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For many aspiring homeowners in Texas, the biggest obstacle is the upfront cost of buying a home. A Texas down payment assistance program helps overcome this hurdle by providing funds for the down payment and closing costs. These programs make homeownership possible for Texans who can afford monthly payments but haven't saved enough for the initial purchase.
Down payment assistance can cover two main expenses. The first is the down payment, which is a percentage of the home's price paid at closing. The second is closing costs, which are fees for services like appraisals and title insurance needed to finalize the mortgage. By covering these costs, assistance programs greatly reduce the cash needed to buy a home.
Key Organizations: Understanding TDHCA and TSAHC
Prospective homebuyers in Texas will primarily encounter programs from two key state-level entities: the Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC). While both work to make homeownership affordable, they have different structures.
The Texas Department of Housing and Community Affairs (TDHCA) is a state agency that administers state and federal funding to create affordable housing opportunities. As a government body, TDHCA focuses on serving low-income families and other underserved populations.
The Texas State Affordable Housing Corporation (TSAHC) is a self-sustaining nonprofit organization created by the Texas Legislature. Its nonprofit status allows it to offer unique programs to help Texans at various income levels, including both first-time and repeat homebuyers. Both organizations are state-authorized and provide stable, reliable support.
Types of Assistance Available: Grants vs. Forgivable Loans
The assistance provided through Texas programs comes in several forms. The structure of the aid determines whether it needs to be repaid and under what conditions, making the choice a strategic decision for the homebuyer.
Common Types of Down Payment Assistance
Choosing the Right Option for You The choice between a grant and a forgivable loan involves a trade-off. A grant might come with a slightly higher interest rate on your main mortgage. A forgivable loan may offer a lower mortgage rate but requires you to stay in the home for a few years to avoid repayment.
Discuss these options with your lender to determine which path best aligns with your long-term financial goals. A buyer planning to stay put may benefit from a forgivable loan's lower rate, while someone who might move soon may prefer a grant.
Several powerful programs are available to eligible homebuyers across the entire state, administered by the TDHCA and TSAHC. These programs provide a consistent foundation of support no matter where in Texas you plan to buy.
Programs from the Texas Department of Housing and Community Affairs (TDHCA)
The TDHCA offers two primary programs, both accessed through a network of TDHCA-approved mortgage lenders who handle the application process.
My First Texas Home
This program is designed for first-time homebuyers and military veterans. A "first-time homebuyer" is anyone who has not owned a primary residence in the past three years.
Program Features:
My Choice Texas Home
This flexible program is open to all qualifying Texas homebuyers, including repeat buyers and veterans, with no first-time homebuyer requirement.
Program Features:
Programs from the Texas State Affordable Housing Corporation (TSAHC)
TSAHC administers two popular statewide programs through participating lenders. Both offer assistance as either a non-repayable grant or a deferred forgivable second lien loan.
Homes for Texas Heroes Program
This program makes homeownership more accessible for Texans employed in certain "hero" professions.
Eligible Professions:
Qualified heroes can receive a grant or a 3-year forgivable loan. If they are first-time homebuyers, TSAHC provides a Mortgage Credit Certificate (MCC) for free, a savings of about $500.
Home Sweet Texas Home Loan Program
This is TSAHC's broadest program, designed for low- and moderate-income homebuyers who do not qualify for the Heroes program. It is open to Texans in all professions and includes both first-time and repeat buyers.
The program offers the same benefits as the Heroes program: a 30-year fixed-rate mortgage with assistance as either a non-repayable grant or a 3-year forgivable second lien loan.
General Eligibility for Statewide Programs: Credit, Income, and Education
While each statewide program has a unique audience, they share a set of common requirements. Meeting these foundational criteria is the first step for any potential applicant.
Common Eligibility Requirements
How to Apply Homebuyers do not apply for assistance directly with TDHCA or TSAHC. The entire process is managed through a network of approved private mortgage lenders. These trained experts will qualify you for a mortgage and handle the down payment assistance application. Your first and most important step is to connect with a participating lender.
Beyond direct down payment assistance, Texas offers a powerful financial tool for first-time homebuyers called the Mortgage Credit Certificate (MCC). This is a valuable tax benefit that can be combined with certain assistance programs to provide significant, long-term savings.
