Down Payment Assistance Programs in Texas: Where to Look and How They Work
What Down Payment Assistance Looks Like in Texas
Down payment assistance in Texas comes from three main sources: state programs run by the Texas Department of Housing and Community Affairs (TDHCA), local housing finance corporations in your county, and federal programs administered through local lenders. Most programs give you money as a grant (you don't repay it) or a second mortgage (you repay it, usually with no interest). The amount ranges from a few thousand dollars to 20 percent of your home's purchase price, depending on which program and your income.
Texas does not have a single statewide application. Instead, you find programs through your lender, your local housing authority, or TDHCA's website. Some programs require you to complete homebuyer education first—usually a one-day or online course that costs $50 to $150. Others have income limits (often 80 percent of your area's median income) or require you to be a first-time buyer. The key difference between programs is whether they help you save for a down payment before you buy, or whether they give you the money after you've found a home and a lender.
Key Takeaways
- Texas down payment assistance comes from TDHCA state programs, local housing finance corporations, and federal programs through lenders—not from a single statewide fund.
- Most programs require homebuyer education, proof of income, and a signed purchase contract or pre-approval letter before you can receive funds.
- Your lender often knows about programs you may have access to for, so asking them directly is faster than searching on your own.
- Some programs give you a grant (no repayment), while others create a second mortgage that you repay over 10 to 30 years with little or no interest.
- Income limits and first-time buyer requirements vary by program, so you may may have access to for some but not others in your area.
TDHCA Programs and How to Find Them
The Texas Department of Housing and Community Affairs runs several down payment assistance programs, but they work through local nonprofits and lenders, not directly. The main program is the Homebuyer Assistance Fund (HAF), which provides grants and second mortgages to buyers in participating counties. TDHCA also administers the Community Development Block Grant (CDBG) program, which funds down payment help through local governments in smaller cities and rural areas.
To find which programs operate in your county, go to the TDHCA website and search by county name. The site lists the nonprofit or lender administering each program, their phone number, and whether they are currently taking new buyers. Many programs have waiting lists or run out of funding partway through the year, so calling to confirm they are open is essential. You can also contact your city or county housing authority—they often know about all programs in your area and can refer you to the right one.
TDHCA programs typically require you to be a first-time homebuyer (or have not owned a home in the past three years), have a household income below 80 to 100 percent of your area's median income, and complete a homebuyer education course. The amount of assistance varies; some programs cap it at $15,000, while others go higher depending on the home price and your down payment gap.
Local Housing Finance Corporations and County Programs
Most Texas counties have a housing finance corporation that issues bonds to fund down payment and closing cost assistance. These are separate from TDHCA but often work with the same lenders and nonprofits. Examples include the Dallas Housing Finance Corporation, Houston Housing Finance Corporation, and similar entities in Austin, San Antonio, and other major cities. These programs often have lower income limits than state programs and may prioritize buyers in specific neighborhoods or with specific needs (such as teachers or healthcare workers).
To find your county's program, search "[your county name] housing finance corporation" or call your county assessor's office and ask for the housing finance department. Many county programs are advertised through local lenders, so your bank or mortgage broker may already know about them. County programs often move faster than state programs because they have smaller applicant pools and simpler paperwork.
Federal Programs Through Your Lender
Some down payment assistance comes through federal programs that lenders administer directly. The Federal Home Loan Bank (FHLB) Affordable Housing Program provides grants to lenders, who then pass them to borrowers. The Community Reinvestment Act (CRA) also encourages lenders to offer down payment help in underserved areas. These programs are not advertised as heavily as state programs, but your lender may offer them if you ask.
To learn what your lender offers, call their mortgage department and ask: "Do you have down payment assistance programs for first-time buyers?" or "What grants or second mortgages do you offer to help with down payments?" Some lenders bundle down payment help with their own loan products, so comparing lenders can reveal options you would not find through a state or county program alone.
