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2019 FHA Loan Limits in Texas

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The Texas real estate market enjoyed a boom during the past several years, with home prices rising consistently from 2012 through 2018. Growth slowed somewhat in 2018, however, which could be good news for homebuyers looking to purchase properties in the Lone Star State this year.

The median home price statewide is $231,660, though prices are substantially above that in major metropolitan areas. Homebuyers in Austin, for instance, will find a median sale price of $304,900. But not all metros exceed the state median — the median price in San Antonio is well under the state’s at $221,500.

The vast majority of Texans live in urban areas. Just over 3 million residents live in rural areas, while the remaining 25.2 million opt to live in the state’s metropolitan regions, according to 2017 data from the U.S. Department of Agriculture (USDA). Texas’s urban areas are currently growing by 1.7% each year. At that rate, the urban population will double within 40 years, which could significantly affect housing prices.

If you’re considering buying in either a rapidly growing Texas metro area or in a rural part of the state, you may be considering a mortgage backed by the Federal Housing Administration (FHA). An FHA loan could help you get into your new home that much faster, as the credit and down payment requirements are lower than you’ll find with conventional loans.

Texas had one of the highest rates of FHA loans granted in the country in 2018, making up 8.61% of total FHA-endorsed mortgages. Only California and Florida posted higher percentages, at 9.13% and 8.68%, respectively.

The amount you can borrow with an FHA loan in Texas will depend where you choose to move. The FHA annually sets new loan limits based on area housing prices. In Texas, loan limits for single-family homes vary from $314,827 to $395,600, depending on the county in which you choose to buy.