What is a Texas Mortgage Credit Certificate?
An MCC is a federal income tax credit for qualified first-time homebuyers. A tax credit is more powerful than a deduction because it provides a dollar-for-dollar reduction of your federal income tax liability.
The MCC allows a homeowner to claim a credit for a percentage of the mortgage interest paid each year, up to a maximum of $2,000 annually. For TSAHC programs, the credit rate is 15% of the annual interest. This benefit can be claimed every year for the life of the loan, as long as the property remains your primary residence.
Combining an MCC with Down Payment Assistance for Greater Savings
The MCC is most powerful when paired with a down payment assistance program. It can be combined with the TDHCA's My First Texas Home program and with TSAHC's DPA programs. Note that an MCC through TSAHC can now only be obtained in conjunction with one of their DPA options.
The MCC also serves as an immediate mortgage qualifying tool. Lenders can count the annual tax savings as additional income when calculating your debt-to-income (DTI) ratio. This can help a homebuyer on the edge of qualifying for a mortgage get approved or qualify for a larger loan.
In addition to statewide programs, many of Texas's major metropolitan areas offer their own localized down payment assistance. The Dallas-Fort Worth Metroplex is home to several such options.
Dallas County and City of Dallas (DHAP) Assistance Options
The Dallas Homebuyer Assistance Program (DHAP) is a key resource for homes within Dallas city limits. It offers up to $60,000 in assistance for households with incomes between 80% and 120% of the Area Median Income (AMI). Applicants must be U.S. citizens or permanent residents, complete a homebuyer education course, and work with a DHAP-approved lender.
Separately, the Dallas County Home Loan Counseling Center (HLCC) provides the Upfront Cost Assistance Program (UPCAP) and other counseling services for county residents. Statewide TSAHC programs are also fully available in the DFW area.
Fort Worth Homebuyer Assistance Program (HAP)
For homes within Fort Worth city limits, the Fort Worth Homebuyer Assistance Program (HAP) offers up to $25,000 for first-time homebuyers.
Key HAP Requirements:
Assistance in Surrounding Cities: Mesquite
The City of Mesquite's Down Payment Assistance Program (DPAP) helps first-time homebuyers within its city limits. The program provides a deferred forgivable loan of up to $10,000, covering 50% of down payment and closing costs. The loan is forgiven after five years of residency, and household income must be at or below 80% of the AMI.
The Houston metropolitan area features a diverse array of down payment assistance programs designed to address the unique challenges of its housing market.
Harris County Down Payment Assistance Program (DAP)
For homes in unincorporated areas of Harris County, the Harris County Down Payment Assistance Program (DAP) provides up to $23,800 to eligible first-time homebuyers.
Key DAP Requirements:
City of Houston Homebuyer Assistance Program (HAP)
Within Houston city limits, the Homebuyer Assistance Program (HAP) offers up to $50,000 to qualified first-time homebuyers. The aid is a no-interest loan that is forgiven after five years of residency.
This program is highly accessible, with no minimum credit score requirement. Eligibility is based on household income being at or below 80% of the AMI and having less than $30,000 in liquid assets. A separate program, Harvey Homebuyer Assistance Program 2.0 (HbAP 2.0), is available for residents impacted by Hurricane Harvey.
Southeast Texas Housing Finance Corporation (SETH) 5 Star Program
The SETH 5 Star Texas Advantage Program is a flexible option available in most of Texas, including the Houston region. It offers up to 5% of the loan amount as either a non-repayable grant or a 3-year forgivable second lien loan.
This program does not have a first-time homebuyer requirement. Eligibility includes a minimum FICO score of 640 and meeting program income limits. The program is not available in Travis County or the cities of El Paso, McKinney, and Grand Prairie.
The competitive Austin housing market has led to robust local programs aimed at helping residents achieve homeownership.
Travis County's Hill Country Home DPA Program
The Hill Country Home Down Payment Assistance (DPA) Program is available for home purchases anywhere in Travis County, including Austin. This program is not restricted to first-time homebuyers.
Program Features:
City of Austin Down Payment Assistance Program
For homes within Austin's full-purpose city limits, the Austin Down Payment Assistance Program offers up to $40,000. This program is for first-time homebuyers, including those who have been displaced or divorced.