How the Application Process Works
Most programs follow the same basic steps, though timing varies. First, you complete a homebuyer education course (online or in person, usually one day). Second, you get pre-approved for a mortgage from a participating lender. Third, you find a home and make an offer. Fourth, you submit an application to the down payment program with your purchase contract, pay stubs, tax returns, and bank statements. Fifth, the program verifies your income and the home's value, then issues the funds to your lender or directly to closing.
The entire process typically takes four to eight weeks from application to closing, though it can be faster if the program has low volume. Some programs require you to apply before you find a home (they give you a pre-approval letter), while others require a signed purchase contract. Check with the specific program in your area to learn their order of steps.
One common mistake is waiting to ask about down payment help until after you have already made an offer. Programs need time to verify your information and issue funds, so mentioning it early—even during pre-approval—keeps your timeline on track. Tell your real estate agent and lender upfront that you are looking for down payment assistance; they can steer you toward programs that work with their processes.
Income Limits, First-Time Buyer Rules, and Other Requirements
Most Texas programs limit your household income to 80 percent of your area's median income, though some go up to 100 or 120 percent. Median income varies by county; in rural areas it may be $50,000 to $60,000, while in Houston or Dallas it may be $70,000 to $90,000. TDHCA publishes income limits by county on its website, updated annually.
First-time buyer definitions vary. Some programs define it as never having owned a home. Others allow you to may have access to if you have not owned in the past three years, or if you are a single parent, displaced homemaker, or member of a Native American tribe. A few programs have no first-time buyer requirement at all. Check the specific program's rules before you assume you are ineligible.
Other common requirements include a minimum credit score (often 580 to 640), proof that you completed homebuyer education, and a debt-to-income ratio below 50 percent. Some programs require you to buy in a specific area (such as a census tract designated for community development) or to buy a home below a certain price. These details matter, so read the program's full requirements or ask the administrator directly.
Grants Versus Second Mortgages: What You Repay
Down payment assistance comes in two forms, and the difference affects your monthly payment and long-term cost. A grant is money you do not repay—it reduces your down payment need and your first mortgage amount. A second mortgage is a loan you repay, usually over 10 to 30 years. Most Texas programs offer one or the other, though some offer both and let you choose.
Grants are better if you can get them, because they lower your total debt. However, they are usually smaller (often $5,000 to $15,000) and have stricter income limits. Second mortgages let you borrow more (sometimes up to 20 percent of the home price), but you make a monthly payment. The good news is that most second mortgages for down payment assistance have zero interest or very low interest (1 to 3 percent), and some forgive the loan if you stay in the home for 5 to 10 years. Ask the program whether the second mortgage is forgivable and what the interest rate is before you commit.
Frequently Asked Questions
Can I use down payment assistance if I already have a mortgage pre-approval?
Yes. In fact, having a pre-approval from a participating lender makes the process faster. Tell your lender you want down payment assistance, and they can refer you to programs they work with. Some programs require a pre-approval letter as part of the application, so having one ready saves time.
What if I don't may have access to for TDHCA programs because my income is too high?
Try local housing finance corporations and lender-based programs, which sometimes have higher income limits or no income limit at all. You can also look into employer-sponsored programs if you work for a large company, school district, or hospital. Some programs prioritize specific professions like teachers or nurses and may have different rules.
Do I have to repay a grant, or is it really assistance programs?
Grants do not require repayment. However, some grants have a clawback clause: if you sell the home or refinance within a certain period (often 5 to 10 years), you may have to repay part or all of the grant. Read the program's terms carefully to understand any conditions.
How long does it take from application to closing?
Most programs take four to eight weeks. The timeline depends on how quickly you submit documents, how busy the program is, and whether the lender and program coordinate smoothly. Starting the process early—before you make an offer—gives you the most time and reduces stress.
Can I use down payment assistance to buy a second home or investment property?
No. Nearly all Texas down payment assistance programs require the home to be your primary residence. You cannot use the funds for a vacation home, rental property, or investment. The program will verify this through the purchase contract and your loan application.