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2022 Texas First-Time Homebuyer Programs 

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Texas offers first-time homebuyer programs to help qualified individuals and families, primarily those with low- to-moderate incomes, pay for closing costs and down payments on their first home. To be eligible for these programs, you will need to meet specific requirements, including income limits, where you can buy and how long you will need to live in your home. Learn more about how these programs work if you want to buy a first home in the Lone Star State.

Texas statewide and local first-time homebuyer programs

Texas has two agencies that offer first-time homebuyer programs. The Texas Department of Housing and Community Affairs (TDHCA), a state-run agency, provides programs primarily based on applicants’ income. The nonprofit agency Texas State Affordable Housing Corporation (TSAHC) offers programs for first-time and other homebuyers. Both housing agencies service their programs, offering low-interest mortgage loans and down payment assistance via participating lenders.

Program nameAssistance amountAssistance typeWhere it’s available
My First Texas Home Varies depending on the type of mortgage30-year, low-interest rate mortgage with up to 5% of the first lien mortgage for closing cost assistance; also 0% interest second lien, or three-year forgivable second lienStatewide
Homes For Texas Heroes*Varies depending on the type of mortgage3% to 5% down payment assistance (DPA) (grant or deferred forgivable second lien) and low-interest fixed mortgage loanStatewide
Home Sweet Texas**Varies depending on the type of mortgageLow-interest fixed mortgage loan and down payment assistance (grant or deferred forgivable second lien)Statewide
Texas Mortgage Certificate Credit***Varies depending on the type of mortgageTax credit equal to 20% or 30% of the annual interest paid on the mortgage loanStatewide

*Homes for Texas Heroes Program offers home loans and down payment assistance for educators, including the following full-time positions in a public school district: school teachers, teacher aides, school librarians, school counselors, and school nurses; police officers, firefighters and EMS personnel; corrections officers; veterans and active military. 

**Funds may be limited, according to TDHCA. It can be used with Home Sweet Texas and Homes for Texas Heros programs. 

***You don’t have to be a first-time homebuyer to take advantage of this program.

What to know about different types of down payment assistance

Most first-time homebuyer programs offer down payment and closing cost assistance and access to an affordable fixed mortgage. One program is a special tax credit; other programs offer grants and/or forgivable second mortgages. If you use one of those programs, you will have to follow strict guidelines or risk having to pay the second forgivable lien back.

Here’s how each type of down payment assistance works.

  • Forgivable second mortgage. If you secure a forgivable second mortgage, you are usually required to remain in your home for a certain number of years. For example, if you are eligible for the My First Home Texas program and take out a second, three-year forgivable mortgage, you will be required to stay put for three years for the loan to be forgiven. Typically, forgivable loans do not require repayment or accrue interest. However, if you move or refinance before the specified time, you forfeit forgiveness and will have to pay the loan back in full to the lender.
  • Grant. If you are given a housing grant, you are simply awarded cash to pay your closing costs or down payment, rather than having a lien (as with a second mortgage) on your house. Some grants operate like forgivable loans when it comes to remaining in your house for many years. If you break the grant agreement, you may have to pay back all or some of the grant funds.

How Texas first-time homebuyer programs work

First-time homebuyers in Texas can take advantage of assistance programs and save further by pairing them with FHA, VA and USDA mortgages.

In addition, local county governments and nonprofits may offer additional assistance grants or loans throughout the year. If you seek additional assistance, it’s worth reaching out to the local nonprofits and housing authorities to ask for help, even after buying your first home. If you plan to stake your claim in Texas using a housing assistance program, you must follow these basic steps.

  1. TAKE AN ONLINE ELIGIBILITY QUIZ.Each program offers an ‘eligibility quiz’ on its homepage that you can take to find out if you are a match for a specific program.
  2. GET A MORTGAGE APPROVAL FROM A PROGRAM-APPROVED LENDER.The Texas State Affordable Housing Corporation (TSAHC) and the Texas Department of Housing and Community Affairs (TDHCA) provide links to lenders to choose from for each program. The lenders may vary depending on the program, but you must use a recommended lender.
  3. COMPLETE YOUR HOMEBUYER EDUCATION REQUIREMENTS.The TSAHC and the TDHCA require first-time homebuyers who want to utilize their programs to complete homebuyer education courses.
  4. LEARN THE INCOME LIMITS.First-time homebuyer programs primarily help low- to moderate-income earners get into the housing market. Carefully read the details of your program to find out if you qualify based on your income.
  5. KNOW THE PAYBACK REQUIREMENTS BEFORE YOU SELL OR REFINANCE.When you accept assistance from a first-time homebuyer program, you will likely be required to stay put in your home for a certain number of years. If you sell early or refinance, you may find you must pay some or all of the money back.

