Saving for a down payment can feel like the biggest hurdle to buying your first home. What many Texas buyers do not realize is that the state has programs built to help with exactly that.
Here is a plain-English guide to the main Texas homebuyer assistance programs, who they are for, and how to get started.
Quick answer: Texas offers down payment assistance through TDHCA's My First Texas Home and My Choice Texas Home programs, with up to 5% of the loan amount, and through TSAHC programs like Homes for Texas Heroes. Eligible buyers may also get a Texas Mortgage Credit Certificate, a federal tax credit of up to $2,000 per year.
First, You May Count as a "First-Time" Buyer Even if You Have Owned Before
For TDHCA's first-time buyer programs, a first-time homebuyer is someone who has not had an ownership interest in a primary residence in the past three years. So if you owned a home years ago and have been renting since, you may still qualify.
TDHCA also notes that certain exceptions to the first-time buyer requirement are available in targeted areas and for qualified veterans.
My First Texas Home (TDHCA)
The Texas Department of Housing and Community Affairs (TDHCA) runs My First Texas Home for first-time buyers. It offers a 30-year, fixed-rate mortgage with down payment and closing cost assistance of up to 5% of the loan amount.
That assistance comes as a 0% interest second loan, either forgivable after 3 years or deferred for 30 years. TDHCA's program chart lists a minimum credit score of 620, and income and purchase price limits apply.
Good to know: Some forgivable assistance may need to be repaid if you sell or refinance too soon. Ask your lender how the terms work before you choose.
My Choice Texas Home (TDHCA)
This program works much like My First Texas Home, with up to 5% in down payment assistance, but you do not have to be a first-time buyer to qualify.
Texas Mortgage Credit Certificate
A Mortgage Credit Certificate (MCC) lets eligible buyers claim part of the mortgage interest they pay each year as a federal tax credit, up to $2,000 per year. It is available to first-time buyers and veterans, either on its own or combined with My First Texas Home.
TSAHC Programs
The Texas State Affordable Housing Corporation (TSAHC) also offers statewide help:
- Homes for Texas Heroes is for public school teachers, first responders, corrections officers, veterans, and other eligible professions.
- Home Sweet Texas is for low- and moderate-income buyers, with no profession requirement.
Both TSAHC programs offer down payment assistance of up to 5% of the loan amount, require a credit score of at least 620, and have income limits. They also have no first-time buyer requirement.
How to Get Started
- Check the income and purchase price limits for your county on the TDHCA or TSAHC websites.
- Find a participating lender. These programs are offered through approved lenders.
- Take a homebuyer education course. TDHCA offers a free online course that satisfies its homebuyer education requirement.
- Ask about local programs too. Some Texas cities and counties offer their own down payment assistance.
Other Low Down Payment Options
Even without assistance, many buyers need less down than they think. FHA loans allow 3.5% down with a credit score of 580 or higher, some conventional loans allow 3% down, and eligible veterans may qualify for VA loans with no down payment. (See 7 Home Buying Myths, Plus One That's Only True in Texas.)
Program terms, limits, and availability can change. Confirm current details with TDHCA, TSAHC, or a participating lender.
Frequently Asked Questions
Who counts as a first-time homebuyer in Texas? For TDHCA's first-time buyer programs, it is someone who has not had an ownership interest in a primary residence in the past three years. Exceptions are available in targeted areas and for qualified veterans.
How much down payment assistance can I get in Texas? TDHCA's My First Texas Home and My Choice Texas Home programs, and TSAHC's programs, offer assistance of up to 5% of the loan amount for eligible buyers.
What credit score do I need? TDHCA and TSAHC both list a minimum credit score of 620 for these programs.
What is a Mortgage Credit Certificate? It is a federal tax credit for eligible buyers, worth up to $2,000 per year, based on part of the mortgage interest you pay.
Find Out What You Qualify For
It is always worth asking whether you qualify for help. Ryan Adams and The Adams Group TX can connect you with lenders who offer these programs and help you plan your home search around them. Call us at (832) 308-7633 or visit us at 5822 Sienna Parkway, Suite 500, Missouri City, TX 77459.