Texas FHA Loan Limits by County

County NameOne-FamilyTwo-FamilyThree-FamilyFour-FamilyMedian Sale Price
ANDERSON$314,827$403,125$487,250$605,525$112,000
ANDREWS$314,827$403,125$487,250$605,525$139,000
ANGELINA$314,827$403,125$487,250$605,525$137,000
ARANSAS$314,827$403,125$487,250$605,525$197,000
ARCHER$314,827$403,125$487,250$605,525$163,000
ARMSTRONG$314,827$403,125$487,250$605,525$183,000
ATASCOSA$359,950$460,800$557,000$692,200$313,000
AUSTIN$331,200$424,000$512,500$636,900$284,000
BAILEY$314,827$403,125$487,250$605,525$72,000
BANDERA$359,950$460,800$557,000$692,200$313,000
BASTROP$389,850$499,050$603,250$749,700$339,000
BAYLOR$314,827$403,125$487,250$605,525$115,000
BEE$314,827$403,125$487,250$605,525$139,000
BELL$314,827$403,125$487,250$605,525$171,000
BEXAR$359,950$460,800$557,000$692,200$313,000
BLANCO$314,827$403,125$487,250$605,525$175,000
BORDEN$314,827$403,125$487,250$605,525$164,000
BOSQUE$314,827$403,125$487,250$605,525$118,000
BOWIE$314,827$403,125$487,250$605,525$139,000
BRAZORIA$331,200$424,000$512,500$636,900$284,000
BRAZOS$314,827$403,125$487,250$605,525$233,000
BREWSTER$314,827$403,125$487,250$605,525$171,000
BRISCOE$314,827$403,125$487,250$605,525$101,000
BROOKS$314,827$403,125$487,250$605,525$55,000
BROWN$314,827$403,125$487,250$605,525$120,000
BURLESON$314,827$403,125$487,250$605,525$233,000
BURNET$314,827$403,125$487,250$605,525$191,000
CALDWELL$389,850$499,050$603,250$749,700$339,000
CALHOUN$314,827$403,125$487,250$605,525$136,000
CALLAHAN$314,827$403,125$487,250$605,525$163,000
CAMERON$314,827$403,125$487,250$605,525$105,000
CAMP$314,827$403,125$487,250$605,525$114,000
CARSON$314,827$403,125$487,250$605,525$183,000
CASS$314,827$403,125$487,250$605,525$84,000
CASTRO$314,827$403,125$487,250$605,525$82,000
CHAMBERS$331,200$424,000$512,500$636,900$284,000
CHEROKEE$314,827$403,125$487,250$605,525$119,000
CHILDRESS$314,827$403,125$487,250$605,525$83,000
CLAY$314,827$403,125$487,250$605,525$163,000
COCHRAN$314,827$403,125$487,250$605,525$75,000
COKE$314,827$403,125$487,250$605,525$75,000
COLEMAN$314,827$403,125$487,250$605,525$80,000
COLLIN$395,600$506,450$612,150$760,750$344,000
COLLINGSWORTH$314,827$403,125$487,250$605,525$66,000
COLORADO$314,827$403,125$487,250$605,525$145,000
COMAL$359,950$460,800$557,000$692,200$313,000
COMANCHE$314,827$403,125$487,250$605,525$111,000
CONCHO$314,827$403,125$487,250$605,525$159,000
COOKE$314,827$403,125$487,250$605,525$188,000
CORYELL$314,827$403,125$487,250$605,525$171,000
COTTLE$314,827$403,125$487,250$605,525$49,000
CRANE$314,827$403,125$487,250$605,525$155,000
CROCKETT$314,827$403,125$487,250$605,525$87,000
CROSBY$314,827$403,125$487,250$605,525$173,000
CULBERSON$314,827$403,125$487,250$605,525$122,000
DALLAM$314,827$403,125$487,250$605,525$90,000
DALLAS$395,600$506,450$612,150$760,750$344,000
DAWSON$314,827$403,125$487,250$605,525$85,000
DEAF SMITH$314,827$403,125$487,250$605,525$99,000
DELTA$314,827$403,125$487,250$605,525$81,000
DENTON$395,600$506,450$612,150$760,750$344,000
DEWITT$314,827$403,125$487,250$605,525$120,000
DICKENS$314,827$403,125$487,250$605,525$58,000
DIMMIT$314,827$403,125$487,250$605,525$64,000
DONLEY$314,827$403,125$487,250$605,525$89,000
DUVAL$314,827$403,125$487,250$605,525$55,000
EASTLAND$314,827$403,125$487,250$605,525$80,000
ECTOR$314,827$403,125$487,250$605,525$196,000
EDWARDS$314,827$403,125$487,250$605,525$92,000
EL PASO$314,827$403,125$487,250$605,525$157,000
ELLIS$395,600$506,450$612,150$760,750$344,000
ERATH$314,827$403,125$487,250$605,525$159,000
FALLS$314,827$403,125$487,250$605,525$176,000
FANNIN$314,827$403,125$487,250$605,525$148,000
FAYETTE$314,827$403,125$487,250$605,525$158,000
FISHER$314,827$403,125$487,250$605,525$55,000
FLOYD$314,827$403,125$487,250$605,525$66,000
FOARD$314,827$403,125$487,250$605,525$56,000
FORT BEND$331,200$424,000$512,500$636,900$284,000
FRANKLIN$314,827$403,125$487,250$605,525$197,000
FREESTONE$314,827$403,125$487,250$605,525$87,000
FRIO$314,827$403,125$487,250$605,525$84,000
GAINES$314,827$403,125$487,250$605,525$123,000
GALVESTON$331,200$424,000$512,500$636,900$284,000
