By Cody Leovic – Updated: April 28, 2023
If you dream of owning a home in Texas, the road ahead may be challenging. However, there are many options to make the path a little easier and help you make that dream a reality.
Home affordability in Texas has worsened in recent years, making it difficult for many aspiring homeowners to enter the market. In 2021, Texas’s median household income was just $67,321, while the median home value was more than $200,000. Since then, home prices have risen sharply, while the average income has hardly changed.
Texas offers several first-time homebuyer programs and grants to help individuals achieve their dream of homeownership. These programs help make homeownership more accessible by offering down payment assistance, low interest loans, and other forms of support for Texas residents. Here, we’ll help you understand your options as a first-time homebuyer in Texas, bringing your dream one step closer to reality.
Ready to see what Divvy can do for you? Explore Divvy’s rent-to-own Homes in Texas and beyond.
Shopping for your first home in another state? Check out our full first-time homebuyer program guide here.
Requirements for First-Time Home Buyers in Texas
In Texas, a first-time homebuyer is categorized as any person or family who hasn’t owned a home or had an ownership interest in a home at any point in the last three years. To have an ownership interest in a home, you would have to be listed on the deed – unless you were married, in which case both spouses have ownership stakes, whether both are listed on the deed or not.
If you meet these first-time homebuyer qualifications for Texas, then you’ll likely be eligible for one or more of the housing assistance programs offered by the state. Even if you don’t meet those criteria, some programs may be open to individuals and families who have previously owned homes.
2023 Texas Home Buyer Statistics
Understanding Texas’s recent housing market conditions can help you determine what to expect from your homebuying experience. Here’s what Texas’s housing market was like in November 2022, the most recent statistics available from the Texas Real Estate Research Center at the time of writing:
- Homes in metro areas of Texas are relatively less affordable compared to other areas of the US.
- The median home price was $334,000.
- Homes spent an average of 46 days on the market before being sold.
TDHCA’s Texas Homebuyer Programs
The Texas Department of Housing and Community Affairs (TDHCA) offers many home buying assistance programs, including several just for first-time homebuyers. These programs may provide grants, down payment assistance, tax credits, and more to supplement federal financing options, closing affordability gaps for low- and moderate-income homebuyers.
As part of its mission to help homebuyers in Texas, the TDHCA offers educational options to help homebuyers prepare for and understand the homebuying journey. Texas Homebuyer U is a free online course, and the Texas Statewide Homebuyer Education Program connects you with certified professionals for coaching and assistance.
Completion of at least one of these education options is required to qualify for TDHCA’s home buying assistance programs. To help you more easily navigate eligibility requirements and be sure you’ve applied for the programs that can offer you the most help, it’s a good idea to work with a lender, real estate agent, or counselor. They can help you better understand the process and help you to apply for any and all programs that are right for you to help pave a smoother path to home ownership.
My First Texas Home
My First Texas Home offers 30-year, low-interest mortgages and no-interest second liens for up to 5% of the mortgage amount to use as assistance for down payment and closing costs. The second lien (down payment and closing cost assistance) is only repaid when you sell or refinance your home.
To qualify, you must be a first-time homebuyer or veteran, be approved for a mortgage with a Texas Homebuyer Program lender, have a minimum credit score of 620, and meet income and property value limits.
My Choice Texas Home
The My Choice Texas Home program is similar to My First Texas Home but has higher income limits and no first-time homebuyer requirement. It offers a 30-year, low-interest mortgage and a second lien for up to 5% of your mortgage amount in down payment and closing cost assistance.
Eligibility requirements are the same as My First Texas Home, except this program is open to all Texas homebuyers and veterans who meet the income, credit, and property value limits.
Texas Mortgage Credit Certificate Program for Tax Reduction
The Texas Mortgage Credit Certificate Program (MCC) reduces your federal tax liability by up to $2,000, easing the financial pressure of purchasing your first home. It can be combined with the My First Texas Home program, but no minimum credit score is required to qualify if used as a standalone option.
The MCC is available to veterans and first-time homebuyers who have a mortgage through a Texas Homebuyer Program lender. Income and purchase price limits and other requirements may apply.
Texas State Affordable Housing Corporation Programs
The Texas State Affordable Housing Corporation (TSAHC) offers two home buying assistance programs. They’re open to first-time and repeat homebuyers and can be combined with the MCC, if you’re eligible. The TSAHC programs offer down payment assistance to help Texans buy a home.
