Texas First-Time Homebuyer Programs

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Updated on Monday, April 1, 2019

Intro

When you’re planning to buy a home, there are a number of financial hurdles you need to clear, including saving for a down payment and closing costs. In fact, some borrowers who can afford a monthly mortgage payment struggle in their homebuying quest precisely because they can’t set aside the amount needed to put down and close.

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Texas homebuyers will find assistance on both fronts, as there are programs offered through both the Texas State Affordable Housing Corporation (TSAHC) and the Texas Department of Housing and Community Affairs (TDHCA) that provide affordable loans as well as help with down payment and closing costs.

Texas first-time homebuyer programs

Most of the programs you’ll find in this guide apply to homebuyers across the state, regardless of profession. However, the Homes for Texas Heroes program offered through the TSAHC is exclusive to those working in fields such as teaching, law enforcement and emergency services (see complete list below). Homebuyer assistance in Texas targets low- to moderate-income homebuyers.

Eligibility for Texas assistance

Eligibility for Texas homebuyer assistance vary based on each program’s income and purchase price limits. All of the programs listed in this guide are statewide. However, there are city- and county-level assistance programs as well. Katie Howard Claflin, director of communications and development at TSAHC, noted that many city-level assistance programs can be combined with state incentives, further reducing borrowers’ upfront costs.

TDHCA announced in February 2019 that it will put $166.3 million toward low-interest loans and down payment assistance in the coming year. These funds will be distributed as part of the My First Texas Home program described below on a first-come, first-served basis. Applicants must have a credit score of 620 or higher and must be a first-time homebuyer, a veteran or purchasing a property in a federally designated target area.

Targeted areas include those that suffer chronic economic distress and qualified census tracts — areas in which half of the local households earn an income 60% less than the area median income (AMI). If you buy a home in a targeted area through the Homes for Texas Heroes Loan Program, you’ll be granted higher income and purchase-price limits.

Homes for Texas Heroes Loan Program

What is it?

  • A 30-year fixed rate
  • Offers up to 3%-5% in down payment assistance
    • May receive 3%-4% as a grant
    • Five percent may be taken as a zero-interest second lien repayable when you sell, refinance or transfer the home
  • Available to first-time and repeat homebuyers

Requirements

  • Exclusive to the following professions (among a few others):
    • Firefighters
    • Police officers
    • Corrections officers
    • Teachers
    • Nursing faculty member
    • Veterans
    • Emergency services personnel
  • Income limit capped at 115% of the area median income (AMI)
  • Minimum credit score of 620 required; requirement increases to 680 for borrowers who choose to take down payment assistance as a second lien loan.

How to apply

You can take TSAHC’s eligibility quiz to find out whether you’re eligible for the Homes for Texas Heroes Loan Program. Claflin said eligible borrowers should contact participating lenders who will walk them through the qualification and borrowing process.

Homes Sweet Texas Home Loan Program

What is it?

  • A homeownership program that may be used anywhere in Texas and for whichever type of home you choose.
  • Borrowers may take 3%-4% in down payment assistance as a grant.
  • Borrowers may take 5% in down payment assistance as a second lien or soft second, with 0% interest and no monthly repayment obligation. The second loan can be repaid when the borrower sells, transfers or refinances the home.

Requirements

  • Income limit capped at 115% of AMI
  • Minimum credit score of 620 required
  • Borrowers who choose to take down payment assistance as a second lien loan will need a minimum 680 credit score

How to apply

To find out whether you qualify for the Homes Sweet Texas Home Loan Program, complete the short eligibility quiz on the TSAHC website.

My First Texas Home

What is it?

  • A 30-year fixed-rate mortgage
  • Offers down payment assistance
  • Offers up to 5% in closing cost assistance
  • Borrowers statewide can use the program, provided they work with participating lenders
  • Applies to U.S. Department of Veterans Affair (VA), Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA), and Fannie Mae HFA Preferred
  • Can be combined with Texas Mortgage Credit Certificate (MCC) tax-incentive programs

Requirements

  • Must be a first-time homebuyer (or must not have owned a home within the past three years) or be a veteran
  • Minimum credit score of 620
  • Income limits apply and vary based on family size. Maximum income limit ranges are as follows:
    • For non-targeted areas: $68,800-$107,410
    • For targeted area: $82,560-$126,700
  • Purchase price limits also apply, based on the following schedule:
    • A single-family unit in non-targeted areas: $271,164-$355,764
    • A single-family unit in targeted areas: $331,423-$434,823
    • A duplex in non-targeted areas: $347,178-$455,432
    • A duplex in targeted areas: $424,329-$556,639
  • Homebuyer education course is required
  • Applies to the following property types:
    • Single-family units
    • Manufactured homes purchased with FHA loans
    • Duplexes (some restrictions apply)
    • Condos

How to apply

Contact a participating lender to determine whether you’re eligible for the My First Texas Home program.

My Choice Texas Home

What is it?

  • Down payment assistance
  • Offers up to 5% of the loan amount in closing cost assistance
  • Applies to Fannie Mae Preferred conventional loans, as well as VA, USDA and FHA loans
  • Cannot combine with MCC program

Requirements

  • First-time and repeat homebuyers are eligible
  • Minimum credit score of 620 required
  • Homebuyer education course is required
  • Income limits apply, based on location and family size. Maximum limit ranges are below:
    • $68,800-$107,410 for non-targeted areas
    • $82,560-$126,700 for targeted areas
  • Purchase price limits are based on family size and location:
    • Single-family properties in non-targeted areas: $271,164-$355,764
    • Single-family properties in targeted areas: $331,423-$434,823
    • Duplexes in non-targeted areas: $347,178-$455,432
    • Duplexes in targeted areas: $424,329-$556,639
  • May be used for the following property types:
    • Single-family homes
    • Manufactured housing purchased with FHA loans
    • Duplexes (some restrictions apply)
    • Condos

How to apply

To learn more about the My Choice Texas Home program, reach out to a participating lender.

Mortgage Credit Certificate (MCC)

What is it?

  • A tax credit of up to $2,000 per year, based on mortgage interest paid.
  • May be combined with the Homes for Texas Heroes or Homes Sweet Texas Home down payment assistance programs.
  • Applies to single-family homes, condos, townhouses and manufactured homes (some restrictions apply).

Requirements

  • Must be a first-time homebuyer (defined as not having owned a home within the past three years)
  • No minimum credit score requirement, provided you have fixed-rate mortgage loan not issued through the TSAHC
  • MCC applies statewide

How to apply

Both TSAHC and TDHCA charge a $500 issuance fee for the Mortgage Credit Certificate, plus a $200-$225 compliance fee that is also associated with the credit. The $500 fee is waived for borrowers using a My First Texas Home Loan or a Texas Heroes loan, but borrowers are still responsible for the compliance fees.

As of Feb. 1, TDHCA will only issue MCCs in combination with My First Texas Home Loans. The certificates will no longer be offered as a standalone product. However, TSAHC offers MCCs as standalone products, including to borrowers who did not use one of the agency’s products.

National first-time homebuyer programs

Working through the available programs to determine your eligibility may take a little time, but it could yield thousands of dollars in savings, particularly if you live in a Texas city or county that offers assistance programs.

You may qualify for additional savings through national programs, so incorporate these into your mortgage strategy as well. LendingTree, which is MagnifyMoney’s parent company, offers the following guide to national first-time homebuyer programs that may help you maximize savings on your journey to homeownership.

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