GARZA$314,827$403,125$487,250$605,525$103,000
GILLESPIE$324,300$415,150$501,800$623,650$282,000
GLASSCOCK$314,827$403,125$487,250$605,525$221,000
GOLIAD$314,827$403,125$487,250$605,525$175,000
GONZALES$314,827$403,125$487,250$605,525$107,000
GRAY$314,827$403,125$487,250$605,525$82,000
GRAYSON$314,827$403,125$487,250$605,525$175,000
GREGG$314,827$403,125$487,250$605,525$159,000
GRIMES$314,827$403,125$487,250$605,525$136,000
GUADALUPE$359,950$460,800$557,000$692,200$313,000
HALE$314,827$403,125$487,250$605,525$105,000
HALL$314,827$403,125$487,250$605,525$55,000
HAMILTON$314,827$403,125$487,250$605,525$75,000
HANSFORD$314,827$403,125$487,250$605,525$102,000
HARDEMAN$314,827$403,125$487,250$605,525$61,000
HARDIN$314,827$403,125$487,250$605,525$171,000
HARRIS$331,200$424,000$512,500$636,900$284,000
HARRISON$314,827$403,125$487,250$605,525$175,000
HARTLEY$314,827$403,125$487,250$605,525$168,000
HASKELL$314,827$403,125$487,250$605,525$55,000
HAYS$389,850$499,050$603,250$749,700$339,000
HEMPHILL$314,827$403,125$487,250$605,525$117,000
HENDERSON$314,827$403,125$487,250$605,525$150,000
HIDALGO$314,827$403,125$487,250$605,525$125,000
HILL$314,827$403,125$487,250$605,525$115,000
HOCKLEY$314,827$403,125$487,250$605,525$118,000
HOOD$395,600$506,450$612,150$760,750$344,000
HOPKINS$314,827$403,125$487,250$605,525$133,000
HOUSTON$314,827$403,125$487,250$605,525$118,000
HOWARD$314,827$403,125$487,250$605,525$221,000
HUDSPETH$314,827$403,125$487,250$605,525$157,000
HUNT$395,600$506,450$612,150$760,750$344,000
HUTCHINSON$314,827$403,125$487,250$605,525$90,000
IRION$314,827$403,125$487,250$605,525$160,000
JACK$314,827$403,125$487,250$605,525$86,000
JACKSON$314,827$403,125$487,250$605,525$123,000
JASPER$314,827$403,125$487,250$605,525$101,000
JEFF DAVIS$314,827$403,125$487,250$605,525$177,000
JEFFERSON$314,827$403,125$487,250$605,525$171,000
JIM HOGG$314,827$403,125$487,250$605,525$75,000
JIM WELLS$314,827$403,125$487,250$605,525$88,000
JOHNSON$395,600$506,450$612,150$760,750$344,000
JONES$314,827$403,125$487,250$605,525$163,000
KARNES$314,827$403,125$487,250$605,525$102,000
KAUFMAN$395,600$506,450$612,150$760,750$344,000
KENDALL$359,950$460,800$557,000$692,200$313,000
KENEDY$314,827$403,125$487,250$605,525$125,000
KENT$314,827$403,125$487,250$605,525$83,000
KERR$314,827$403,125$487,250$605,525$206,000
KIMBLE$314,827$403,125$487,250$605,525$131,000
KING$314,827$403,125$487,250$605,525$114,000
KINNEY$314,827$403,125$487,250$605,525$115,000
KLEBERG$314,827$403,125$487,250$605,525$125,000
KNOX$314,827$403,125$487,250$605,525$50,000
LA SALLE$314,827$403,125$487,250$605,525$52,000
LAMAR$314,827$403,125$487,250$605,525$116,000
LAMB$314,827$403,125$487,250$605,525$75,000
LAMPASAS$314,827$403,125$487,250$605,525$171,000
LAVACA$314,827$403,125$487,250$605,525$146,000
LEE$314,827$403,125$487,250$605,525$136,000
LEON$314,827$403,125$487,250$605,525$119,000
LIBERTY$331,200$424,000$512,500$636,900$284,000
LIMESTONE$314,827$403,125$487,250$605,525$95,000
LIPSCOMB$314,827$403,125$487,250$605,525$102,000
LIVE OAK$314,827$403,125$487,250$605,525$118,000
LLANO$314,827$403,125$487,250$605,525$191,000
LOVING$314,827$403,125$487,250$605,525$65,000
LUBBOCK$314,827$403,125$487,250$605,525$173,000
LYNN$314,827$403,125$487,250$605,525$173,000
MADISON$314,827$403,125$487,250$605,525$124,000
MARION$314,827$403,125$487,250$605,525$113,000
MARTIN$318,550$407,800$492,950$612,600$277,000
MASON$314,827$403,125$487,250$605,525$216,000
MATAGORDA$314,827$403,125$487,250$605,525$144,000
MAVERICK$314,827$403,125$487,250$605,525$128,000
MCCULLOCH$314,827$403,125$487,250$605,525$86,000
MCLENNAN$314,827$403,125$487,250$605,525$176,000
MCMULLEN$314,827$403,125$487,250$605,525$124,000
MEDINA$359,950$460,800$557,000$692,200$313,000
MENARD$314,827$403,125$487,250$605,525$64,000
MIDLAND$318,550$407,800$492,950$612,600$277,000
MILAM$314,827$403,125$487,250$605,525$114,000
MILLS$314,827$403,125$487,250$605,525$140,000
MITCHELL$314,827$403,125$487,250$605,525$67,000
MONTAGUE$314,827$403,125$487,250$605,525$95,000
MONTGOMERY$331,200$424,000$512,500$636,900$284,000