Eligibility is targeted at low-income households, requiring income at or below 80% of the Median Family Income (MFI). The process requires completing a homebuyer education course and working with one of the city's approved lenders.
San Antonio's housing market is supported by innovative local programs that cater to a wide spectrum of income levels.
City of San Antonio's Homeownership Incentive Program (HIP)
The City of San Antonio's Homeownership Incentive Program (HIP) uses a unique two-tiered structure for homes purchased within city limits.
This tiered system makes assistance available to many families who might assume they earn too much to qualify for other programs.
Neighborhood Housing Services of San Antonio (NHSSA) Loans
The Neighborhood Housing Services of San Antonio (NHSSA) offers another option for first-time homebuyers in Bexar County, providing up to $20,000.
This assistance is a repayable second mortgage. A key benefit is its accessible credit score requirement of 580, which opens a path to homeownership for buyers who may not meet the higher thresholds of other programs.
Navigating down payment assistance is straightforward when you follow a clear path. These steps will help you effectively access the resources available to you.
Step 1: Find a Participating Lender
Your first and most important step is to connect with an approved mortgage lender. For nearly all Texas programs, you do not apply directly to the housing agency. Instead, a network of trained lenders manages the entire process.
These lenders are experts in the specific rules and requirements for each program. They will help you get pre-approved for a mortgage and handle the assistance application on your behalf. You can find lists of approved lenders on the websites for the Texas Department of Housing and Community Affairs and the Texas State Affordable Housing Corporation.
Step 2: Complete Mandatory Homebuyer Education
Nearly every down payment assistance program in Texas requires you to complete a homebuyer education course. These courses are designed to prepare you for successful, long-term homeownership.
The curriculum covers key topics like budgeting, credit scores, and the mortgage process. Courses are offered by HUD-approved agencies, often in convenient online formats, and you will receive a certificate of completion required for your loan application.
Step 3: Navigate the Approval and Closing Process
After partnering with a lender and finishing your course, the process follows a clear sequence:
To check your eligibility for TSAHC programs, you can take their quick online quiz.
Most Texas down payment assistance programs require a minimum credit score of 620. However, specific requirements can vary between lenders and the type of mortgage loan (FHA, VA, Conventional) you are pairing with the assistance. It is always best to check with a participating lender for their exact criteria.
Not necessarily. While some programs, like My First Texas Home, are specifically for first-time buyers, others such as the My Choice Texas Home program are available to repeat buyers. Many programs waive the first-time buyer requirement for military veterans and their spouses, expanding eligibility across the state.
Yes, most Texas DPA programs can be used to purchase various property types, including single-family homes, condos, and townhomes. The property must be located in Texas, meet the program's purchase price limits, and serve as your primary residence. Manufactured housing may have additional restrictions.
Yes, in most cases, you can supplement a Texas down payment assistance program with gift funds from a relative. These funds must be properly documented with a gift letter, and your mortgage lender will provide specific instructions to ensure the funds are verified and applied correctly at closing.
If your assistance was provided as a forgivable second-lien loan and you sell or refinance the home before the forgiveness period ends (typically 3-10 years), you will likely be required to repay the remaining balance. Grant-based assistance does not require repayment and is not affected by a future sale.
No, they are different but can often be used together. A Texas down payment assistance program provides upfront funds for your down payment and closing costs. The MCC is a dollar-for-dollar federal tax credit that reduces your annual income tax liability, helping with long-term affordability.
The assistance funds are not paid directly to you. Instead, the Texas down payment assistance program provider wires the funds to the title company handling your closing. The title company then applies the money directly toward your down payment and closing costs as part of the final transaction.
The approval timeline for a Texas down payment assistance program aligns with your overall mortgage approval process, typically taking 30 to 45 days. Your participating lender processes both the main home loan and the DPA application simultaneously to ensure a smooth and coordinated closing.
Absolutely. In addition to being eligible for statewide programs like Homes for Texas Heroes, qualified veterans are often exempt from the first-time homebuyer requirement. This allows Texas veterans and their spouses greater flexibility and access to the full range of down payment assistance options available.
Eligibility for a Texas down payment assistance program is based on your total annual household gross income, which is your income before taxes or other deductions are taken out. The income of all applicants on the mortgage loan is considered to determine if you meet the program's specific limits.
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