Dallas, calculating this figure should be the first step.

The median home price in Dallas is around $420,000 as of May 2026, according to Redfin. However, prices can vary significantly depending on the area. The northern school districts, preferred by Korean families, tend to be higher, while prices decrease as you move south. School district ratings can be checked through indicators like GreatSchools or Niche, but since boundaries change frequently, it's advisable to verify the assigned school for the specific address before making a contract.

When determining the size of the down payment based on the $420,000 figure, the differences become clear. Applying the minimum requirement of 3.5% for FHA loans results in about $14,700, while a credit score below 580 requires 10%, or $42,000. For conventional loans available to first-time homebuyers, applying 3% results in a lower amount of $12,600, but this comes with PMI (private mortgage insurance).

Making a 20% down payment, or $84,000, allows you to start without PMI. However, for those moving from out of state, it's important to also consider Texas's unique property tax burden. Texas has no state income tax, but the effective property tax rate is around 1.6%, which is among the highest in the nation. If your previous state had lower property taxes, the monthly escrow amount may feel significantly higher than expected.

With a 20% down payment of $84,000 and an interest rate of 6.6%, the principal and interest would be calculated at around $2,150 per month. Additionally, Texas's unique property taxes and insurance premiums will be added separately each month, so it's better to include these items when comparing to rent.

If you are unable to cover the full down payment, it may be worth looking into the Dallas Homebuyer Assistance Program, or DHAP. This program supports down payments and closing costs for households earning 80% or less of the area median income, providing up to $50,000 in general areas and up to $60,000 in high-opportunity areas in the form of interest-free deferred loans. If you fulfill the residency requirement, the repayment obligation disappears, effectively lowering the DTI burden for families who were anxious about approval due to insufficient funds.

To increase your approval chances, having a good credit score is crucial. According to themortgagereports.com, as of July 2026, a score above 780 results in an average 30-year fixed rate of 6.59%, while scores in the 760s are at 6.66%, 740s at 6.75%, and 700s at 6.91%. While a 0.3% difference may seem minor, it can lead to significant repayment differences over a 30-year term.

Next to credit scores, practical methods to lower DTI are important. Paying off auto loans or credit card debt can lower the approval threshold, and obtaining pre-approval in advance can instill confidence in sellers when making an actual offer. It's advisable to prepare income documentation, such as pay stubs and tax returns, reliably.

If you start with a down payment below 20%, you can request PMI cancellation once the loan balance falls below 80% of the home's value as you pay down the principal. Calculating this point in advance can be a strategy to lower the initial down payment while reducing long-term burdens.

It's best to avoid purchasing a new car, getting a new credit card, or changing jobs right before closing. The loan review process may involve credit checks and income re-verification, so any changes in debt or income structure at the last minute can jeopardize approval. Having a few months' worth of repayment amounts set aside as reserves can also present stability during the review.

This article is not investment or legal advice, and tax and loan conditions may vary by county and lender, so it's advisable to consult with a professional before finalizing any contracts.