MOORE$314,827$403,125$487,250$605,525$112,000
MORRIS$314,827$403,125$487,250$605,525$76,000
MOTLEY$314,827$403,125$487,250$605,525$63,000
NACOGDOCHES$314,827$403,125$487,250$605,525$142,000
NAVARRO$314,827$403,125$487,250$605,525$110,000
NEWTON$314,827$403,125$487,250$605,525$171,000
NOLAN$314,827$403,125$487,250$605,525$115,000
NUECES$314,827$403,125$487,250$605,525$197,000
OCHILTREE$314,827$403,125$487,250$605,525$104,000
OLDHAM$314,827$403,125$487,250$605,525$183,000
ORANGE$314,827$403,125$487,250$605,525$171,000
PALO PINTO$314,827$403,125$487,250$605,525$134,000
PANOLA$314,827$403,125$487,250$605,525$147,000
PARKER$395,600$506,450$612,150$760,750$344,000
PARMER$314,827$403,125$487,250$605,525$99,000
PECOS$314,827$403,125$487,250$605,525$80,000
POLK$314,827$403,125$487,250$605,525$118,000
POTTER$314,827$403,125$487,250$605,525$183,000
PRESIDIO$314,827$403,125$487,250$605,525$171,000
RAINS$314,827$403,125$487,250$605,525$109,000
RANDALL$314,827$403,125$487,250$605,525$183,000
REAGAN$314,827$403,125$487,250$605,525$144,000
REAL$314,827$403,125$487,250$605,525$150,000
RED RIVER$314,827$403,125$487,250$605,525$80,000
REEVES$314,827$403,125$487,250$605,525$71,000
REFUGIO$314,827$403,125$487,250$605,525$144,000
ROBERTS$314,827$403,125$487,250$605,525$136,000
ROBERTSON$314,827$403,125$487,250$605,525$233,000
ROCKWALL$395,600$506,450$612,150$760,750$344,000
RUNNELS$314,827$403,125$487,250$605,525$82,000
RUSK$314,827$403,125$487,250$605,525$159,000
SABINE$314,827$403,125$487,250$605,525$89,000
SAN AUGUSTINE$314,827$403,125$487,250$605,525$104,000
SAN JACINTO$314,827$403,125$487,250$605,525$91,000
SAN PATRICIO$314,827$403,125$487,250$605,525$197,000
SAN SABA$314,827$403,125$487,250$605,525$82,000
SCHLEICHER$314,827$403,125$487,250$605,525$77,000
SCURRY$314,827$403,125$487,250$605,525$106,000
SHACKELFORD$314,827$403,125$487,250$605,525$87,000
SHELBY$314,827$403,125$487,250$605,525$101,000
SHERMAN$314,827$403,125$487,250$605,525$94,000
SMITH$314,827$403,125$487,250$605,525$192,000
SOMERVELL$395,600$506,450$612,150$760,750$344,000
STARR$314,827$403,125$487,250$605,525$66,000
STEPHENS$314,827$403,125$487,250$605,525$77,000
STERLING$314,827$403,125$487,250$605,525$114,000
STONEWALL$314,827$403,125$487,250$605,525$62,000
SUTTON$314,827$403,125$487,250$605,525$105,000
SWISHER$314,827$403,125$487,250$605,525$82,000
TARRANT$395,600$506,450$612,150$760,750$344,000
TAYLOR$314,827$403,125$487,250$605,525$163,000
TERRELL$314,827$403,125$487,250$605,525$102,000
TERRY$314,827$403,125$487,250$605,525$75,000
THROCKMORTON$314,827$403,125$487,250$605,525$97,000
TITUS$314,827$403,125$487,250$605,525$147,000
TOM GREEN$314,827$403,125$487,250$605,525$160,000
TRAVIS$389,850$499,050$603,250$749,700$339,000
TRINITY$314,827$403,125$487,250$605,525$147,000
TYLER$314,827$403,125$487,250$605,525$113,000
UPSHUR$314,827$403,125$487,250$605,525$159,000
UPTON$314,827$403,125$487,250$605,525$82,000
UVALDE$314,827$403,125$487,250$605,525$139,000
VAL VERDE$314,827$403,125$487,250$605,525$142,000
VAN ZANDT$314,827$403,125$487,250$605,525$140,000
VICTORIA$314,827$403,125$487,250$605,525$175,000
WALKER$314,827$403,125$487,250$605,525$147,000
WALLER$331,200$424,000$512,500$636,900$284,000
WARD$314,827$403,125$487,250$605,525$179,000
WASHINGTON$314,827$403,125$487,250$605,525$198,000
WEBB$314,827$403,125$487,250$605,525$167,000
WHARTON$314,827$403,125$487,250$605,525$147,000
WHEELER$314,827$403,125$487,250$605,525$98,000
WICHITA$314,827$403,125$487,250$605,525$163,000
WILBARGER$314,827$403,125$487,250$605,525$89,000
WILLACY$314,827$403,125$487,250$605,525$87,000
WILLIAMSON$389,850$499,050$603,250$749,700$339,000
WILSON$359,950$460,800$557,000$692,200$313,000
WINKLER$314,827$403,125$487,250$605,525$105,000
WISE$395,600$506,450$612,150$760,750$344,000
WOOD$314,827$403,125$487,250$605,525$139,000
YOAKUM$314,827$403,125$487,250$605,525$154,000
YOUNG$314,827$403,125$487,250$605,525$114,000
ZAPATA$314,827$403,125$487,250$605,525$53,000
ZAVALA$314,827$403,125$487,250$605,525$13,000
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How are FHA loan limits set?

