How Texas TSAHC Down Payment Assistance Works
What TSAHC down payment help covers and who runs it
TSAHC stands for Texas State Affordable Housing Corporation, a state agency that lends money to first-time homebuyers in Texas to cover down payments and closing costs. TSAHC does not give the money away—you repay it as part of your mortgage or as a separate loan. The program is open only to people buying their first home, and your income and the home price must stay within limits set by the county where you are buying.
TSAHC works through partner lenders—banks and mortgage companies that have signed up to offer TSAHC loans. You do not contact TSAHC directly. Instead, you work with a lender who knows the program, and that lender handles the paperwork with TSAHC on your behalf. The lender tells you whether you meet TSAHC's rules and what your monthly payment will be.
The amount TSAHC will lend you depends on the county. In rural and lower-cost areas, the program may cover up to 5 percent of the home price. In higher-cost urban counties, it may go higher. Your lender will know the exact limit for your county and can tell you how much you could borrow.
Key Takeaways
- TSAHC lends money for down payments and closing costs to first-time homebuyers in Texas; you repay it as part of your mortgage or as a separate loan.
- You must work through a TSAHC-approved lender, not contact TSAHC directly, and your income and home price must fall within county-specific limits.
- The loan amount varies by county and is usually a percentage of the home price, with rural areas often receiving higher percentages than urban ones.
- TSAHC charges an upfront fee (called a loan origination fee) that is added to the amount you borrow, so the total cost is higher than the down payment itself.
Income and home price limits by county
TSAHC sets a maximum income you can earn to stay in the program. This limit changes every year and is different for every county in Texas. A single person in one county might have a limit of $60,000, while a family of four in another county might have a limit of $85,000. Your lender can tell you the exact limit for your county and your household size before you apply.
The home price also has a ceiling. TSAHC will not lend on a house that costs more than a certain amount, and that amount varies by county. In less expensive areas, the limit might be $200,000. In Austin or Dallas, it could be $350,000 or higher. If you are buying in a county where home prices are rising, ask your lender to confirm the current limit, because it may have changed since you last checked.
If your income or the home price is above the limit, you cannot use TSAHC. Some lenders offer other down payment programs that do not have income caps, so ask your lender what else might work if TSAHC does not.
How the loan works: repayment and interest
TSAHC loans are usually subordinate mortgages, which means they sit behind your main mortgage. You make one payment to your primary lender (for the main mortgage) and a separate payment to TSAHC (or to the lender servicing the TSAHC loan). Some programs let you roll the TSAHC amount into your main mortgage so you have only one payment, but this is less common and depends on your lender.
The interest rate on a TSAHC loan is typically lower than a regular personal loan or credit card, but it is higher than your main mortgage rate. Rates change, so your lender will quote you the current rate. The loan term is usually 10 to 20 years, depending on how much you borrow and what your lender offers.
On top of the interest, TSAHC charges an upfront loan origination fee—usually between 1 and 2 percent of the loan amount. This fee is added to what you owe, so if you borrow $15,000 with a 1.5 percent fee, you actually owe $15,225. This means your total monthly payment is higher than it would be if you had paid the down payment out of pocket.
What documents and information you need to provide
To work with a TSAHC lender, you will need to show proof of income, employment, and savings. Bring recent pay stubs (usually the last two months), a W-2 or tax return from the past year, and a letter from your employer confirming your job. If you are self-employed, bring tax returns for the past two years and a profit-and-loss statement.
You will also need to show that you have money in the bank—not for the down payment itself (TSAHC covers that), but to prove you can handle a mortgage payment. Bring bank statements from the past two months. You will need a signed purchase agreement or contract for the house you want to buy, and your lender will order an appraisal to confirm the home is worth what you are paying.
Because TSAHC is a state program, some lenders may ask for proof that you are a Texas resident or that you have lived in Texas for a certain amount of time. Ask your lender upfront what documents they need so you can gather them before you start the formal process.
Finding a TSAHC-approved lender
TSAHC publishes a list of approved lenders on its website. You can search by county or by lender name. Not every bank or mortgage company in Texas is on the list, so start there rather than calling random lenders. Many credit unions and community banks participate, as do some larger national lenders.
Once you find a lender, call and ask whether they are currently taking TSAHC applications. Some lenders pause the program temporarily if they are overwhelmed with applications or if funding is tight. A quick phone call saves you time if a lender is not accepting new borrowers right now.
You can work with more than one lender at the same time to compare rates and terms, but each lender will pull your credit report. Multiple credit pulls within a short window (usually 14 to 45 days, depending on the scoring model) count as a single inquiry, so do your shopping quickly if you are comparing offers.
Timeline from application to closing
Once you submit your application to a TSAHC lender, the process usually takes 30 to 45 days, though it can be faster or slower depending on how quickly you provide documents and how busy the lender is. The lender will order an appraisal (3 to 7 days), pull your credit report, and verify your income and employment. If anything is missing or unclear, they will ask you for more information, which can add time.
After the lender approves you, they send the TSAHC paperwork to the state agency for final sign-off. This step usually takes one to two weeks. Once TSAHC approves it, you move to closing—the final meeting where you sign all the mortgage documents and the lender funds the loan. Closing typically happens within a week of final approval.
The entire timeline depends on you, your lender, and the appraisal. If you are buying a house that is already under contract, make sure your lender knows your closing date so they can work backward and tell you when you need to apply.
When TSAHC might not work for you
If your income is above the limit for your county, TSAHC will not work. If the house costs more than the county's price cap, TSAHC will not work. If you have owned a home in the past three years (even if you no longer own it), you are not a first-time buyer and TSAHC will not work. These rules are firm—there are no exceptions or waivers.
If your credit score is very low (below 620 in most cases), some TSAHC lenders will not approve you, though a few lenders work with lower scores. If you have unpaid collections, judgments, or recent late payments, approval becomes harder. Ask a lender to pre-may have access to you before you spend time gathering documents.
If you are buying a manufactured home, a condo in a complex with certain rules, or a property that does not meet standard lending requirements, TSAHC may not cover it. Your lender will tell you whether the specific property qualifies.
Frequently Asked Questions
Can I use TSAHC if I am buying with a co-buyer who is not a first-time homebuyer?
No. Both borrowers on the loan must be first-time homebuyers. If one person has owned a home before, neither of you can use TSAHC. You could explore other down payment programs that do not have this requirement, or one person could buy the home alone and add the other person later.
What happens if I pay off the TSAHC loan early?
Most TSAHC loans have no prepayment penalty, so you can pay it off early without extra fees. Paying it off early saves you interest. Check your loan documents or ask your lender to confirm whether your specific loan allows early repayment without penalty.
Does TSAHC help with property taxes or homeowners insurance?
No. TSAHC covers only down payments and closing costs. Property taxes, homeowners insurance, and HOA fees (if any) are your responsibility and are not part of the TSAHC loan.
Can I use TSAHC to buy a second home or investment property?
No. TSAHC is for primary residences only—the home where you will live. You cannot use it to buy a vacation home, rental property, or investment property.
What if I do not have a house under contract yet?
You can apply for TSAHC before you find a house. The lender will pre-may have access to you based on your income and credit, and you will know how much you can borrow. Once you find a house and have a signed contract, you tell the lender and they order the appraisal. Pre-may have access to early can help you move faster once you find the right home.