First-Time Homebuyer Programs in Texas

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Texas, where the average home value is $301,011, you would need a down payment of $60,202 to avoid buying private mortgage insurance.

Fortunately, first-time homebuyer programs in Texas are available to help you achieve homeownership. Some mortgages even allow first-time homebuyers to put less down on a home, but these usually have income requirements and require mortgage insurance. MoneyGeek found several state-specific and government-backed first-time homebuyer programs for Texans from different financial backgrounds.

Texas offers grants and loans to assist first-time homebuyers in covering both down payment and closing costs. We have compiled the first-time homebuyer programs offered by the Texas State Affordable Housing Corporation (TSAHC) and the Texas Department of Housing and Community Affairs (TDHCA) to help you find the best option for your particular needs and situation.

Under TSAHC, Home Sweet Texas provides a 30-year fixed-rate loan and up to 5% down payment assistance for low and moderate-income homebuyers. The loan can be an HFA conventional loan or any government-backed mortgage.

The down payment assistance can come in the form of a grant or a deferred forgivable second lien loan that only has to be repaid if you sell your home or refinance your mortgage within three years of the home’s purchase date.

The Homes for Texas Heroes program from TSAHC provides fixed-rate mortgage financing and down payment assistance for Texan homebuyers in eligible professions. Like the Home Sweet Texas program, it offers a 30-year mortgage along with down payment assistance up to 5%, either as a grant or second mortgage. If you opt for the assistance as a second mortgage, you will only have to repay it if you sell or refinance during the three-year period.

The Texas Mortgage Credit Certificate (MCC) program from TSAHC provides a federal tax credit to first-time homebuyers. The credit, which is equal to 15% of what you spent on mortgage interest, can be claimed every year for the life of the mortgage as long as the home remains the primary residence.

This is not a standalone program anymore. It can now only be obtained in combination with TSAHC's down payment assistance program. If you qualify for TSAHC’s Homes for Texas Heroes program, you will receive its MCC for free.

My First Texas Home, offered by the TDHCA, is designed to first-time homebuyers in Texas and those who haven’t owned a home in the past three years. The program provides a 30-year, low-interest rate mortgage with up to 5% of the first lien loan amount in down payment and closing cost assistance. The assistance is a no-interest deferred loan that must be repaid when you sell your home, refinance or pay off your mortgage.

My Choice Texas Home, another program from TDHCA, is available to first-time and repeat homebuyers. Similar to the My First Texas Home program, it offers a 30-year, low-interest mortgage with up to 5% of down payment and closing cost assistance. The assistance comes in the form of a second mortgage with no interest and monthly payments.

Through this program, you can get a Fannie Mae HFA Preferred conventional loan, in addition to government-backed loans. It’s worth noting, however, that it comes with higher income limits.

In addition to statewide first-time homebuyer programs in Texas, city-specific programs are available to help you pursue homeownership in your chosen city. Check out the table below for some of the cities in Texas that provide first-time homebuyer programs for potential residents.

In Texas, there are zero-down-payment loan programs available that allow you to purchase a home without putting any money down. USDA and VA loans are two government-backed options that offer no down payment requirements.

USDA loans are designed to assist low- to moderate-income homebuyers in rural areas. They are issued by the U.S. Department of Agriculture through its Rural Development Guaranteed Housing Loan program.

USDA loans offer several benefits, including low interest rates and zero down payments. They are intended to make homeownership more accessible for those who might not qualify for conventional financing. The program also provides flexible credit guidelines to help more families achieve homeownership.

To be eligible for a USDA loan, your property must be 2,000 square feet or below and located in a USDA-eligible rural area with less than 35,000 people. You also must meet certain income limits, which vary depending on where you live. For example, in Dawson County, Texas, the income limit for a four-person household is $60,000. In contrast, Borden County, Texas, has an income limit of $86,400 for the same household size.

VA loans are a type of mortgage issued by the U.S. Department of Veterans Affairs and are designed to help veterans, active-duty service members and eligible surviving spouses become homeowners.

VA loans offer several advantages, including the absence of a down payment requirement. They also do not require private mortgage insurance (PMI), which can save borrowers a significant amount of money over the life of the loan. Additionally, VA loans come with lower interest rates compared to private loans. As of July 2024, the APR for a 15-year fixed-rate VA loan is 6.13%, while the APR for a 30-year fixed-rate VA loan is 6.31%.

To be eligible for a VA loan, you must meet specific requirements related to your length of service or service commitment, duty status and character of service. You must also meet certain income limits depending on where you live and provide a valid certificate of eligibility (COE).

First-time homebuyers in Texas can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

FHA loans and conventional loans are the two most common types of mortgages. FHA loans require a minimum down payment of 3.5%, making them accessible for buyers with limited savings. Conventional loans can require as low as a 3% down payment for first-time homebuyers but generally have stricter credit score and debt-to-income ratio requirements than FHA loans.

Interest rates are another important factor to consider. As of November 2024, the current APR for a 15-year fixed-rate conforming loan is 6.03%, while the APR for a 15-year fixed-rate FHA loan is 8.49%. APRs on FHA loans can be higher because there tend to be more fees and extra costs associated with borrowing money on government-backed loans.

Use our FHA vs. conventional loan calculator to help you compare FHA and conventional mortgage programs and find the best option for you.

We answered some frequently asked questions about first-time homebuyer programs in Texas to help you get closer to homeownership.

Explore additional MoneyGeek resources for first-time homebuyers in Texas to help you with the homebuying process.