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Texas first-time homebuyer assistance programs

Rae Hartley Beck Suzanne De Vita
Written by
Rae Hartley Beck,
Edited by
Suzanne De Vita
Published on January 30, 2024 | 5 min read

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Texas’ economy is going strong and an influx of residents has pushed home prices up. If you’re a first-time homebuyer in the state, the Texas Department of Housing and Community Affairs and other organizations oversee several programs that could help you more easily afford a home. These initiatives for first-time buyers include loans and down payment assistance.

Texas first-time homebuyer loan programs

TDHCA My First Texas Home

For first-time homebuyers, the Texas Department of Housing and Community Affairs (TDHCA) offers the My First Texas Home program, a 30-year mortgage with a low interest rate and up to 5 percent in interest-free down payment assistance. You can obtain an FHA, VA or USDA loan through this program.

The assistance must be repaid when you sell your home, or refinance or pay off your mortgage.

You could be eligible for the program with a credit score as low as 620, but you must also meet the program’s income and purchase price requirements, which vary based on county. You must also take a homebuyer education course, available for free through Texas Homebuyer U.

This program is available to veterans as well as first-time buyers, or those who haven’t owned a home in the past three years.

TDHCA My Choice Texas Home

If you’re a first-time or repeat homebuyer, TDHCA’s My Choice Texas Home program offers a similar low-rate mortgage and up to 5 percent assistance to help cover your closing costs and down payment. This assistance is a zero-interest, no-monthly payment second mortgage.

In addition to an FHA, VA or USDA loan, you can also obtain a Fannie Mae HFA Preferred conventional loan through this program.

To qualify, your credit score can be as low as 620, but you must also be within income and purchase price limits.

TSAHC Home Sweet Texas Home Loan Program

The Home Sweet Texas Home Loan Program through the Texas State Affordable Housing Corporation (TSAHC) offers a 30-year fixed-rate mortgage and up to 5 percent down payment assistance, either as a grant or second mortgage. There’s no interest and no monthly payments on the second mortgage, and it’ll be forgiven after three years. (If you sell your home or refinance your mortgage before then, however, you’ll need to repay it.)

This program can be used to get a Fannie Mae HFA Preferred or Freddie Mac HFA Advantage conventional loan, an FHA loan, VA loan or USDA loan.

You don’t have to be a first-time homebuyer to be eligible, but you must have at least a 620 credit score and meet income and purchase price limits based on county, size of your household and whether you’re buying in a targeted or non-targeted area.

TSAHC Homes for Texas Heroes Program

If you work in a public service profession — such as a teacher, police officer or firefighter — or are an eligible veteran, you might qualify for TSAHC’s Homes for Texas Heroes Program. This program offers a 30-year mortgage along with down payment assistance up to 5 percent. Like the Home Sweet Texas Home Loan Program, the assistance can be either a grant or second mortgage.

You don’t have to be a first-time homebuyer, but your income and the home’s price can’t exceed income and purchase price limits. You can view a list of eligible occupations here.

Texas down payment assistance

While TDHCA’s and TSAHC’s programs can be paired with down payment assistance, certain cities in Texas might also have their own assistance programs, which are worth checking out if you’re buying a home in the area.

Local Texas homebuyer assistance

First-time homebuyers in Austin could qualify for up to $40,000 in down payment and closing cost assistance via a forgivable loan through the city. To qualify, your income must be below $65,450 if you’re a one-person household (the limits increase for bigger households), and you must be buying a home within the city’s limits. That home also can’t cost more than $614,054.70.

Other Texas homebuyer assistance programs

Mortgage credit certificate (MCC)

A mortgage credit certificate (MCC) is a federal tax credit for a percentage of your annual mortgage interest. The credit is equal to up to $2,000 per year.

You can combine the MCC with a My First Texas Home loan, but you’re not required to have that type of loan in order to be eligible. The certificate is only available to first-time homebuyers and veterans who are within income and price limits.

Other first-time homebuyer loan programs

In addition to Texas state homebuying programs, consider any of the nationally available first-time buyer loan programs, including:

  • FHA loans – If you have a lower credit score or limited savings, consider an FHA loan. These loans are widely available, have a minimum credit score of 580 and require a down payment as little as 3.5 percent.
  • VA loans – If you’re a member of the military or veteran, you could qualify for a VA loan, which doesn’t require a down payment.
  • USDA loans – USDA loans don’t have a down payment requirement, but are only available to borrowers buying in a USDA-eligible rural area. You typically need a credit score of 640 or higher to qualify.
  • Good Neighbor Next Door program – This HUD program has a very low down payment requirement on homes in certain areas, coupled with the ability to save 50 percent on the purchase price.

Get started

  • Do your homework. If you’re interested in a Texas Department of Housing and Community Affairs program, find an approved mortgage lender to help you get the process started. It’s helpful to have your documentation handy ahead of time, including three months’ worth of bank statements and two months’ worth of recent pay stubs. If you’re considering a program through the Texas State Affordable Housing Corporation, begin by taking this eligibility quiz. You can then browse through the organization’s list of lenders to learn more.
  • Work on your credit score. It’s the most important factor in determining your mortgage rate, so focus on boosting your number.
  • Compare lenders. Whichever lender or loan program you decide on, compare mortgage rates and loan offers with at least three lenders. This can help you find the most affordable mortgage for your first home purchase.
Written by
Rae Hartley Beck Arrow Right Icon
Contributing writer
Rae Hartley Beck is a writer and editor with over eight years of experience in personal finance. Her work has most recently appeared in Bankrate, MoneyWise and Investopedia. Rae specializes in credit card rewards, investing, real estate, home improvement, lending and financial advice for millennials, Gen Z, Gen Alpha and their parents.