Homes for Texas Heroes Program
Homes for Texas Heroes offers home loans and down payment assistance for educators, police officers, firefighters, EMS personnel, corrections officers, and veterans. Down payment assistance is available as either a grant (doesn’t have to be repaid) or a deferred forgivable loan, which you only repay if you sell or refinance within three years.
If you work in any of these professions, have a credit score of at least 620, and meet certain income requirements, you will most likely qualify for this program.
Home Sweet Texas Home Loan Program
If you don’t qualify for Homes for Texas Heroes, you could qualify for the Home Sweet Texas Home Loan Program. This program isn’t limited to specific professions or just first-time homebuyers, so more people may be eligible. It offers home loans, as well as down payment assistance in the form of grants or deferred forgivable loans.
To qualify, you should still have a minimum credit score of 620 and meet certain income limits. The program does allow for higher purchase prices and income limits in economically stressed areas. In non-targeted areas, the Home Sweet Texas Home Loan Program caps purchase price limits at $359,460 in non-targeted areas and $429,340 in targeted areas. Similarly, income limits for Texans in non-targeted areas are capped at $116,840 and range between $117,000 to $136,600 in targeted areas.
Mortgage Assistance Programs in Houston, Dallas, San Antonio, and Other Texas Cities
Major metro areas in Texas often have tougher housing markets than smaller cities. To help homebuyers overcome this, many large cities have their own assistance programs.
Houston Homebuyer Assistance
The Houston Homebuyer Assistance Program offers up to $30,000 to first-time homebuyers whose household income is at or below 80% of the area’s median income and who want to purchase a home in the Houston area. The assistance is offered as a no-interest lien that’s forgiven after you live in the home for five years. If you move out before then, you’ll need to repay a portion of the loan.
There are no credit score or home price limits, but your debt-to-income ratio must be 45% or less to qualify. You must also contribute $350 to the down payment.
Dallas Homebuyer Assistance Program
The Dallas Homebuyer Assistance Program offers up to $60,000 in assistance (the amount varies by individual needs and area) through a deferred, forgivable second lien. Homebuyers must plan to purchase a home in Dallas that costs $271,000 or less. Eligible buyers should also complete a homebuyer education course, have a household income that doesn’t exceed 80% of the area median income, and have a debt-to-income ratio at or below 45%.
You should have at least $1,000 to put toward the home purchase, with enough savings to cover two monthly mortgage payments after closing. The program is combinable with the MCC.
San Antonio Down Payment Assistance Programs
The city of San Antonio offers two down payment assistance programs to help home purchase a home within city limits.
The Homeownership Incentive Program (HIP 120) gives aspiring San Antonio homeowners a loan or second loan of between $1,000 and $15,000 at a 0% interest rate. The amount given varies based on individual needs. As of 2022, household income limits for the HIP 120 range between $62,250 and $110,250. Purchase prices are capped at $283,200 for an existing home and $301,200 for new construction.
The HIP 120 loan must be used alongside an FHA, VA, or conventional loan. It can be applied to your down payment and additional associated fees, such as closing costs. This loan is 75% forgivable and 25% must be paid back if there is a change in ownership. First-time home buyers are eligible if purchasing a primary residence. If the HIP 120 will be a second loan, home buyers need to meet qualifications with a private lender for a first loan.
San Antonio also offers assistance for city employees who want to purchase a home within the city limits. The Home Ownership Program for Employees (HOPE) is offered to full-time civilian employees of the City of San Antonio (CoSA), while the First Responders Homebuyer Assistance Program (FRHAP) is open to CoSA police and fire employees who meet eligibility requirements.
Applicants for the HOPE program must be pre-approved by a mortgage lender for a VA, FHA, or conventional loan for a primary residence. Individuals and families purchasing a home within the San Antonio City limits may receive a $10,000 0% interest / no payments second loan that can be put towards a down payment or associated home purchase costs. Prospective homeowners who intend to purchase a home in the Community Revitalization Action Group (CRAG) area are eligible to receive $20,000.
The FRHAP program is open to full-time CoSA firefighters and police officers, offering them a 0% interest / no payment second loan, which is forgiven over a five-year period. As with the HOPE program, homeowners who purchase a home within city limits may receive $10,000 while those who plan to purchase a home in the CRAG area receive $20,000.
FRHAP applicants must already be pre-approved with a lender for a conventional, FHA, or VA loan and the home must be their primary residence. Additionally, applicants must complete an eight-hour homebuyer education course approved by HUD and provide a certificate of completion to meet eligibility requirements for this program.