The FHA sets a range of loan limits each year based on the housing market. For 2019, loan limits for single-family properties range from $314,827 at the low end to $726,525 for homes in high-cost areas. Loan limits can vary across the state, as is the case in Texas.

For instance, FHA loans in Bowie County, which is in the Texarkana metropolitan area, are capped at $314,827. But Collin County, part of the Dallas-Fort Worth-Arlington metropolitan area, has an FHA loan limit of $395,600. The difference is due to their median home-sale prices. Bowie County’s median sale price is $139,000, while Collin County’s is $344,000. To find out the loan limits for single- and multi-family properties in your county, see the Department of Housing and Urban Development’s (HUD) online FHA Mortgage Limits search tool.

Do you qualify for an FHA loan in Texas?

For an in-depth look at FHA loans overall, check out our complete guide. It covers borrower requirements, the pros and cons of FHA loans and the different types of products offered by the FHA.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Casey Hynes
Casey Hynes |

Casey Hynes is a writer at MagnifyMoney. You can email Casey here

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The Hidden Costs of Selling A Home

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

iStock

When you decide to sell your home, you may dream of receiving an offer well above your asking price. But putting your home on the market requires you to open your wallet, which could cut into your potential profit.

While some line items probably won’t come as a surprise, you may find that there are a handful of hidden costs.

Below, we highlight those unexpected expenses and everything else you need to know about the cost of selling a house.

The hidden costs of selling a home

It’s easy to fixate on the money you expect to make as a home seller, but don’t forget the money you’ll need to cover the cost to sell your home.

A joint analysis by Thumbtack, a marketplace that connects consumers with local professional services, and real estate marketplace Zillow, found that homeowners spend nearly $21,000 on average for extra or hidden costs associated with a home sale.

Many of these expenses come before homeowners see any returns on their home sale. Money is spent in three main categories: location, home preparation and location.

Location

Your ZIP code can influence how much you pay to sell your home. Many extra costs are influenced by regional differences — like whether sellers are required to pay state or transfer taxes.

For example, if you’re in a major California metropolitan area like Los Angeles, you may pay more than double the national average in hidden costs when selling your home.

Below, we highlight 10 of the metros analyzed in the Thumbtack/Zillow study, their median home price and their average total hidden costs.

Metro Area

Median Home Price*

Average Total Hidden Costs of Selling

New York, NY

$438,900

$33,510

Los Angeles-Long Beach-Anaheim, CA

$652,700

$46,060

Chicago, IL

$224,800

$18,625

Dallas-Fort Worth, TX

$243,000

$19,350

Philadelphia, PA

$232,800

$21,496

Houston, TX

$205,700

$17,477

Washington, D.C.

$405,900

$34,640

Miami-Fort Lauderdale, FL

$283,900

$24,241

Atlanta, GA

$217,800

$18,056

Boston, MA

$ 466,000

$35,580

Source: Thumbtack and Zillow analysis, April 2019.


*As of February 2019.

Generally, selling costs correlate with the home price, so expect to pay a little more if you live in an area with a higher-than-average cost of living or one that has a lot of land to groom for sale.

Home preparation

Thumbtack’s analysis shows home sellers may spend $6,570 on average to prepare for their home sale. These costs can include staging, repairs and cleaning.

Buyers are generally expected to pay their own inspection costs; however, if you’ve lived in the home for a number of years and want to avoid any surprises, you might also consider paying for a home inspection before listing the property for sale. Inspection fees typically range from $300 to $500.

Staging is often another unavoidable expense for sellers and can cost about $1,000 on average, according to HomeAdvisor. Staging, which involves giving your home’s interior design a face-lift and removing clutter and personal items from the home, is often encouraged because it can help make the property more appealing to interested buyers.

It also helps to have great photos and vivid descriptions of the property online to help maximize exposure of the property to potential buyers. If your agent is handling the staging and online listing, keep an eye on the “wow” factors they include. Yes, a virtual tour of your house looks really cool, but it might place extra pressure on your budget.

You could potentially save hundreds on home preparation costs if you take the do-it-yourself route (DYI), but expect a bill if you outsource.

Closing costs

Closing costs are the single largest added expense of the home selling process, coming in at a median cost of $14,,281, according to Thumbtack. Closing costs include real estate agent commissions and local transfer taxes. There may be other closing costs, such as title insurance and attorney fees.

Real estate agent commissions range from 5-6% of the home price, according to Redfin. That amount is further broken down by 2.5-3% being paid to the seller’s agent and the other 2.5-3% being paid to the buyer’s agent.

The taxes you’ll pay to transfer ownership of your home to the buyer vary by state.

Other closing costs include title search and title insurance to verify that you currently own the home free and clear and there are no claims against it that can derail the sale. The cost of title insurance varies by loan amount, location and title company, but can go as high as $2,000.

If you live in a state that requires an attorney to be present at the mortgage closing, the fee for their services can range from $100 to $1,500.

There are also escrow fees to factor in if you’re in a state that doesn’t require an attorney. The cost varies and is usually split the homebuyer and seller.

If you have time to invest, you could try listing the home for sale by owner to eliminate commission fees. One caveat: Selling your home on your own is a more complicated approach to home selling and can be more difficult for those with little or no experience.

