These Texas first-time home buyer programs serve a distinct purpose, and you may be eligible for more than one program if you meet the requirements.

Purchase of your first house may seem like an impossible dream until you learn about the numerous loans, grants, and assistance programs that are available to you as a first-time homebuyer. To assist qualified borrowers in the state of Texas, the Texas Department of Housing and Community Affairs, or TDHCA, offers first-time homebuyer programs through its Housing and Community Development Division.

These Texas first-time homebuyer programs can assist with down payments, closing expenses, and even provide tax relief on their federal income taxes if they meet certain requirements.

Let’s look at some of the programs available to first-time homeowners in Texas to see if they can make the process a little easier. Here are three of the most popular Texas first-time home buyer programs, which you can find below.

#1 My First Texas Home

First-time homebuyers and veterans can take advantage of the My First Texas Home program, which offers fixed-rate mortgages with terms ranging from 15 to 30 years.

The second loan of up to 5 percent of your mortgage amount, with no interest and no monthly payments, may also be available to you if you meet the requirements. This loan can be used to help you with the down payment and closing fees. If you don’t sell your house or pay off your mortgage, you won’t have to pay back this second loan.

To be qualified for this program, you will need to meet certain requirements depending on your credit score, current debts, and current earnings. Borrowers who are first-time homebuyers will also be required to take a homebuyer education course and submit proof of completion to the lender.

This means that not only will you as the buyer be required to qualify for a loan, but so will the property you wish to purchase. However, the house must meet certain conditions based on the purchase price and income limits of the surrounding area in order to qualify for the My First Texas Home loan program, which is available throughout the state of Texas.

#2 My Choice Texas Home

The My Choice Texas Home program is extremely similar to the My First Texas Home program in that it offers 30-year fixed-rate loans, which is similar to the My First Texas Home program. In addition to offering government-backed loans and even conventional loans, the My Choice Texas Home program is not limited to first-time homebuyers.

You will still need to meet the program’s eligibility requirements, which include having a credit score of at least 620. Your level of income will also be considered as a consideration in the decision. The home, too, must match the program’s conditions, which include things like the price of the acquisition.

Additionally, My Choice Texas Home can assist with the down payment and closing costs by providing a second loan up to 5 percent of the mortgage amount that is not required to be repaid until the home is sold or paid off completely. It is then recycled to assist another homebuyer in need of assistance.

A combination of the My First Texas Home loan and the My Choice Texas Home loan, as well as the Texas Mortgage Credit Certificate, which we will discuss further below, is also possible.

#3 Texas Mortgage Credit Certificate

Even if you are not aware of it, with every mortgage payment you make, a portion of the money goes towards paying down your mortgage and a portion goes towards paying the interest you are charged for borrowing that money. It is the purpose of the Texas Mortgage Credit Certificate to assist first-time homebuyers in Texas in recouping a portion of the interest they have already paid on their federal tax liability.

In addition to being used in conjunction with a first mortgage, the Texas Mortgage Credit Certificate also has the option of being used on its own. Your federal tax liability will be reduced on a dollar-for-dollar basis if you use the TMCC to reduce your liability.

The Texas Mortgage Credit Certificate has income and purchase price limitations when used as a stand-alone option, but there is no minimum credit score requirement when used as part of a package. Each year’s maximum tax credit is also limited, and it is determined by the percentage of mortgage interest paid. Although not valid for the life of the loan, the TMCC can be used each year for the length of time that the home is used as a principal residence.

Down Payment Grants in Texas

Apart from loan programs, there are a number of grants available to assist first-time homebuyers in Texas with the down payment required to purchase a house.

Hill Country Home Down Payment Assistance

Buyers of homes in Travis County, which includes the city of Austin, can benefit from the Hill Country Home Down Payment Assistance Program. The loan granted in the form of a grant can amount to up to 5 percent of the original loan amount of the home and can be used to help with the down payment or closing costs of the home acquisition.

5 Star Texas Advantage Program

In partnership with the Southeast Texas Housing Finance Corporation, the 5 Star Texas Advantage Program is available to you. In the form of a grant, eligible Texas residents can receive help with their down payment and closing costs.

Homeownership Across Texas Grant

There is no requirement to apply for the Homeownership Across Texas grant. The quantity of money you receive is determined by the type of initial loan you are granted.. Borrowers with conventional loans may be eligible for a 3 percent grant, while those with government-backed loans like as VA, FHA, or USDA loans may be eligible for a 5 percent award.

Home Star Program

The Home Star Program is also available to citizens of Texas through the Southeast Texas Housing Finance Corporation (SETH) Participants who meet the eligibility requirements can receive a grant for the down payment on a home worth up to 4% of the total loan amount.

Homes for Texas Heroes Program

Those who serve their communities, such as police officers and firefighters, teachers, and veterans, are the focus of the Homes for Texas Heroes Program. A down payment assistance program of 3 to 5 percent of the loan amount is available to those who meet the eligibility requirements. A 30-year fixed-rate mortgage with a variety of interest rates and financing options is also available through this program.

Buying a Home in Texas’s Big Cities

In many cases, the cost of a home in a major city is significantly higher than the cost of buying a home in a rural area or small town. Even in metropolitan real estate markets, it’s possible that competition will be even more intense. The following information will help you understand what to expect if you want to purchase a home in one of Texas’ largest cities. This section gives you a high-level summary.

Houston First-time Homebuyers

Home prices in Houston were $320,000 on average in April 2021, according to the most recent available data. According to Realtor.com, this represents a 14.3 percent increase year-over-year. Those with a household income at or below 80 percent of the area’s median income can apply for one of the DPA programs, which provides up to $30,000.

An interest-free, forgiven loan backed by a lien is provided as part of the aid. If the buyer stays in the home for five years, the loan is considered paid off. A portion of the original loan amount will be repaid to the City if the buyer sells or moves out of the home before the end-of-five-years period has expired.

San Antonio First-time Home Buyers

Home prices in San Antonio were $250,000 on average in April 2021, according to the most recently available information. According to Realtor.com, this was an increase from 7.8 percent year-over-year.

In the form of a “0% interest / no payments second loan,” this assistance can be used to cover the down-payment required by your lender as well as some of the additional costs associated with buying a home. Over the course of five years, the entire amount will be forgiven. In addition, the city of San Antonio offers two other down payment aid programs: one for first responders and another for city employees, respectively.

Dallas First-time Homebuyers

During the month of April 2021, the median listing price for a house in Dallas was $418,700. According to Realtor.com, this is an increase of 11.7 percent year on year. Having a household income that is no more than 80 percent of the area’s median income is required to qualify for homebuyer assistance in Dallas.

“The aid is a second lien in the form of a forgiving deferred debt,” according to the website. Terms of the loan include no monthly payments and interest-free terms prorated annually based on the time of affordability (residency term of the loan). It is necessary to make a partial repayment if the property is sold or leased or transferred or otherwise disposed of.

Ready to Buy a Home in Texas?

You should consider dealing with an experienced Texas realtor who is aware with the various financing and program options accessible to you, as well as the different neighborhoods in the state of Texas. To begin your home hunt, please contact us right away!