Other Programs Throughout Texas
The above programs are just some of the area-specific home buying assistance options for Texans. Check if your city or county offers its own programs for residents or hopeful homeowners, like these programs below:
- Arlington Homebuyers’ Assistance Program
- Austin’s Homebuyer Education and Assistance Programs
- El Paso’s First-Time Homebuyer Program
- Frisco’s Down Payment Assistance Program
- Grand Prairie’s Buying Power Program
- Harris County’s Down Payment Assistance Program
- Plano’s First-Time Homebuyers Assistance & Educational Program
- San Antonio’s Down Payment Assistance Programs
- Travis County’s Down Payment Assistance Program
How Divvy Can Help You Buy Your First Home
If you don’t qualify for the homebuyer assistance programs above due to credit or income limitations, then Divvy Homes may be the perfect choice for you.
Divvy helps first-time homebuyers realize their dreams of homeownership by providing a unique rent-to-own option that helps you save for a down payment. At the end of the specified term, you can either put the savings toward the purchase of your current Divvy home or walk away with them, minus a surrender fee and any other potential deductions.
By working with Divvy, you may have access to homes that many other first-time homebuyers don’t, and our all-cash offers can give us an edge over other homebuyers. Plus, if you decide to purchase your Divvy home, you can still take advantage of traditional first-time homebuyer programs that you qualify for.
At Divvy, we believe everyone should be able to realize the dream of homeownership, and it’s our mission to help you get there. Explore our housing options in Dallas, Houston, and San Antonio to get started.
Note: Divvy is not affiliated with the first-time homebuyer programs mentioned in this article. Be aware that requirements for these programs may change. We recommend consulting with a lender or real estate agent when evaluating first-time home buyer programs.
Texas First-Time Home Buyer FAQs
What credit score is needed for first-time homebuyers in Texas?
Most Texas home buying assistance programs require a minimum credit score of 620. If you choose to work with Divvy, though, you typically need a minimum score of 550.
How much does down payment assistance cover in Texas?
The amount of down payment assistance you can receive will vary by program and your individual situation. Several programs offer up to 5% of your mortgage total in assistance, while others offer up to a dollar limit (like $30,000).
Is there a first-time homebuyer tax credit in Texas?
Yes. The Texas Mortgage Credit Certificate Program for Tax Reduction can give homebuyers a dollar-for-dollar reduction in their federal income tax liability, up to $2,000.
- U.S. Census Bureau (https://www.census.gov/quickfacts/fact/table/TX/BZA210220)
- National Association of Realtors (https://www.nar.realtor/research-and-statistics/housing-statistics/realtors-affordability-distribution-curve-and-score)
- Texas A&M University; Texas Real Estate Research Center (https://assets.recenter.tamu.edu/Documents/housing-reports/Texas_Housing_Insight-202301.PDF)
- Texas Homebuyer Program (https://thetexashomebuyerprogram.com/products/texas-homebuyer-u)
- Texas Department of Housing and Community Affairs (https://thetexashomebuyerprogram.com/products/texas-statewide-homebuyer-education-program#product-features)
- Texas Homebuyer Program, My First Texas Home (https://thetexashomebuyerprogram.com/products/my-first-texas-home)
- Texas Homebuyer Program, My Choice Texas Home (https://thetexashomebuyerprogram.com/products/my-choice-texas-home)
- Texas Homebuyer Program, Texas Mortgage Credit Certificate Program (https://thetexashomebuyerprogram.com/products/texas-mortgage-credit-certificate-program)
- Texas State Affordable Housing Corporation, Homes for Texas Heroes Program (https://www.tsahc.org/homebuyers-renters/homes-for-texas-heroes-program)
- Texas State Affordable Housing Corporation, Home Sweet Texas Home Loan Program (https://www.tsahc.org/homebuyers-renters/home-sweet-texas-home-loan-program)
- Austin Board of Realtors (https://www.abor.com/document/home-sweet-texas-loan-program)
- Houston Homebuyer Assistance Program (https://houstontx.gov/housing/hap.html)
- Dallas Homebuyer Assistance Program (https://dallascityhall.com/departments/housing-neighborhood-revitalization/Pages/Dallas-Homebuyer-Assistance-Program-DHAP.aspx)
- San Antonio Down Payment Assistance Programs (https://www.sanantonio.gov/NHSD/Programs/DownPayment#229643298-hip-120)
Grant is a member of the marketing team and focuses on connecting aspiring homeowners in our metros with Divvy. He's worked on marketing teams spanning all parts of the homeownership journey, including home loans, power tools and home improvement, siding and flooring, and now Divvy. Grant graduated from Villanova University and became a homeowner in 2021.