Other home selling costs to consider

Now that you have an understanding of the costs that may get overlooked, remember to budget for the below expenses as you prepare to sell your home.

Utilities

It’s important that you make room in your budget to keep the utilities — electricity and water — on until the property is sold. (This is in addition to budgeting for utilities in your new home.) Keeping these services active can help you sell your home since potential buyers won’t bother fumbling through a cold, dark property to look around. It may also prevent your home from facing other issues like mold during the humid summertime or trespassers.

Be sure to have all of your utilities running on the buyer’s final walk-through of the home, then turn everything off on closing day and pay any remaining account balances.

Homeowners insurance

Budget to pay for homeowners insurance on the home you’re selling as well as your new home. You’ll still need to ensure coverage of your old property until the sale is finalized. Check the terms first, as your homeowners insurance policy might not apply to a vacant home. If that’s the case, you can ask to pay for a rider — an add-on to your insurance policy — for the vacancy period.

Capital gains tax

If you could make more than $250,000 on the home’s sale (or $500,000 if you’re married and filing jointly), take a look at the rules on capital gains tax. If your proceeds are less than the applicable amount after subtracting selling costs, you’ll avoid the tax. However, if you don’t qualify for any of the exceptions, the gains above those thresholds could be subject to a 15% capital gains tax, or higher. Consult your tax professional for more information.

How to save money when selling your home

Keep the following tips in mind when you decide to put your home on the market:

  • Shop around and negotiate. Don’t settle on the first companies and professionals you come across. Comparison shop for your real estate agent, home inspector, closing attorney, photographer, etc. It could also work in your favor to try negotiating on the fees they charge to save even more.
  • Choose your selling time carefully. The best time to sell your home is during the spring and summer months. If you wait until the colder months to sell, there may not be as much competition for your home.
  • DIY as much as possible. Anything you can do on your own to spruce up your home — landscaping, painting, minor repairs, staging — can help you cut back on the money you’ll need to spend to get your home sold.

The bottom line

There are several upfront costs to consider when selling your home, but planning ahead can help you possibly reduce some of those costs and not feel as financially strained.

List each cost you’re expecting to pay and calculate how they might affect the profit you’d make on the home sale and your household’s overall financial picture. If you’re unsure of your costs, try using a sale proceeds calculator to get a ballpark estimate of your potential selling costs. Be sure to also consult a real estate agent.

If you’re starting from scratch on your next home, here’s what you need to know about the cost to build a house.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Crissinda Ponder
Crissinda Ponder |

Crissinda Ponder is a writer at MagnifyMoney. You can email Crissinda here

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Mortgage

When Is the Best Time to Buy a House?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Fall may be the best time to look for a house
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Timing a new home purchase can be tricky. Should you start looking in the spring or in the summer? Should you wait for lower interest rates, or make an offer on a house you love even though the price is higher than what you budgeted? These are a few questions you may be pondering if you’re considering buying a house.

It’s common to look for cues about the best time to buy from the local housing economy or from what friends and real estate agents say, but the answer often lies closer to home — with an honest look at your personal finances. We’ll delve into some facts and figures to help you answer the question: When is the best time to buy a house?

The best time to buy a house is when you’re financially ready

Your kitchen table may be covered with listings of all the homes you’re interested in, detailed analyses of mortgage interest rate trends, historic home price appreciation and a plethora of other technical financial data about the timing of a home purchase. None of that information will matter if you aren’t financially ready to buy a home.

So how do know when you’re financially ready to buy your home? We’ve come up with five sings to help you determine if your homebuying timing is right.

1. You know your payment comfort zone

Before you ever speak to a loan officer, do some soul searching about your payment comfort zone — that is, how much you can comfortably afford to spend on a monthly mortgage payment alongside other regular expenses. This might be an unfamiliar concept, but taking the time to seriously consider your payment comfort zone may result in a different monthly payment target than the “maximum qualifying” number you’ll receive from a lender.

The Consumer Finance Protection Bureau considers 43% to be the maximum debt-to-income ratio (DTI) to meet the definition of a “qualified mortgage” — the stamp of approval from the regulatory powers that you’ll be able to afford your mortgage. Just multiply your monthly income by .43 and you’ll arrive at the government recommended total debt number. For example, if you earn $6,000 per month, your total debt including your monthly mortgage payment shouldn’t be more than $2,580. But is that really your payment comfort zone?

Start by asking yourself questions like how much do you take home every month after health insurance, retirement savings, local and federal taxes and Social Security deductions? What about your gym membership, the kids’ karate classes and the new organic food regimen that just pushed your grocery budget from $400 per month to $600?