Texas first-time homebuyer program requirements

House hunters in need of assistance in Texas should learn the basic eligibility requirements for its programs, including credit score and income requirements. The table below outlines the different program requirements to help you figure out your best fit.

Program name Credit score minimumDTI ratio maximumMaximum income limitHow long you have to live in the home
My First Texas Home620Depends on loan/lenderDepends on the county and household size. Non-targeted areas: $75,100 to 119,370. Targeted areas: $90,120 to $138,460Three years if you use the three-year forgivable second lien. Otherwise, it is a 30-year fixed mortgage.
Homes For Texas Heroes620Depends on loan/lenderAny family size: $93,875 to $123,625 (non-targeted areas) Any family size: $105,140 to 133,280 (targeted areas)Six months for the TSAHC grant. Three years for the forgivable second lien.
Home Sweet Texas620Depends on loan/lenderAny family size: $56,240 to 133,280 (Depending on type of loan and area)Six months for a TSAHC grant. Three years for the forgivable second lien.
Texas Mortgage Certificate CreditN/AN/AIncome limits vary by countyN/A

Things you should know

If you are searching for your first home in Texas, many of the down payment assistance programs are available statewide. However, you can only use specific and recommended lenders for them. Check out the median income limits in Texas via the HUD website and enter your state and county information, as well.

National first-time homebuyer programs

Most first-time homebuyer programs in Texas require you to be approved for a mortgage from a specific lender. While the grants and second forgivable loans available can cover or help to cover closing costs and down payments, you still have to qualify for a mortgage to use them. First-time homebuyers (and others) can use national programs designed to specifically help borrowers with low to moderate income. Note: Not all loans listed below are exclusive to first-time borrowers, but many will take advantage of them.

Conventional loans. A conventional mortgage can be expensive, especially for first-time homebuyers. Conventional mortgages usually have higher loan limits, but these loans come with strict requirements. If you are interested in a conventional mortgage, two good options are Fannie Mae HomeReady® and Freddie Mac Home Possible® programs.

FHA loans. FHA loans are popular because of their lower credit score requirements (500 to 619) and lower down payment requirements (3.5%).

VA loans. The U.S. Department of Veterans Affairs (VA) guarantees VA loans for veterans and those serving in the armed forces. If you are neither of these things, skip this section. VA loans have no down payment requirements or loan limits. If you qualify for a Texas housing grant or second forgivable mortgage, you could use those funds to pay other fees or house-related expenses.

USDA loans. If you are fond of rural living, you could try a USDA loan from the U.S. Department of Agriculture (USDA). These mortgages provide 100% financing if you purchase in a USDA-designated area.

FAQs about Texas’s first-time homebuyer programs

Who qualifies as a first-time homebuyer in Texas?

Most Texas programs consider you a first-time homebuyer if you haven’t owned a home in the past three years. However, there are programs, like the Homes for Texas Heroes, that can be used by anyone who qualifies, not just first-time owners. If you are buying your second home or have questions regarding your status, it’s wise to reach out to the program administrators to ask about eligibility.

Can I qualify for down payment assistance in Texas?

If you meet the credit, income, and in the case of Homes for Texas Heroes, the professional requirements, and you take the required homebuyer education classes, you could qualify for homebuying assistance in Texas.

How much of a down payment do I need to buy a house in Texas?

It will depend on the type of mortgage you use. If you are eligible for a VA or USDA loan, you don’t need to provide a down payment. The minimum FHA down payment requirement is 3.5%, but some programs, like My First Texas Home, may provide up to 5% of the total mortgage to help you cover it.

Home price trends in Texas’s major areas

Home costs vary widely in the big state of Texas, depending on the county. For example, in Travis County (home to the state’s capital and popular city, Austin), median home prices were up 33.1% year over year in the fourth quarter of 2021, to $519,353, according to data from the National Association of Realtors (NAR). The average monthly mortgage payment in Travis County rose $546 to $1,991. In Harris County, home of Houston (the largest city in Texas), the median home price rose 14.3% year over year to $234,902. This translates to a monthly mortgage payment of $900, up $139 from the previous year.

 

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