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Texas First-Time Homebuyer 2022 Assistance Programs

The Texas Homebuyer Program / Getty Images

They say everything’s bigger in Texas. But, sadly, that statement might not apply to the size of your savings account. And maybe the last time you checked your balance, you thought you didn’t have enough for a down payment on your first home in Texas.

Think again.

You might be surprised to discover there are several programs designed to help first-time homebuyers get a down payment together—and land a low-interest loan—in the Lone Star State.

Here’s a closer look at some of Texas’ first-time homebuyer assistance programs and how they can help you purchase a house.

Texas homebuyer programs

The Texas Department of Housing and Community Affairs, or TDHCA, is a state agency backed by the governor and the legislature to provide quality and affordable housing. Texans can apply for loan programs that offer flex­i­ble down pay­ments as well as closing cost assis­tance pro­grams.

TDHCA works with participating lenders to offer homebuyers Federal Housing AdministrationDepartment of Veterans AffairsDepartment of Agriculture, and Fannie Mae and Freddie Mac loans with 30-year fixed-rate first mortgage loans. When borrowers land one of these loans, they might be eligible for more financial help from the TDHCA programs.

Eligibility for TDHCA homebuyer assistance

Specific income and house price limits vary across the state, but here’s what a typical Texas borrower needs to qualify for assistance.

  • Borrowers must have a minimum credit score of 620.
  • Borrowers must meet income and loan requirements.
  • The property for sale must be located in Texas and not exceed purchase price limits. (Borrowers who choose homes in designated “target areas,” which are areas of slow economic growth, may qualify with a higher income and may be able to exceed purchase price limits.)
  • Eligible properties include new or existing single-family homes, condos, manufactured homes, and duplexes (as long as the homebuyer occupies one unit).
  • Buyers must be approved for a mortgage with a lender participating in The Texas Homebuyer Program.

My First Texas Home

First-time homebuyers (meaning you haven’t owned a home as a primary residence within the past three years) and veterans can apply for the My First Texas Home program. It’s a 30-year mortgage with a low-interest rate.

Up to 5% of the total mortgage amount can go toward the down payment and closing costs as a zero-interest, no-monthly payment second mortgage. Even though this is technically a loan, the funds you receive for the down payment and closing costs don’t need to be repaid unless you sell the home, refinance it, or pay it off.

Additionally, you may be able to get the Texas Mortgage Credit Certificate, which kicks in a dollar-for-dollar reduction on your federal tax liability. The good news is you don’t need to have a minimum credit score to qualify. The catch? There are limited funds for this stand-alone product, so money may have run dry when you apply.

My Choice Texas Home

Though My Choice Texas Home is suited more for veterans and repeat homebuyers, first-time buyers can also apply.

This plan also provides a 30-year mortgage with a low-interest rate and up to 5% interest-free down payment assistance. A three-year forgivable second mortgage is available, too. And note that the income limits are higher than the limits for My First Texas Home.

Texas State Affordable Housing Corp.

The Texas State Affordable Housing Corp., or TSAHC, was created to help low- to moderate-income families obtain homeownership in underserved areas where affordable housing is not available. Though TSAHC funding doesn’t come from the state, it’s certainly worth considering if you want to buy your first home but need some financial help.

Home Sweet Texas Home Loan Program

Though the income limits for the Home Sweet Texas Home Loan Program—aimed at first-time borrowers—vary by county, it typically amounts to a gross household income of $97,000 or less.

If approved for the program, you’ll get a 30-year fixed-rate mortgage. In addition, you can choose down payment assistance as a grant, which you do not have to repay. Or you can choose a deferred forgivable second mortgage, which you have to repay only if you sell or refinance within three years. Down payment assistance is available for up to 5% of the total loan amount.

Homes for Texas Heroes Program

The Homes for Texas Heroes Program is virtually identical to the Home Sweet Texas Home Loan Program, with a couple of exceptions.

One, it is specifically for borrowers who are teachers, police officers, corrections officers, veterans, firefighters, or EMS personnel. Two, the income limits are higher than Home Sweet Texas Home—at up to 115% of the median family income in the area where the house sits, or up to 140% in targeted areas.

Financial assistance courtesy of your hometown

There are loads of programs to help first-time buyers across the state. Each has its own eligibility requirements, but they are certainly worth a closer look. You might be able to score down payment and closing cost assistance via second loans or grants that you might not have to repay as long as you live in the house for a specific required time.

For instance, the Homebuyer Assistance Program in Fort Worth offers up to $20,000 in mortgage assistance, and 3% of the loan amount can go toward closing costs and the remainder for the down payment. Or you can use all of the aid for the down payment. Note that borrowers do have to kick in $1,000 or 2% of the purchase price, whichever is less.

Head to your city government website and enter “first-time homebuyer” in the search field to see what local assistance is available to you.

What to do if your credit score isn’t up to snuff

If you discover your credit score doesn’t cut it for these programs, it doesn’t necessarily put the breaks on homeownership. With a little work, you can see improvements to your score when you make positive changes in a few months.

“The No. 1 thing to do is pay your bills on time every month,” says Sara Rathner, a personal finance expert at NerdWallet. “And not just credit cards and loan payments. Utility bills and rent may be reported to credit bureaus, too. Payments that are more than 30 days late can drop your credit score by around 100 points.”

While you’re making efforts to amp up your score, it’s best to turn down new credit card offers if you’re thinking of applying for a loan in a few months.

“The hard credit pull that’s part of the application process can ding your score by a few points temporarily,” adds Rathner.

How to get started

To find out if you’re eligible for the Texas programs, take the Texas Homebuyer Program’s readiness quiz. If it gives you the green light, your next move is to meet with a lender who participates in the program.

“I typically meet with clients right away to assess the application and confirm the info from the readiness calculator,” says Michael Peña, sales manager and loan officer at Academy Mortgage, a participating lender in the program.

If everything jibes after the initial meeting, Peña asks for a potential borrower’s pay stubs from the past 30 days, two years of tax returns, bank statements from the previous two months, and a copy of identification to confirm the information on the application.

The post Texas First-Time Homebuyer 2022 Assistance Programs appeared first on Real Estate News & Insights | realtor.com®.

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