Texas · First-time buyers

Texas first-time buyer programs, plainly

The two agencies

TDHCA is the state housing department. TSAHC is a nonprofit created by the state with the same job for its own programs. Neither one lends to you directly: you apply with a participating lender, who makes the loan under the program's rules, and the agency's help comes through that lender at closing. Each agency lists its lenders on its site.

TDHCA's programs

• My First Texas Home. For first-time buyers, which the program defines as anyone who has not owned a home in the past three years, plus veterans. A 30-year fixed FHA, VA or USDA loan, with down-payment and closing-cost help of up to a percentage of the loan amount (minimum credit score 620 at this writing; check TDHCA). The help is a second loan at 0% interest with no monthly payment; it is repaid when you sell, refinance, transfer or pay off the first loan, or stop living there. Income and purchase-price limits by county, a minimum credit score, and a homebuyer education course are required.
• My Choice Texas Home. The same shape, open to buyers who are not first-timers, and it allows a conventional loan as well as a government-backed one. The help is either a 0% deferred second loan repaid when you sell, refinance or pay off, or a 0% second loan forgiven after three years; the forgivable option carries a higher rate.
• Texas Mortgage Credit Certificate (MCC). Not a loan: a federal income-tax credit for a percentage of the mortgage interest you pay each year, for as long as you live in the home and keep the loan. It is for first-time buyers and veterans, and can be paired with a My Choice Texas Home loan or used on its own with a loan from outside the TDHCA programs (currently a credit of 20% of the interest, up to the federal cap; check TDHCA). The credit shows up on your tax return, not on the Loan Estimate, and if you sell within nine years a recapture tax can apply in some cases.

TSAHC's programs

• Homes for Texas Heroes. For people in a set list of public-service jobs: full-time public-school teachers, aides, librarians, counselors and nurses; police and public security officers; firefighters and EMS; corrections and juvenile corrections officers; veterans and active-duty military; and nursing and allied-health faculty. The agency's list is the one that counts.
• Home Sweet Texas. For anyone under the program's income limit who does not fit the Heroes list.

Both TSAHC programs are open to repeat buyers as well as first-timers. Both offer a 30-year fixed loan with help of up to 5% of the loan amount in one of three forms: a grant that is never repaid, a second loan forgiven after three years if you do not sell, refinance or move out, or a 0% deferred second loan repaid when you sell, refinance or pay off; the lender's offer says which. TSAHC also offers an MCC. Income limits apply by county and household size, and a homebuyer course is required.

For veterans: the Veterans Land Board

The Texas Veterans Land Board (VLB) runs a home loan program for Texas veterans, with its own rate, through participating lenders. It is separate from the federal VA loan benefit and can be combined with it; terms are on the VLB's site.

What the help really is

"Down-payment assistance" covers three different things, and the difference is thousands of dollars:

A deferred second loan is still a good deal for many buyers, because it costs nothing while you hold it. But it is a lien on the home, it is paid back out of your equity, and it affects a later refinance: the second loan has to be paid off or agreed to by the agency, and in Texas a later cash-out refinance would also have to fit under the 80% rule with the second loan counted.

The trade: the program sets the rate

Each program publishes its own rate for its loans, and the more assistance you take, the higher that rate tends to be. On a given day it may be above or below what the same lender would quote you on a plain loan. So the right comparison is the whole package: the program loan's rate and payment, with the help, against a plain loan's rate and payment, with your own down payment. The way to see it is two Loan Estimates from the same lender on the same day, one each way. How to compare two Loan Estimates shows what to line up, and the Loan Estimate checker reads each one's fees.

Worked example (illustrative)

A $300,000 purchase with a $290,000 loan. The rates and the assistance are made up to show the arithmetic; the real ones are on the agencies' sites and change often.

If the $8,700 is a grant, or a forgivable loan you keep past its forgiveness date, the plain loan's lower payment takes about 91 months, seven and a half years, to make up for it. If it is a deferred loan you repay when you sell or refinance, the help is a 0% loan, and the program costs you the $96 a month for as long as you keep it. If you could not buy without the help, the arithmetic is moot. If you could, run the numbers.

Before you count on any of it

• Income and price limits, the assistance percentage, the minimum credit score and the list of eligible jobs change, often every year. The agency's site is the only current source; this page is a map, not the terms.
• Funds are limited and a program can pause when its money for the year is spent.
• You must use a participating lender, and lenders' own fees still differ, so the lender is still worth shopping. Cities and counties run programs of their own that can sometimes be stacked; ask the lender.

Questions people ask

What is the My First Texas Home program?

TDHCA's program for first-time buyers (anyone who has not owned a home in the past three years) and veterans: a 30-year fixed loan from a participating lender with down-payment and closing-cost help as a 0% deferred second loan, repaid when you sell, refinance or pay off the first loan. Income and price limits apply by county. Check TDHCA's site for the current terms.

Do I have to be a first-time buyer for Texas down-payment help?

Not for all of it. TDHCA's My First Texas Home is for first-timers and veterans; its My Choice Texas Home and both of TSAHC's programs, Homes for Texas Heroes and Home Sweet Texas, are open to repeat buyers under the income limits.

Is Texas down-payment assistance a grant or a loan?

It depends on the program and the option chosen. TDHCA's My First Texas Home help is a 0% deferred second loan repaid when you sell, refinance or pay off; My Choice Texas Home offers that or a second loan forgiven after three years. TSAHC offers a grant, a forgivable second loan or a deferred one. The lender's offer and the Loan Estimate say which; ask before you sign.

Program names, eligibility, limits and assistance amounts are set by TDHCA, TSAHC and the VLB and change often; nothing here is a statement of current program terms, and comparemyloan is not affiliated with any agency. Figures are illustrative and are not a loan offer, approval, commitment to lend, or Loan Estimate. Your actual rates and fees depend on qualification with lenders. comparemyloan does not negotiate with lenders, lock rates, or take loan applications. This page is general information, not legal or tax advice.