Part 4: How Much Funds Are Needed to Purchase a Home in Frisco TX?

How Much Funds are Needed to Purchase a Home in Frisco TX?

There are some funds that are needed which are pretty self-explanatory. Not much elaboration will be needed. They are:

Down Payment

Depending on the type of your loan determines the minimum down payment you require.

  • FHA minimum down = 3.5% of home purchase price
  • Conventional minimum down = 5% of home purchase price
  • USDA minimum down = 0%
  • VA minimum down = 0%

There are possibilities where family members gift you the down payment. Check with the lender to see if this is a possibility for you.

Closing Costs

Fees you pay when you obtain a mortgage. Different lenders charge different closing costs. Some lenders require you to pay an upfront application fee and a credit report fee at the time when you submit a loan application. Some lenders do not. To find out the actual charges and upfront fees involved, speak to your preferred lender directly.

As the home buyer in Frisco TX, you *may ask for Seller to help with your closing costs. This is where negotiations are involved with the Seller. It is not always guaranteed. In most cases, Sellers can contribute up to a 3% of sales price towards closing costs in a conventional loan and up to 6% in an FHA loan. This closing cost (also known seller’s concession) will help with needing less funds to bring to the closing table. Depending on how much you receive from the Seller and how much your closing costs are, you may or may not need additional funds.

Your Frisco TX Realtor® and lender will be able to give you more specifics on your situation. Every transaction will be different.

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There are additional funds required to purchase your first home. They are:

Earnest Money

Earnest money is a deposit of good faith to show sellers you are serious in purchasing the property. In Frisco Texas, there must be monetary value for consideration of good faith. There is not a set standard amount.

  • Amount may be as little as $1 – if that is what is agreed between a Buyer and a Seller.
  • However, consideration of good faith has been typically $500 on lower end properties (less than $100,000)
  • $1,000 for every $100,000 purchase price.

Again note that these are customary numbers, and are not set. The final amount is negotiated between buyer and seller.

If your offer is accepted, the earnest money is deposited and cashed by the title company. Depending on where the transaction terminates, some or all of the earnest money is refunded back to the buyer. If this is true, the title company will send you a check (from them).

Earnest money is credited towards the purchase.

Option Fee

The option period is also known as a Termination period. The option period has a set time period along with the monetary value of this time period. The option period gives the buyers an unrestricted right to cancel the transaction for any reason – or no reason at all. At the same time, the Buyer  gives an agreed amount of money to the Seller for taking the property off the market during this time. The seller cannot accept another offer (unless a back-up offer) during the option period.

Amount of the Option Fee can be as low as $1 or as high as any amount. What is typical for an option fee could be in the $50 – $200 range. Remember, the period (days) and amount are negotiations between the parties to the contract.

The option fee may be credited (or not) towards the purchase of the home – as per agreed between parties.

Inspection Fee

During the option period (stated above), it is a good practice to hire a property inspector to inspect the house. A home inspection is a visual assessment of the property condition at time of inspection. The objective of a home inspection is to try to identify existing faults and identify potential problems.

A general home inspection in the Frisco TX area may cost from $250 and up. It depends on the age of the property and the size of the property. Every home inspector charges a different fee.

Caution: Do not just use the lowest priced inspector.

Your Frisco TX Realtor® should have several good recommendations for you.

It is also advisable to order a termite inspection. A termite inspection can cost around $75.

When the home inspector suspects further evaluation is needed on certain aspects of the home (foundation, water heater, a/c, heater, windows, plumbing, etc.), some of these trades may charge you trip charges.

All negotiations and responsibilities of repairs should be negotiated prior to option period expiring. If more time is needed, an extension of the option period should be discussed as quickly as possible. However, the extension is no guarantee. If the negotiations are not completed before the option period expires and prior to buyer opting to terminate the transaction, it is assumed that the Buyers purchase the property in its “as-is” condition.

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Appraisal Report

The appraisal report may be considered as a part of the closing cost. The appraisal report must be ordered when financing is in place. Lenders want to assure the property appraises for at least the loan amount. The appraisal fee usually cost $350 – $425 depending on the type of financing and the cost of the appraisal.

The lender may opt to charge the buyer to pay for the appraisal report upfront (prior to closing).

Pre-paid Items

Pre-paid items make up the closing costs. Depending on how much was negotiated with the Seller and lender’s requirements, some buyers must come up with their own pre-paid funds at closing.
These pre-paid items may include:

    • 1-year homeowner’s hazard insurance premium for the first year
    • Reserves for property taxes and insurance as required by lender
    • Pre-paid mortgage interests from the day of closing until the end of the month

It is advisable to close closer towards the end of the month to minimize pre-paid interests needed at closing or at the beginning of the month (first 7 days) to receive a lender credit.

If you do not have 20% down payment on your loan, you are also required to pay an upfront mortgage insurance premium. Check with your lender on the mortgage insurance premium. The more down payment you put towards your loan, the lower your mortgage insurance premium.

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Summary of funds required to purchase your Frisco TX home

In summary, here is a snapshot of the funds you require to purchase your first time home in Frisco TX:

  • Down Payment = Depends on your loan
  • Earnest Money = Typically $500 – $1,000 (or approximately $1,000 per $100,000)
  • Option Fee = Typically $50 – $200
  • Inspection Fee = Start around $250 – $450 (larger homes could possibly be higher)
  • Termite Fee = Start at $65 – $125
  • Appraisal Report = $350 – $450
  • Closing costs = Depends on your lender, when you close, etc.




Map of Frisco Texas


Contact 3:16 team REALTY (214) 783-2210 for more information about any of these homes, or assisting you in finding the best deal for your housing needs.
We can set up an appointment to meet and discuss.