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Texas Down-Payment Assistance: Grants, Forgivable Loans, and Low-Rate Mortgages for First-Time Buyers

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  Published in House and Home on Wednesday, November 19th 2025 at 13:35 GMT by the-sun.com

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Down‑Payment Assistance in Texas: How First‑Time Homebuyers Can Secure Grants and Loans

For many Texans, the idea of owning a home feels distant. Between rising property prices, stiff mortgage competition, and the hefty costs that come with buying a house—down payment, closing fees, and often mortgage‑insurance premiums—the dream can quickly turn into a financial headache. In recent months, the state has quietly stepped up its support for aspiring homeowners, launching a suite of down‑payment assistance programs that offer grants, forgivable loans, and low‑interest financing to those who qualify. This article pulls together the most important information from a recent Sun article that explains how Texas residents can tap into these resources, what they need to do, and why the programs matter.

1. The Landscape of Texas Down‑Payment Assistance

The Sun piece details the main avenues through which Texans can obtain financial help when buying their first home. While a few local nonprofit groups offer limited aid, the two biggest players are the Texas Department of Housing and Community Affairs (TDHCA) and the federal Home Ownership and Equity Recognition (HOME) program. Both offer two main flavors of assistance:

In addition, many counties have their own local grants that can cover closing costs and even a portion of the mortgage. The Sun article links to the TDHCA website, the HOME program page, and a handful of county‑level housing agencies for more specific information.

2. Eligibility Requirements

The most common eligibility hurdles are:

1. First‑time buyer status – defined by TDHCA as having owned a principal residence in the past five years, or being a relative of a prior owner. Some programs consider a “primary home” to be the buyer’s first home, so if you’ve lived elsewhere for the last five years, you qualify.

2. Income limits – programs are usually capped at 80 % of the area median income (AMI). For example, in a city like Dallas (AMI $65,000), a single applicant must earn ≤ $52,000 a year to qualify.

3. Credit score – the TDHCA requires a minimum 620, whereas HOME programs often set it at 600. These thresholds reflect the risk profile lenders are willing to accept.

4. Financing source – the assistance is only available if the buyer uses a participating lender who is approved by the state program. That lender must be willing to include the down‑payment aid in the mortgage structure.

5. Homebuyer education – most programs require completion of an accredited homebuyer education course. The Sun article provides links to the courses offered by the Texas Department of Housing and Community Affairs and the Texas Real Estate Commission.

3. Application Process – Step‑by‑Step

1. Verify Eligibility – Start with the TDHCA’s online tool to see if your income and family size qualify. Check the local county office’s grant list for extra opportunities.

2. Enroll in a Homebuyer Course – Complete the course and obtain a certificate. Many courses are offered online; the Sun article notes that the course can be completed in 12–15 hours.

3. Find a Participating Lender – Contact banks, credit unions, or mortgage brokers that are part of the TDHCA or HOME program. Ask them about the maximum loan amount, interest rates, and the availability of down‑payment assistance.

4. Gather Documentation – You’ll need proof of income (pay stubs, tax returns), credit history, and a copy of the purchase agreement.

5. Submit the Application – Most lenders will route the application to the state program. The program will review the paperwork, determine the amount of assistance, and disburse the funds directly to the seller or the closing agent.

6. Close the Deal – Once the grant or forgivable loan is approved, the lender will incorporate the assistance into the final mortgage. The buyer usually pays a small fee to the lender for administering the program.

The article stresses that the entire process can take 6–8 weeks, so buyers should start early.

4. How the Assistance Works

The down‑payment aid takes several forms:

• Grants – Non‑repayable funds that cover a portion of the down payment or closing costs. These are often capped at $5,000–$10,000 depending on the county.

• Forgivable Loans – Small loans that must be repaid only if the buyer sells or refinances before a predetermined period (usually 5–7 years). If the buyer stays in the home for the required time, the loan disappears.

• Mortgage‑Insurance Waivers – Some programs allow buyers to avoid private mortgage insurance (PMI) if the down payment is less than 20 %. That can save hundreds of dollars a month.

• Interest‑Rate Reduction – The TDHCA’s HOME program offers a 30‑year fixed rate that is typically 0.5–1.0 % lower than conventional rates, giving buyers even more monthly relief.

5. Why These Programs Matter

The Sun article underscores the real-world impact of these programs. It shares the story of Maria Torres, a single mother of two from Houston, who secured a $7,500 grant that covered 25 % of her down payment. Without the grant, she would have needed to save three years of wages to afford the same home. The article also cites recent HUD data indicating that states with robust down‑payment assistance have higher first‑time home‑buyer rates and lower default rates.

Moreover, the programs help diversify communities by enabling lower‑income families to move into neighborhoods that were previously out of reach. The Sun notes that in 2023, Texas saw a 12 % increase in first‑time homeownership among families earning under $50,000 a year, a trend that can only be attributed in part to these grants and forgivable loans.

6. Potential Pitfalls and What to Watch Out For

• Limited Funding – Grants are limited and often run out early in the year. The article warns that applicants who wait until the last month may miss out.

• Eligibility Overlap – Some buyers may qualify for multiple programs but can only receive aid from one. It’s essential to apply early and choose the most advantageous program.

• Repayment Requirements – Forgivable loans require staying in the home for a set period. If a buyer sells early, the repayment amount can be substantial.

• Closing Costs – Even with down‑payment assistance, buyers must still cover closing costs (appraisal, inspection, title insurance). Some programs cover part of these costs, but not all.

7. Where to Find More Information

The Sun article includes several useful links:

• TDHCA First‑Time Homebuyer Program – https://www.tdhca.texas.gov/housing/firsttimehomebuyerprogram
• HOME Program Details – https://www.tdhca.texas.gov/housing/homeprogram
• County‑Level Grants – Search “Texas county down‑payment assistance” on Google to locate local agencies.
• Homebuyer Education Courses – https://www.tdhca.texas.gov/housing/education

These resources provide application forms, program guidelines, and FAQs to help prospective buyers navigate the process.

8. Bottom Line

For Texas residents on the brink of homeownership, down‑payment assistance programs offer a lifeline. Whether it’s a grant that covers a chunk of the down payment, a forgivable loan that vanishes after five years, or a lower mortgage rate, these programs can transform a months‑or‑years‑of‑saving goal into a reality. The key to success is early research, thorough preparation, and a willingness to engage with the state and local agencies that are eager to help more Texans step onto the property ladder.

If you’re a first‑time buyer in Texas, start by checking your eligibility on the TDHCA website, complete a homebuyer education course, and talk to a lender that participates in the program. The journey to homeownership may still feel daunting, but with the right assistance, the path becomes markedly smoother—and a lot more affordable.