Texas homebuyers can get down payment and closing cost help from two statewide agencies and several local programs. TDHCA’s My First Texas Home and My Choice Texas Home and TSAHC’s Home Sweet Texas and Homes for Texas Heroes typically provide up to 5% of the loan amount as a grant or 0% second lien. In Austin, the city’s DPA program offers larger, need-based forgivable loans for income-eligible first-time buyers.
How does down payment assistance work in Texas?
Down payment assistance in Texas works as extra money at closing that sits alongside your main mortgage. You apply through a participating lender, not the agency directly, and the program pays part of your down payment, closing costs or both when you close.
For the full first-time buyer picture, see our First-Time Home Buyers Guide.
The help comes in one of three forms:
- Grant: money that never has to be repaid.
- Deferred forgivable second lien: a 0% loan with no monthly payment that is forgiven after a set period, often three years for the state programs, as long as you keep the home as your primary residence and do not sell or refinance first.
- Deferred repayable second lien: a 0% loan with no monthly payment that is due in full when you sell, refinance or pay off the first mortgage.
Most programs pair the assistance with their own first mortgage, so the first loan’s rate comes from the program’s daily rate sheet rather than the open market. An assisted loan can price differently from the same program without assistance, so compare the payment on both before you choose.
“The first thing I ask a buyer looking at assistance is how long they plan to stay. A grant and a three-year forgivable loan look the same at closing, but they play out very differently if you sell or refinance early.”
— Charlie Cooper, President, Austin Capital Mortgage
What statewide down payment assistance programs does Texas offer?
Texas offers statewide down payment assistance through two agencies: the Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC).
Each agency runs two homebuyer programs, and both work only through approved participating lenders.
How does TDHCA’s My First Texas Home program work?
My First Texas Home is TDHCA’s program for first-time buyers, with the first-time requirement waived for eligible veterans and for homes in certain targeted areas. It pairs a 30-year fixed-rate first mortgage with assistance of 2% to 5% of the loan amount as a 0% second lien.
You choose either a 30-year deferred repayable lien or a 3-year deferred forgivable lien.
Eligible first-time buyers can also pair it with a Mortgage Credit Certificate (MCC), a federal tax credit for part of the mortgage interest you pay each year. An MCC is not cash at closing, but it can lower your federal taxes for as long as you keep the loan and live in the home.
How is TDHCA’s My Choice Texas Home different?
My Choice Texas Home offers the same 2% to 5% assistance and the same two second-lien options as My First Texas Home, without the first-time buyer requirement. Repeat buyers who meet the income and purchase price limits can use it.
The MCC is a first-time buyer benefit, so it is generally not available with My Choice Texas Home.
How do TSAHC’s Home Sweet Texas and Homes for Texas Heroes programs work?
TSAHC’s two programs offer up to 5% of the loan amount for down payment and closing costs to both first-time and repeat buyers.
You can take the assistance as a grant that never has to be repaid, a deferred forgivable second lien that is forgiven after three years, or a deferred repayable second lien. Homes for Texas Heroes is for these eligible professions:
- Full-time public school teachers, teacher aides, librarians, counselors and nurses
- Police officers and public security officers
- Firefighters and EMS personnel
- Veterans and active military
- Correction officers and juvenile corrections officers
- Nursing faculty and allied health faculty
Home Sweet Texas is for income-eligible buyers who are not in one of those professions. TSAHC also offers an MCC to first-time buyers who meet its income and price limits.
What down payment assistance is available in Austin?
Austin buyers can look at the City of Austin’s Down Payment Assistance program in addition to the statewide options. The city program is for first-time buyers with household income at or below 80% of the area median family income (MFI) who buy inside Austin city limits.
It offers two need-based options, both at 0% interest with no monthly payment:
- Standard DPA: a forgivable loan of up to $14,999, forgiven after a five-year affordability period
- Shared Equity DPA: a forgivable loan of $15,000 to $40,000 with a shared equity agreement
The amount is based on your demonstrated financial gap, so the city program can be larger than the state programs but serves a narrower group of buyers. It also caps total debt-to-income ratio (DTI, your monthly debts divided by gross monthly income) at 45%.
Travis County and other nearby cities and counties have run their own programs, and funding and terms change each fiscal year. Confirm what is open before you write an offer.
How do Texas down payment assistance programs compare?
Texas down payment assistance programs differ mainly in who can use them, how much they provide and whether the money is ever repaid. Use this table to narrow your options before you talk with a lender.
| Program | Who it’s for | Assistance | Form of help |
|---|---|---|---|
| TDHCA My First Texas Home | First-time buyers; veterans and targeted areas exempt from the first-time rule | 2% to 5% of the loan amount | 0% second lien: 30-year deferred repayable or 3-year forgivable |
| TDHCA My Choice Texas Home | First-time and repeat buyers | 2% to 5% of the loan amount | Same options as My First Texas Home |
| TSAHC Homes for Texas Heroes | Eligible teachers, first responders, veterans, corrections officers and health faculty | Up to 5% of the loan amount | Grant, 3-year forgivable or deferred repayable second lien |
| TSAHC Home Sweet Texas | Income-eligible first-time and repeat buyers | Up to 5% of the loan amount | Grant, 3-year forgivable or deferred repayable second lien |
| City of Austin DPA | First-time buyers at or below 80% MFI buying in Austin city limits | Up to $14,999 standard; $15,000 to $40,000 shared equity | 0% forgivable loan, based on need |
| TDHCA or TSAHC MCC | First-time buyers within income and price limits | Federal tax credit on part of yearly mortgage interest | Tax credit, not cash at closing |
Program terms as published by each agency, reviewed October 2026. Income limits, purchase price limits and funding change; confirm current terms with a participating lender.
