Texas first-time homebuyer and down payment assistance programs

Saving for a down payment and closing costs is often the hardest part of buying a first home. Texas has statewide programs that can cover part of it, and some cities add their own. Here’s how the main programs work, who they’re for, and what to weigh before you use one.

Who counts as a first-time buyer

For the state programs, a first-time homebuyer generally means someone who hasn’t owned and lived in a primary residence in the last three years. So if you sold a home four years ago and have rented since, you may qualify again.

TDHCA and TSAHC also make exceptions for qualified veterans and for homes in certain targeted areas. And some programs don’t require you to be a first-time buyer at all, as the table below shows.

The statewide programs at a glance

The Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC) both work through approved lenders. You don’t apply to the agency directly; you apply for a mortgage with a participating lender.

Options change. On TDHCA’s rate notice for November 12, 2026, for example, My First Texas Home listed assistance options of up to 4%, while My Choice Texas Home listed options up to 5%. Your lender can tell you what’s available on the day you lock.

Grant, forgivable or repayable: what you’d owe

The word “assistance” covers three very different deals. Ask which one you’re getting before you sign.

• Grant. Free money that never has to be repaid. TSAHC offers this form.
• Forgivable second loan. A second lien on your home that’s forgiven after three years if you keep living there and don’t sell or refinance. TDHCA’s version also requires that you’re current on your first mortgage at the three-year mark.
• Repayable second loan. A 0% loan with no monthly payment. You repay it in full when you sell, refinance or pay off your first mortgage. With TDHCA’s version, it’s also due if the home stops being your primary residence.

Requirements to expect

• Income limits. Your household income must be at or below the limit for your county and household size.
• Purchase price limits. The home’s price must be within the limit for your county.
• Primary residence. The home must be where you live.
• Homebuyer education. TDHCA requires a pre-purchase homebuyer course certified by HUD. TSAHC recommends a TSAHC-approved course.
• A participating lender. Both agencies work only through approved lenders; TSAHC’s website has a lender search tool.

Mortgage credit certificates: a yearly tax credit

A mortgage credit certificate (MCC) turns part of the interest you pay each year into a federal tax credit, for as long as you live in the home. Both agencies offer MCCs to first-time buyers, and they can be paired with down payment help. TSAHC says its MCC is currently available only with its down payment programs, and Homes for Texas Heroes buyers get it at no cost.

Each program sets its own credit rate, so confirm the current one with your lender. A few IRS rules from Publication 530 apply to every MCC:

• You claim the credit on Form 8396 with your tax return.
• It can’t be more than your tax bill for the year, but unused credit can carry forward for up to three years.
• If you itemize, you reduce your mortgage interest deduction by the amount of the credit.
• If you sell the home within nine years, you may have to pay back part of the benefit (Form 8828).

A tax professional can tell you what the credit would be worth on your own return.

City and local programs

Some Texas cities offer larger, need-based help, often with their own income limits and a set period you agree to keep the home. Two examples:

• Dallas (DHAP). Up to $60,000 in designated High Opportunity Areas and $50,000 elsewhere in the city, for households at or below 80% of the area median income. It’s an interest-free, forgivable second loan, and the sales price limit is $342,000. BCL of Texas has managed the program since May 1, 2026.
• Houston. The city’s Housing and Community Development Department lists several homebuyer programs for households up to 80% or 120% of area median income. Its Homebuyer Assistance Program 2.0 lists up to $125,000 as a no-interest, forgivable loan. All of the city’s programs require an 8-hour HUD-approved homebuyer course.

City funding comes and goes. Houston’s site has noted that some programs stopped taking applications when funds ran out, so check the city’s page before you count on it. Other cities and counties run their own programs too; your city’s housing department is the place to start.

A worked example on a $290,000 home

Say you buy a $290,000 home with 3.5% down ($10,150), for a first mortgage of $279,850 on a 30-year fixed loan. Here’s what assistance at different levels would equal.

Try your own numbers in the mortgage calculator, and see what price range fits your budget with the affordability calculator.

How to get started

1. Check the current income and price limits for your county on the TDHCA and TSAHC websites.
2. Take a HUD-certified homebuyer education course early. It’s useful even if a program doesn’t require it.
3. Find a lender that participates in the program you want, and ask for a Loan Estimate with and without assistance.
4. Ask whether the help is a grant, forgivable or repayable, and what would make it due.
5. If you live in a city with its own program, check whether it can be combined with a state program.

Comparing loan types too? Read FHA vs. conventional loans, and how much house you can afford. Our first-time home buyer guide walks through every step.

When you’re ready, you can pre-qualify to buy, set rate alerts to watch the market, or ask Lowi™ about a program offer you’ve received. Kwalifai never sells your number to lenders.