When you start subtracting the realities of your month-to-month budget from your take-home pay, $2,580 of mortgage and other debt may not leave you much breathing room for a sudden pipe burst in a bathroom, or an air conditioner that takes its last breath on the hottest day of the summer.

Once you’ve worked the numbers backward from all of your monthly expenses — not just the ones the lender uses to get you preapproved for a mortgage — you’ll have an honest idea of what you can comfortably afford.

Here’s a side-by-side review of the money left over from a $6,000 monthly income when considering your organic fruit diet, martial artist kids and your monthly commitment to fitness, assuming you take home about 75% of your before-tax income.

Money left over just looking at 43% DTIMoney leftover after expense reality check
$6,000 before tax income$4,500 take-home pay
($2,580) suggested expenses for 43% DTI($600) (gym membership/karate/organic grocery markup)
($2,580) suggested by 43% DTI
$3,420 extra income suggested by lending guidelines$1,320 actual leftover real-life income

If your monthly income before taxes is $6,000 and you buy a house using the 43% rule based on your real life take home pay and additional expenses, you’ll have $1320 left over every month for gas, groceries, utility and all other bills.

Make sure that’s enough cushion for your month-to-month expenses, and if it’s not, start scaling back your monthly payment cushion until you’ve got more breathing room in your monthly budget to comfortably cover your day-to-day spending and other obligations.

2. You know your credit score and it’s as high as possible

Besides your DTI ratio, your credit score is the most important factor in getting you approved for and snagging the best rate on a mortgage. You’ll want to get your credit in good shape before you start shopping for a mortgage.

Start by checking your credit reports for errors because mistakes could be dragging your score down. You’ll want to initiate any disputes to correct errors at least six months before you shop for a mortgage, because lenders will require you to pause any disputes in order to get your mortgage approved.

Next, review your credit scores and the factors that may be bringing them down. (Find them at https://my.lendingtree.com.) While it does take time to improve your score, one way to boost it quickly is to pay down your credit balances. This will improve your utilization ratio, or the amount of credit you’re using compared to the amount of credit available to you. Try to do this at least three to four months before you apply for a mortgage so the credit bureaus have time to reflect any payments you’ve made. And focus on making all your credit payments on time.

3. You have your down payment and emergency fund saved

When you were in the process of determining your payment comfort zone, you probably spent some time crunching down payment numbers. Generally, the more you put down, the lower your overall payment will be.

A 20% down payment will help you avoid mortgage insurance on a conventional loan, but even if you don’t have that much saved, every extra 5% down will save you money. Mortgage insurance (also called private mortgage insurance or PMI) protects lenders against losses if you default on your loan. The less you put down, the more PMI you pay monthly on a conventional mortgage.

The table below illustrates the impact every additional 5% down makes on a $200,000 house if you have a 760 credit score and take out a 30-year fixed rate of 4.25% on a conventional loan in Arizona.

Down paymentLoan amountMonthly mortgage insuranceTotal monthly PIMI (Principal/interest/mortgage insurance)
5%$190,000$193.17$1,127.86
10%$180,000$130.50$1,015.99
15%$170,000$66.58$902.88
20%$160,000$0$787.10

In addition to your down payment, financial planners often recommend having three to six months’ worth of basic expenses in an emergency fund. Lenders also like to see extra money in the bank so they know you have the funds on hand to make extra payments or cover unexpected home repair expenses.

4. Your job is stable

It’s easiest to qualify for a mortgage if you have a salaried job or a full-time hourly position. If you have a position that only has a temporary base pay that will end in the near future, you may have a hard time getting approved. If you’ve been in a commissioned or self-employed position for at least two years and show enough income to qualify on your tax returns, then this is a good time to buy.

5. You plan to stay in your current location for 5-7 years

You may hear the expression buying a home is one of the biggest investments you’ll make. The most disciplined investors also talk about looking at the long term versus the short term.

When it comes to real estate, the “5-year home sale rule” refers to the fact that you have a better chance of recouping the cost of buying a home if you stay in the home for at least five years. By that time, you’ll have made 60 mortgage payments, and in most cases, you’ll see home values in your area gradually rise.

The combination of these factors usually results in a sweet spot for reselling after five years. This is important because as a home seller, you’ll be paying all of the real estate commissions for the services agents provide to sell your home. Those fees can be as high as 6% or more, and that’s money that comes off the top of the profit you make.

The example below shows how the 5-year rule works. It assumes you put down 5% on a $250,000 home with mortgage rate of 4.25%, the market appreciates 6% per year for the next five years (it has averaged 7-8% per year since 2007-08), and selling costs total 8%.

