Saving for a down payment is one of the biggest barriers Texas buyers face. Fortunately, the state has several programs designed to bridge that gap — some cover down payment costs, some cover closing costs, and some do both. Knowing which programs exist, who qualifies, and how they work can save you thousands of dollars or get you into a home sooner than you expected.

The Two Main Texas Assistance Programs

Most Texas buyers eligible for down payment assistance will encounter two agencies: the Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC). These are state-level programs, not federal ones, though they often work alongside FHA, VA, and conventional loans.

TDHCA's My First Texas Home program provides down payment and closing cost assistance of approximately 2% to 5% of the loan amount in the form of a forgivable second lien — meaning if you stay in the home for a set number of years (typically three), you do not repay it. It is paired with a 30-year fixed-rate first mortgage.

TSAHC's Home Sweet Texas and Homes for Texas Heroes programs offer similar assistance — approximately 3% to 5% of the loan amount — as either a grant (no repayment required) or a deferred second lien. The Heroes program targets specific occupations including teachers, law enforcement, firefighters, and healthcare workers.

Program Tip: TDHCA and TSAHC programs are not the same thing. You apply for them through different participating lenders. Ask your lender specifically which programs they are approved to originate — not all lenders participate in both.

Who Qualifies for These Programs

Eligibility requirements vary by program, but most share a similar framework. Expect to encounter:

  • Income limits — typically based on household size and county. In DFW counties, income limits generally range from approximately $75,000 to $110,000 for a household of one to two people, and higher for larger households. These figures adjust periodically.
  • Purchase price limits — the home's purchase price must fall below a program-set cap, which varies by county and loan type. In many DFW markets, the cap is approximately $400,000 to $500,000 or more for non-targeted areas.
  • Credit score minimums — most programs require a minimum credit score of 620, though some lenders may require higher depending on the loan type.
  • First-time buyer requirements — My First Texas Home is targeted at first-time buyers, defined as someone who has not owned a primary residence in the past three years. TSAHC's Heroes program has no first-time buyer requirement.
  • Homebuyer education — most programs require completion of a HUD-approved homebuyer education course before closing.
Income Limit Check: Income limits for these programs are household income, not just the borrower's income. If you have co-borrowers or other household members with income, all of it typically counts toward the limit. Verify current limits with a participating lender before assuming you qualify.

How the Assistance Works at Closing

Down payment assistance through these programs is not cash handed to you directly. It is structured as a second lien — an additional loan — that covers your down payment and sometimes a portion of your closing costs. The terms of that second lien vary:

  • Grant format (TSAHC option): No repayment required, no second lien recorded. This is the cleaner structure.
  • Forgivable second lien (TDHCA): Forgiven after you remain in the home as a primary residence for the required period, typically three years.
  • Deferred second lien: Repaid when you sell, refinance, or pay off the first mortgage. No monthly payments while you live there.

The structure matters if you plan to move or refinance within a few years. A grant is the most flexible. A forgivable or deferred second lien has conditions you need to understand before signing.

What These Programs Do Not Cover

Down payment assistance does not eliminate all upfront costs. You will still be responsible for:

  • Mortgage insurance premiums on FHA loans — typically approximately 1.75% upfront and an annual premium built into monthly payments
  • Prepaid items at closing — homeowners insurance, property tax escrow, and prepaid interest
  • Home inspection fees — not a closing cost but paid before closing
  • Appraisal fees — may be rolled in or paid out of pocket depending on the lender

Some programs allow assistance to cover a portion of closing costs on top of the down payment; others only cover the down payment itself. Read the program terms carefully and confirm with your lender what is and is not covered.

DFW Market Note: In competitive DFW markets, sellers are not always willing to negotiate seller concessions when they have multiple offers. If you are relying on seller-paid closing costs in addition to down payment assistance, have a backup plan — or make sure your lender has structured the deal so your offer stays competitive.

How to Apply

You do not apply to TDHCA or TSAHC directly. You apply through a participating lender — typically a mortgage company or bank that has been approved to originate these loans. Steps typically look like this:

  1. Confirm eligibility — income, purchase price, credit score, and whether you meet first-time buyer rules
  2. Find a participating lender — both TDHCA and TSAHC maintain lender directories on their websites
  3. Complete homebuyer education — a HUD-approved online or in-person course, usually a few hours
  4. Get pre-approved — the lender will run your full application and confirm which programs you qualify for
  5. Shop for a home — your pre-approval letter can reflect the assisted loan structure
  6. Close with your chosen program in place — the second lien funds at the same closing as your first mortgage

Working with a licensed Texas buyer's agent (TREC #9015220) who has experience with assisted loan transactions can help you avoid timing issues and submit offers that do not trip up lenders on program requirements.

Other Programs Worth Knowing

Beyond TDHCA and TSAHC, additional options exist:

  • VA loans — if you are an eligible veteran or active service member, VA loans require no down payment and no private mortgage insurance. This is typically the strongest program available to those who qualify.
  • USDA loans — for eligible rural and some suburban properties, USDA loans also offer zero down payment options. Parts of the DFW metro's outer ring may qualify.
  • Local city programs — cities including Dallas, Fort Worth, and Plano have periodically offered local down payment assistance. Availability, funding, and terms change frequently; check with your city's housing authority directly.

Down payment assistance programs in Texas are real tools with real benefits, but they work best when you understand the structure before you start shopping. Knowing which program fits your situation — and pairing it with the right lender and agent — is what turns a program on paper into money saved at closing.

This article is educational and is not legal, financial, mortgage, or real estate advice. All figures, rates, timelines, and program details are approximate, may change, and should be verified with your lender, attorney, or licensed real estate agent. Equal Housing Opportunity. TREC #9015220.