Who qualifies for Texas down payment assistance?
Texas down payment assistance is generally limited to buyers who meet program income limits, a minimum credit score, purchase price limits and occupancy rules. Requirements differ by program and county, but most share these basics:
- A minimum credit score of 620 for TDHCA and TSAHC programs
- Household income at or below the program limit for your county and household size
- A purchase price at or below the program limit
- The home must be your primary residence
- An approved homebuyer education course before closing
- A first mortgage from an approved participating lender
First-time buyer status matters only for some programs. Most programs define a first-time buyer as someone who has not owned a principal residence in the past three years. For credit, income and document details, see First-Time Homebuyer Requirements.
Should you choose a grant, a forgivable loan or a repayable loan?
The right structure depends mostly on how long you expect to keep the home and the first mortgage. A grant never has to be repaid. A forgivable loan works like a grant only if you stay past the forgiveness date.
A repayable loan is due when you sell or refinance, so it fits buyers who need the help now and expect future equity to cover it.
| Assistance type | Repaid? | Monthly payment? | Usually fits |
|---|---|---|---|
| Grant | Never | No | Buyers who might sell or refinance within a few years |
| Deferred forgivable second lien | Only if you sell, refinance or move out before forgiveness | No | Buyers confident they will stay past the forgiveness period |
| Deferred repayable second lien | Yes, at sale, refinance or payoff | No | Buyers who want the help now and expect equity to cover it later |
| Mortgage Credit Certificate | Not a loan; a yearly federal tax credit | No | First-time buyers with enough federal tax liability to use the credit |
An MCC can trigger a federal recapture tax if you sell within nine years and meet certain income and gain conditions.
“Refinancing is where buyers get caught. If rates drop and you want to refinance in year two, a forgivable lien that has not been forgiven yet comes due. Plan for that before you pick the structure.”
— Charlie Cooper, President, Austin Capital Mortgage
Can you combine Texas down payment assistance programs?
Sometimes. First-time buyers can usually pair a state program’s assistance with that agency’s MCC, because the MCC is a tax credit rather than a second loan. You generally cannot use TDHCA and TSAHC assistance on the same purchase, since each is tied to its own first mortgage.
Layering a state program with the City of Austin DPA depends on each program’s rules, the first mortgage investor’s limits on second liens and your combined loan-to-value ratio. A participating lender can confirm which combinations work for your file.
To see how assistance fits into your total cash to close, read “How Much Money Does a First-Time Homebuyer Need in Texas?”
How did a first-time buyer with $9,000 saved afford a $300,000 home?
A first-time buyer earning $85,000 a year had about $9,000 saved and was under contract on a $300,000 home in the Austin area.
An FHA loan’s 3.5% minimum down payment ($10,500) plus closing costs was more cash than she had saved.
Her loan officer confirmed her income fit the state program limit for her county and paired an FHA first mortgage with 5% assistance as a TSAHC grant, about $14,475 on a $289,500 base loan. The grant covered her down payment and part of her closing costs, and her savings covered the rest with a cushion left over.
Her income was above the City of Austin program’s limit for her household size, so the state program was the better fit.
A Texas first-time buyer with steady income but less than $10,000 saved may close using state down payment assistance of up to 5% of the loan amount, as long as income, credit score and purchase price limits are met.
Scenario attributed to Charlie Cooper, President, Austin Capital Mortgage. Illustrative example; details are fictionalized. Approval is subject to underwriting review and program eligibility.
Your Next Steps
- Look up the income and purchase price limits for your county on the TDHCA and TSAHC websites.
- Check your credit score against the 620 minimum most state programs use.
- Decide how long you expect to keep the home and the loan before choosing a grant, forgivable or repayable option.
- Sign up for an approved homebuyer education course early, since the certificate is needed before closing.
- If you are buying inside Austin city limits, check the City of Austin DPA program’s current funding and income limits.
- Ask your lender which assistance programs it participates in.
Ready to move forward? A loan officer can review your income, county and plans and show you which programs fit. For quick answers to other common questions, see our mortgage FAQs.
Questions About Your Options? Let’s Talk.
Austin Capital Mortgage has helped Texas buyers since 1996, with a dedicated loan officer from start to finish and pre-approval in as little as 24 hours with no credit impact. We’ll walk through which assistance programs and loan options fit your income, county and plans.
Down payment assistance is subject to program availability, funding and eligibility. Rates and payments vary. Approval is subject to underwriting review and program eligibility. Austin Capital Mortgage is a DBA of Aspire Home Loans, LLC, NMLS #1955132. Equal Housing Lender.