Year since purchaseHome value at 6% annual appreciation*Principal balanceTotal equitySelling costs 8%Net profit at sale
1$265,000$233,496.07$31,503.93$21,200$10,303.93
2$280,900$229,318.61$51,581.39$22,472$29,109.39
3$297,754$224,960.12$72,793.88$23,820.32$48,973.56
4$315,619$220,412.74$95,206.26$25,249.52$69,956.74
5$334,556$215,668.28$118,887.72$26,764.48$92,123.24
*Average appreciation rate since the 2007-08 financial crisis

It’s best to buy when rates are heading down

It’s impossible to know exactly what interest rates are doing, but if you see a lot of news about rates dropping, it’s worth it to get a payment quote. From December 2018 to August 2019, mortgage rates offered for many mortgage programs dropped nearly one percentage point, which has a huge impact not only on your monthly payment, but on how much interest you pay over the life of the loan.

We’ll look at how a one percentage point reduction in the interest rate can make a monthly payment difference for a $150,000, $250,000 and $350,000 loan. Using the 5-year rule, we’ll also look at how much extra equity and interest savings you realize by the time you make your 60th payment (12 months of payments x 5 years = 60 payments).

Loan amountMonthly payment at 4.75%Monthly payment at 3.75%Monthly payment savingsInterest savings over 5 years at 3.75%Extra equity at 5 years
$150,000$782.47$694.67$87.80$7,399.24$2,131.38
$250,000$1,304.12$1,157.79$146.35$12,331.08$3,552.30
$350,000$1,825.77$1,620.90$204.87$17,264.88$4,973.22

The bigger the loan amount, the more the impact on your monthly payment savings, total interest costs and equity build up. This makes shopping around for a mortgage and locking in a rate when you find the best deal even more important.

It’s best to buy when home prices are leveling off

The price you pay is just as important as the interest rate when it comes to buying. When home prices level off or rise at a slower pace, sellers tend to put their houses on the market at a more rapid pace, as they worry they may miss out on getting top dollar if prices stall out.

That’s good news if you’re a buyer, because more houses for sales may mean lower prices. Sellers may also consider contributing toward your closing costs or help you buy discount points to get a lower rate. This is also known as a “buyer’s market,” because it tends to be more advantageous to buyers than sellers.

Sales price also affects how much money you need to put down, so getting the best price will help you leave some of that down payment money in the bank to build up your emergency fund even further. Here’s an example of the effects of a 5% difference in price on your down payment, and assuming the seller is willing to pay 3% of your closing costs.

Sales price5% down payment10% down payment3% seller paid costs
$200,000$10,000$20,000$6,000
$210,000$10,500$21,000$6,300
$220,000$11,000$22,000$6,600

If you can buy a home for $200,000 versus $220,000, you’ll save $1,000 in down payment (assuming you’re putting 5% down), and the seller can potentially pay $6,000 in closing costs. The most common signs that the market is turning in your favor are “For Sale” signs. If you start seeing more of them popping up in your area or in a neighborhood you’ve had your eye on for a while, chances are you’re entering a buyer’s market.

The best times of the year to buy a home

Spring and summer are the most popular times to buy. Summer can be especially expensive for families to buy because sellers know there is pressure to find something and get settled before the start of the school year. Conversely, fall and winter are slower seasons for home sales. As a buyer, there are some months and even days when you might be able to save a bundle of cash if you’re able to make an offer and close during unpopular selling months.

The October homebuying advantage

October consistently ranks in the top three months for buyers, according to an analysis by ATTOM Data Solutions that examines dates from 2011 to 2018 during which sellers were least likely to charge a premium for single-family homes and condos. During this time, sellers are likely to accept premiums that are one-half to two-thirds lower than the highest premium months of the year (March to July).

With kids back in the full swing of school, sellers lose a big pool of prospective buyers, giving you an advantage as a prospective homebuyer.

December is the next best month for buying power

While many people are in the thick of holiday events and get togethers, homebuying may be the furthest thing from their minds. Sellers who need to sell in December will often give buyers extra motivation to consider their homes during the holiday season, and buyers prepared to forgo a cocktail party or two may be rewarded with substantial benefits.

Ringing in the new year with a cheaper home in January

If your New Year’s resolution includes home ownership, January may be a great month to look as well, according to ATTOM’s data. While most people are signing up for gym memberships, focusing on house hunting may save thousands of dollars in home costs instead of inches off your waistline.

Final thoughts about timing a home purchase

The good thing about home prices and interest rates is that they tend to move slowly, giving you time to prepare yourself for the homebuying journey. In order to take advantage of deals to buy a house, you need to have your financial house in the best shape possible.

Not only will you potentially save money with a lower rate or price on the home you buy, but the loan approval process will be much easier if you buy within your means and are able to demonstrate strong credit scores, solid income and plenty of money in the bank.

This article contains links to LendingTree, our parent company.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Denny Ceizyk
Denny Ceizyk |

Denny Ceizyk is a writer at MagnifyMoney. You can email Denny here

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