5 First-Time Homebuyer Assistance Programs in Texas

Texas is one of the fastest-growing states in America. Its relatively low cost of living and affordable housing continue to attract homebuyers from all over the country.

Communities throughout the Lone Star State stand to benefit from this robust housing industry, as homeowners tend to bring greater stability, resources, and commitment to their communities. This might be why Texas provides hopeful natives and transplants with multiple first-time homebuyer programs that can make achieving homeownership a little easier.

Types of down payment assistance programs in Texas

The Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC) are two organizations that offer educational resources and financial assistance services to hopeful Texas homebuyers.

Each program offered by these agencies has its own benefits, requirements, and specifications. The programs are designed to lessen the burden of down payments and closing costs, making it easier for applicants to earn a seat at the closing table without emptying their life savings.

Some programs can even be combined with federal assistance opportunities to further reduce the financial burden first-time homebuyers may face.

Understanding Down Payment Assistance Programs in Texas for First-Time Home Buyers

For many first-time home buyers in Texas, accumulating enough funds for a down payment is the most significant barrier to homeownership. Recognizing this challenge, the Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC) offer various programs aimed at providing financial assistance. These programs are tailored to support eligible Texans by reducing the upfront costs associated with buying a home.

The Top 5 Down Payment Assistance Programs in Texas

1. My First Texas Home Program: Offers a 30-year fixed-rate mortgage along with up to 5% of the loan amount in down payment and closing cost assistance. It's geared towards first-time home buyers and veterans.

2. My Choice Texas Home Program: Similar to the My First Texas Home Program but without the first-time home buyer requirement, making it accessible to a broader range of Texans.

3. Homes for Texas Heroes Program: Designed for Texas teachers, first responders, corrections officers and more, this program provides grants for down payment and closing cost assistance.

4. Home Sweet Texas Loan Program: Targets low-to-moderate income buyers in Texas, offering down payment assistance in the form of grants or deferred loans.

5. Texas Mortgage Credit Certificate Program: Offers qualifying first-time home buyers a mortgage interest tax credit that reduces a portion of federal income taxes paid each year.

Texas first-time homebuyer programs and requirements

Here’s what you need to know about the first-time homebuyer programs available in Texas.

My First Texas Home

My First Texas Home program is designed to help first-time homebuyers or those that haven’t owned a home in the past three years. The program is also available to veterans, even if they are currently homeowners.

Qualified buyers can receive a 30-year fixed-rate mortgage with flexible down payment and closing cost assistance, equal to up to 5% of the total loan amount.

To qualify, you must meet specified income limits, have a minimum credit score of 620, and meet debt-to-income ratio limits set by your lender. Once approved, applicants are required to remain in the home for three years before selling or refinancing. Keep in mind that other requirements may apply.

My Choice Texas Home

The My Choice Texas Home program offers one major advantage over many other assistance programs — there is no first-time homebuyer requirement. This gives all Texas buyers the opportunity to qualify for down payment and closing costs assistance.

If eligible, you can secure funding equal to up to 5% of the loan amount, though this program cannot be used with FHA, VA, or USDA loans.

Homes for Texas Heroes

The Homes for Texas Heroes program features 30-year fixed-rate mortgages with several rates and loan options for applicants working as:

• Military veterans
• Police and corrections officers
• County jailers
• Firefighters
• Public security officers

Once approved, applicants can receive funds equal to between 3% and 5% of the total loan amount. These funds can be placed directly toward a down payment and/or closing costs. What makes this program unique is that these funds are a grant, and no repayment is necessary. Borrowers can also opt to receive assistance as a deferred second lien loan. There is also no requirement to live in the home for a minimum number of years.

Home Sweet Texas

The Home Sweet Texas program provides both home loans and down payment funds for low-to-moderate income buyers.

As an applicant, you have two options for down payment assistance. You can choose funding in the form of a grant, which does not have to be paid back. Or you can opt to receive assistance as a deferred second lien loan. As long as you don’t sell or refinance within the first three years of ownership, the lien loan is forgivable.

Texas Mortgage Credit Certificate

The Texas Mortgage Credit Certificate (MCC) offers additional tax savings to Texas homeowners who qualify for the Homes for Texas Heroes or Home Sweet Texas programs. With the MCC, you can take advantage of dollar-for-dollar reductions on your federal taxes until the mortgage loan is paid off, potentially saving you thousands of dollars over the life of your mortgage.

You must be a first-time homeowner to qualify for the MCC. If the credit is used with a fixed-rate mortgage loan not provided by the Texas State Affordable Housing Corporation, no minimum credit score is required.

National first-time homebuyer loan programs

While assistance programs can help cover the costs associated with buying a home, you’ll still have to qualify for a mortgage to use them. Here are several types of mortgage loans current or soon-to-be Texans can consider and their qualification guidelines.

It’s important to note that not all loan programs are compatible with each homebuyer assistance program, so you’ll want to confirm you choose the right option to meet your needs.

Conventional loans

Conventional loans are offered by banks, credit unions, and direct lenders — and they’re the most common mortgage among homebuyers. You may be eligible for a conventional loan with a down payment of as little as 5% of the home cost.

You’ll also typically need a debt-to-income ratio under 43% and a minimum credit score around 640 to qualify.

FHA

Federal Housing Administration (FHA) loans are ideal for first-time homebuyers who don’t quite meet the stricter requirements of conventional loans. For example, you can purchase a home with as little as 3.5% down and a credit score as low as 500, though a higher down payment may be required with a lower score.

You also need a debt-to-income ratio lower than 43% and proof of employment with a steady income.

Learn more about FHA loan offerings at Better Mortgage.

USDA

The U.S. Department of Agriculture (USDA) guarantees loans with up to 100% financing in some rural areas of Texas. This means you might be able to own a slice of the Texas countryside without a down payment. However, USDA loans are only eligible in certain locations, so you’ll want to confirm the property you’re considering qualifies before applying.

VA

Veterans Affairs (VA) loans are exclusively for U.S. military members, including active duty, veterans, and their eligible family members. These loans typically offer lower interest rates compared to other loan types. And best of all — they don’t require a down payment.

Better Mortgage offers VA loans in TX. Learn more.

There is a funding fee to consider, but it can typically be rolled into your monthly payments instead of being paid upfront.

How to Apply for Down Payment Assistance in Texas

Applying for down payment assistance begins with researching the specific program that best suits your situation. Contacting the administering agency or a participating lender to discuss your eligibility and gather the necessary documentation is the next step. Typically, you'll need to provide proof of income, employment verification, and credit history among other documents.

TSAHC
HUD.gov Texas

Why choose Better Mortgage

The Texas real estate market, and property owners, are stronger because of these first-time homebuyer programs. With the help of these resources, your first home purchase could be closer than you think.

Once you’re ready to move forward with your home loan, Better Mortgage can get you pre-approved in as little as 3 minutes. Then, you’ll be well on your way to owning your Texas dream home, without giving up more of your savings than necessary.