Texas First-Time Homebuyer Programs

Becoming a first-time homeowner is an exciting time, but also a time when you want to make sure you know all of your options. There are several first-time homebuyer programs within Texas that are available to help. In fact, as a borrower, you may be eligible to take advantage of these programs. 

The Texas Department of Housing and Community Affairs (TDHCA) offers several buyer programs for first-time home buyers. To be considered a first-time buyer, you must not have owned a home as your primary residence in the past three years. Additionally, if you are an honorably discharged veteran, you may be considered for a program through TDHCA. The benefits of TDHCA program highlights include:

  • Assistance with down payment and closing cost
  • Possible tax credit for annual interest paid on mortgage loan
  • Some programs can be combined for maximum benefits
  • Homes in “targeted areas” enjoy higher income and purchase price limits

Here are a few programs TDHCA and the state of Texas offer:

My Choice Texas Home

With My Choice Texas Home, you’ll have the option of conventional or government-backed 30-year fixed-rate loans. Even better news is that this loan is not restricted to first-time buyers. If you are deemed a qualified buyer, you can get assistance with both down payments and closing costs up to 5 percent of the amount of the loan. However, there are a few stipulations to consider. First, there are limits on income and purchase price. There is also a credit score requirement of at least 620. 

Texas Mortgage Credit Certificate 

As you may already know, when you obtain a mortgage, a portion of your payment includes interest charges that go to your lender – not the actual balance of the loan. With the Texas Mortgage Credit Certificate, you may be able to recoup a portion of that interest on your federal tax bill if you are a first-time homebuyer.

My First Texas Home Loan

If you’re looking for assistance with a down payment and closing costs, My First Texas Home Loan may be your best bet. This program includes a down payment and closing cost assistance of up to 5 percent of the mortgage amount as a no-interest, no-monthly payment second lien. With a 30-year, fixed-interest rate mortgage, this loan is available throughout Texas. To be considered eligible for this program, you will have to complete a certificate of completion before closing. Luckily, TDHCA offers a free, two-hour online course that would satisfy this requirement. However, other HUD-approved homeownership courses are also deemed acceptable. 

While this is considered a loan, the money that is provided for down payments or closing costs does not need to be repaid until the home is sold, refinanced, or paid off. As an added bonus, this loan can be combined with the Texas Mortgage Credit Certificate program to reduce your federal tax bill. 

One piece of information to note: Purchase price and income limits are higher for properties within areas where families earn less than 80 percent of the state’s median income. However, you can determine if a property is within this targeted area by checking out the TDHCA website

Texas Bootstrap Loan Program

Considered to be one of the more distinctive programs, the Texas Bootstrap Loan Program has you build your own home. This program allows you to be the “owner-builder.” In order to be eligible for this program, you will need  “reasonable” credit history and cannot have an annual household income higher than 60 percent of the state/local median family income. 

However, this can be labor intensive and not the best option for people who don’t have experience with home-building, and can take a lot of time. Plus, you are required to be under the supervision of a Nonprofit Owner-Builder Housing Provider, or NOHP, that is certified by Texas. The reason for this is to make sure you know what you’re doing and all laws are being followed. You’ll also be required to do at least 65 percent of the labor associated with the building of your home, and can’t have a debt-to-income ratio more than 45 percent. If you decide to apply for this program, you must live in Texas for at least 60 months. Unfortunately, the maximum benefit of the Texas Bootstrap Loan Program is $45,000; however, you can still look for finances from other places to utilize on top of this program.  

5 Star Texas Advantage Program

If you’re a Texas resident, you can participate in the 5 Star Texas Advantage Program. Offered by the Southeast Texas Housing Finance Corporation (SETH), this program helps eligible applicants with down payment and closing cost assistance in the form of a grant. In fact, the program provides up to 6 percent of the total loan in grant money. You can even choose the amount of assistant and loan option that best meets your needs. The only requirement is that you must purchase a home within the program’s perimeters (which is the entire state of Texas, except the city limits of El Paso, Grand Prairie, and Travis County) and all buyers on the mortgage must complete the online SEHT Homebuyer Education Class. 

Austin Down Payment Assistance Program 

If you’re looking for a program that helps low-income families by offering up to $40,000 in assistance funds, the Austin Down Payment Assistance Program may be the best bet for you. This program helps eligible applicants receive up to $40,000 to help cover costs such as a down payment, closing costs, and prepaid expenses that come along with buying a home. If you haven’t owned a home in the last three years, or have been displaced or divorced, you may be eligible for this program. However, there are limits, as you will have to purchase a single-family home or condominium within Austin’s Full Purpose city limits. Additionally, you have to fall within the low-income range, which is defined as at or below 80 percent median family income. 

Homes for Texas Heroes Program 

If you’re a teacher, police/correctional officer, firefighter, EMS personnel, or veteran, you may qualify for the Homes for Texas Heroes Program. This program will assist between 3 and 5 percent of the loan amount and a 30-year fixed rate mortgage, in addition to several rates and loan options. This admirable program hopes to help hardworking individuals reach their homebuying dreams by giving this money as a gift. This means there are no repayment terms and no requirements to stay within the home for a certain period of time. 

Professions eligible for the Homes for Texas Heroes Program: 

  • Allied Health Faculty Member
  • Corrections Officer
  • County Jailers
  • Emergency Medical Services Personnel
  • Fire Fighters
  • Juvenile Corrections Officers
  • Military Veteran
  • Nursing Faculty Member
  • Peace Officer
  • Professional Educator
  • Public Security Officer

Today’s mortgage rates in Texas

If you’re ready to start your homebuying process, Filo Mortgage can help make the process seamless. Contact us today for all of your homebuying needs, including to learn more about the various options available for you to obtain a mortgage, what the current mortgage rates are in Texas, and to figure out which first-time homebuyer loan in Texas is the right choice for you. Filo Mortgage is ready to help you achieve your homebuying goals. Call us today! 

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