What Salary Do You Need to Buy a Starter Home in Texas? (2024 Data)

To comfortably afford a median-priced starter home in Texas in 2024, you need an annual salary of approximately $65,688. This calculation, based on a 10% down payment and a 7% mortgage rate, positions Texas as a more attainable market than many other Sun Belt states, despite a 31% increase in home prices over the past five years. This guide breaks down the key numbers and highlights the most and least affordable cities for first-time buyers.

How is the Affordable Salary Calculated?

The required salary is derived from standard mortgage qualifying criteria, which recommend that your monthly housing costs should not exceed 30% of your gross monthly income. For a starter home—typically a smaller, more modestly priced property suitable for a first-time buyer—priced at the Texas median of $274,260, the math is clear.

With a 10% down payment ($27,426) and a 7% mortgage rate on a 30-year fixed-rate loan, the principal and interest payment would be about $1,642 per month. Adding estimated costs for property taxes, insurance, and possibly Private Mortgage Insurance (PMI) since the down payment is less than 20%, the total monthly housing cost reaches approximately $1,642. To keep this within the 30% threshold, an annual income of $65,688 is needed.

Which Texas Cities Are Most Affordable for Starter Homes?

Texas housing costs vary dramatically by metro area. Based on recent market data, buyers will find the most accessible opportunities in these urban centers:

• El Paso: With a median home price significantly below the state average, El Paso offers exceptional affordability.
• Lubbock & Amarillo: These North Texas cities provide a low cost of living alongside stable housing markets, ideal for buyers prioritizing budget.
• Corpus Christi: Coastal living remains within reach here, with home prices that are manageable for median incomes in the region.

Prospective buyers should research each city's specific property tax rates, as Texas has no state income tax but relies heavily on local property taxes, which can significantly impact your monthly payment.

Where Are the Biggest Homebuying Challenges in Texas?

The most significant financial hurdles are concentrated in the high-growth centers of the Texas Triangle. In cities like Austin, Frisco, and Plano, demand vastly outpaces supply.

• Austin: The median home price is now around $525,000. To afford a home at this price point with a 10% down payment, a household would need an income of nearly $138,781.
• Frisco & Plano: These desirable Dallas-Fort Worth suburbs feature premium prices driven by top-rated school districts and extensive amenities, often requiring six-figure incomes to compete.

For buyers without substantial savings or dual incomes, these markets can be challenging to enter.

Why is Texas Still Considered an Affordable Market?

Despite rising prices, Texas outperforms many comparable states. For example, the salary needed for a starter home in Arizona is closer to $95,000. Texas received an A- for affordability on the 2024 State Housing Report Card, citing its robust construction pipeline. In 2024, Texas accounted for 15.3% of all U.S. home building permits, according to U.S. Census data. This high volume of new construction is a key factor in helping to stabilize prices over the long term.

Practical Advice for Texas First-Time Homebuyers

Entering the Texas market requires a strategic approach. Based on our experience assessment, following these steps can improve your chances of success:

1. Get Pre-Approved: Understand exactly how much a lender is willing to finance before you start shopping.
2. Explore First-Time Buyer Programs: Investigate FHA loans or state-specific programs like those from the Texas Department of Housing and Community Affairs, which may offer lower down payments and competitive rates.
3. Expand Your Search: Be willing to look in emerging suburbs or slightly less central neighborhoods to find better value.
4. Factor in All Costs: Remember that your monthly payment includes principal, interest, property taxes, and insurance—often referred to as PITI.

Building equity in a Texas home over a five- to seven-year period has historically proven to be a sound financial decision. With careful financial planning and a clear understanding of local market conditions, homeownership in the Lone Star State remains an achievable goal.