Buying a home is one of the largest financial purchases you will probably ever make. If you’ve never done it before, it can be easy to get overwhelmed by the process and discouraged by the costs involved.

The purchase of your first home may seem like an unattainable goal, until you learn about the many loans, grants, and assistance programs available to you as a first-time home buyer.

The Texas Department of Housing and Community Affairs, or TDHCA, offers first-time homebuyer programs to assist qualified borrowers in the great state of Texas.

These programs can help first-time buyers with down payments, closing costs, and can even provide a tax break on federal income taxes.

First-time Home Buyer Loan Programs in Texas

Below, you can find 3 of the most popular loan programs in Texas for first time home buyers.

My First Texas Home

The My First Texas Home program offers 15 and 30-year fixed-interest rate mortgages for first-time homebuyers and veterans.

If you qualify, you may also be eligible to receive up to 5% of the mortgage amount as a no-interest, no-monthly-payment second loan that you can put towards the down payment and closing costs. This second loan doesn’t need to be repaid until the home is sold or paid off.

To be eligible for this program, you will have to qualify based on your credit score and current debts and income. First-time borrowers will also need to complete a homebuyer education course and provide proof of completion to the lender.

Not only will you as the buyer have to qualify for the loan, but so will the home you hope to purchase. The My First Texas Home loan program is available throughout all of Texas, but the house must meet requirements based on purchase price and income limits of the surrounding area.

My Choice Texas Home

The My Choice Texas Home program is very similar to the My First Texas Home loan in that it offers 30-year fixed-rate loans. The My Choice Texas Home program offers government-backed and even conventional loans and is not restricted to first-time buyers.

You will still have to qualify for the program and a minimum credit score of 620 is required. Another factor that will be evaluated is your income level. The home, as well, must meet requirements set forth by the program such as purchase price.

My Choice Texas Home can also help provide that second loan of up to 5% of the mortgage amount to help cover down payment and closing costs and that doesn’t have to be repaid until the home is sold or paid off. The funds are then recycled to help another homebuyer.

My First Texas Home loan and My Choice Texas Home loan can also be combined with the Texas Mortgage Credit Certificate, which we will learn about below.

Texas Mortgage Credit Certificate

You may not know, but with each payment you make on your mortgage, you are paying a portion toward the home price and a portion toward the interest you are charged for borrowing the money. The Texas Mortgage Credit Certificate exists to help first-time homebuyers in Texas recoup a portion of that paid interest on their federal tax bill.

The Texas Mortgage Credit Certificate can be combined with a first mortgage, but it can also be used as a stand-alone option. Using the TMCC, you are entitled to a dollar-for-dollar reduction on your federal tax liability.

There are income limits and purchase price limits when qualifying for the Texas Mortgage Credit Certificate, but there is no minimum credit score requirement when used as a stand-alone option. There are also limits on the tax credit each year depending on the percentage of mortgage interest paid. But the TMCC is valid for the life of the loan and can be used each year as long as the home remains the primary residence.

Down Payment Grants in Texas

In addition to loan programs, there are also several grants to help first time home buyers in Texas with the down payment required to purchase a home.

Hill Country Home Down Payment Assistance

The Hill Country Home Down Payment Assistance program is designed for those buying a home in Travis County, including the city of Austin. The loan provided in the form of a grant can total up to 5% of the original loan amount of the home and may be used towards the down payment or closing costs.

5 Star Texas Advantage Program

The 5 Star Texas Advantage Program is offered through the Southeast Texas Housing Finance Corporation. Eligible Texas residents can receive assistance with down payment and closing costs in the form of a grant.

Homeownership Across Texas Grant

There is no requirement to receive the Homeownership Across Texas grant. The amount received is based upon the type of original loan you receive. Those with a conventional loan may receive a 3% grant and those with a government-backed loan such as a VA, FHA, or USDA loan may receive 5% grants.

Home Star Program

The Southeast Texas Housing Finance Corporation (SETH) also offers Texas residents the Home Star Program. Eligible participants can receive up to 4% of the total loan amount of the home as a grant for the down payment on the home.

Homes for Texas Heroes Program

The Homes for Texas Heroes Program targets those that serve the community such as police officers and firefighters, teachers and veterans. Those eligible can receive down payment assistance of 3 to 5 percent of the loan amount. Through this program, you can also qualify for a 30-year fixed rate mortgage with various rates and loan options.

It’s important to remember that if you haven’t owned a home as your primary residence within the past three years, you’re considered a first-time home buyer by the TDHCA. This requirement is waived if you’re an honorably discharged veteran. So even if you have owned a home before, you may still qualify for these programs.

To help make this process easier, let’s explore some of the programs offered to first time home buyers in Texas. Each program provides a specific purpose, and you may qualify for more than one program.

Best Cities to Live in Texas

Before deciding which homebuyer program is best for you, check out our list of best places to live in Texas and best neighborhoods in Dallas.

Texas Closing Cost Assistance

The SimpleShowing refund program gives all first time home buyers $5,000 on average towards your closing costs. The refund is equal to up to 50% of the buyer’s agent commission and is actually given to anyone who buys a home with a SimpleShowing Agent.

If you are looking to buy a home, considering working with a SimpleShowing agent who is familiar with the many loans and programs available to you in Texas. Contact us today to get started.