How Does the My First Texas Home Program Work?

Introduction to My First Texas Home

The My First Texas Home program is one of the most popular down payment assistance programs in the state, and for good reason. Administered by the Texas Department of Housing and Community Affairs (TDHCA), this program helps first-time home buyers overcome the biggest barrier to homeownership: the down payment.

If you have been renting in Texas and dreaming about owning your own home, this program could be the key to making that dream a reality. It pairs a competitive 30-year fixed-rate mortgage with up to 5% of the loan amount in down payment and closing cost assistance, delivered as a forgivable second lien. That means you may never have to pay back the assistance at all.

In this guide, we will walk you through everything you need to know about the My First Texas Home program, from eligibility requirements to the step-by-step application process.

Program Overview

My First Texas Home is designed specifically for Texans who are purchasing their first home or who have not owned a home in the past three years. The program is funded by tax-exempt mortgage revenue bonds, which allows TDHCA to offer below-market interest rates on the primary mortgage.

The DPA component is structured as a second lien on the property. This second lien carries a 0% interest rate and requires no monthly payments. After a specified period, typically three years of continuous occupancy, the second lien is forgiven entirely. If you sell or refinance before the forgiveness period ends, you may need to repay part or all of the DPA.

This structure makes My First Texas Home one of the most borrower-friendly DPA programs available anywhere in the country. You get help when you need it most, at the closing table, and as long as you stay in your home for a reasonable period, you never have to pay it back.

Eligibility Requirements

To qualify for the My First Texas Home program, you need to meet several criteria. Here is a detailed breakdown.

First-Time Home Buyer Status

The program defines a first-time home buyer as someone who has not had an ownership interest in a principal residence during the past three years. If you owned a home four years ago but have been renting since then, you would qualify as a first-time buyer under this definition.

There are exceptions to the first-time buyer requirement if you are purchasing a home in a federally designated targeted area. In those areas, repeat buyers may also qualify. Your loan officer can help you determine whether the property you are considering falls within a targeted area.

Income Limits

Your total household income must fall below the program's income limits, which vary by county and household size. TDHCA updates these limits periodically based on area median income data. As a general guideline, many Texas counties have income limits that range from approximately $80,000 to $120,000 or more for a household of one to two people, with higher limits for larger households.

It is important to understand that the income limit applies to all adults in the household, not just the borrower on the loan. If you and your spouse both earn income, both incomes count toward the limit even if only one of you is on the mortgage.

To see the current income limits for your county, check your eligibility using our quick online qualifier quiz.

Credit Score Requirements

The minimum credit score for the My First Texas Home program depends on the type of loan you are pairing with the DPA:

• FHA loans: Minimum credit score of 620
• VA loans: Minimum credit score of 620
• USDA loans: Minimum credit score of 620

If your credit score is below 620, you may still have options. Some other Texas DPA programs accept scores as low as 580. Contact us at Cook Brothers Mortgage Team at Cornerstone First Mortgage (NMLS #173855) to discuss your situation.

Purchase Price Limits

The home you are purchasing must be at or below the maximum purchase price set by TDHCA for your county. These limits are designed to ensure the program benefits buyers purchasing modestly priced homes. In most Texas metro areas, the purchase price limits are generous enough to cover a wide range of properties.

Property Requirements

The property must be your primary residence. You cannot use the My First Texas Home program to purchase a vacation home, investment property, or second home. Eligible property types include single-family homes, townhomes, condos (in approved projects), and manufactured homes that meet FHA guidelines.

How Much Down Payment Assistance Can You Get?

The My First Texas Home program provides up to 5% of the first mortgage loan amount in DPA. This money can be used for your down payment, closing costs, or a combination of both.

Here is an example of how the math works:

• Home purchase price: $300,000
• FHA loan amount (96.5% of purchase price): $289,500
• DPA at 5% of loan amount: $14,475
• FHA minimum down payment (3.5%): $10,500
• Remaining DPA for closing costs: $3,975

In this scenario, the DPA covers your entire FHA down payment and still leaves nearly $4,000 to put toward closing costs. Depending on the seller concessions you negotiate, your total out-of-pocket expense at closing could be very low, potentially just a few hundred dollars for items like earnest money and inspections.

Use our DPA calculator to run the numbers for your specific situation.

Loan Types Available

One of the strengths of the My First Texas Home program is its flexibility in loan types. You can pair the DPA with any of the following government-backed mortgage products:

FHA Loans

FHA loans are the most popular choice for DPA recipients. They require just 3.5% down (which the DPA covers), accept credit scores as low as 620 within this program, and offer flexible debt-to-income ratio guidelines. The trade-off is that FHA loans require mortgage insurance premiums, including an upfront premium and a monthly premium.

VA Loans

If you are an eligible veteran or active-duty service member, pairing a VA loan with My First Texas Home DPA is an outstanding combination. VA loans require no down payment at all, so the full 5% DPA can go toward closing costs. VA loans also have no monthly mortgage insurance, which can save you hundreds of dollars per month.

USDA Loans

USDA loans are designed for buyers purchasing in eligible rural areas. Like VA loans, USDA loans require no down payment, so the DPA can be applied entirely to closing costs. Many suburban areas on the outskirts of Texas cities still qualify as USDA-eligible, so do not assume you need to buy in a remote location to take advantage of this option.

Homebuyer Education Requirement

All My First Texas Home participants must complete an approved homebuyer education course before closing. This is a one-time requirement that can be fulfilled online or in person. The course covers topics like budgeting, the mortgage process, maintaining your home, and avoiding predatory lending.

Several approved providers offer free online courses that can be completed in a few hours. Your loan officer at Cook Brothers Mortgage Team at Cornerstone First Mortgage will provide you with a list of approved education providers and help you get this requirement checked off early in the process.

Step-by-Step Application Process

Applying for the My First Texas Home program is straightforward when you work with an approved lender. Here is what the process looks like from start to finish.

Step 1: Get Pre-Qualified

Contact our team to start your pre-qualification. We will review your income, credit, and financial situation to determine whether you meet the program requirements. This step typically takes one to two business days.

Step 2: Complete Homebuyer Education

Once pre-qualified, complete your homebuyer education course. We recommend doing this early so it does not delay your closing later on.

Step 3: Find Your Home

Work with a real estate agent to find a home that meets the program's purchase price and property requirements. Take your time and find a home that works for your budget and lifestyle.

Step 4: Submit Your Full Application

Once you have a signed purchase contract, submit your full mortgage application. We will collect documentation including pay stubs, tax returns, bank statements, and identification.

Step 5: Processing and Underwriting

Your loan goes through processing and underwriting, where the lender verifies all your information and ensures the property meets program requirements. This typically takes two to three weeks.

Step 6: Reservation of DPA Funds

Once your loan is conditionally approved, we reserve your DPA funds through TDHCA's online system. Funds are available on a first-come, first-served basis, and our team monitors availability closely to ensure your reservation is secured.

Step 7: Closing

At closing, the DPA funds are applied to your transaction. You sign your loan documents, receive your keys, and officially become a Texas homeowner. The entire process from pre-qualification to closing typically takes 30 to 45 days.

Tips for a Smooth Experience

• Start early: Begin the pre-qualification process before you start house hunting so you know exactly what you can afford.
• Keep your finances stable: Avoid opening new credit accounts, making large purchases, or changing jobs during the mortgage process.
• Respond quickly: When your loan officer asks for documents, provide them as soon as possible to keep the process on track.
• Ask questions: The DPA process can feel unfamiliar, and that is okay. Our team is here to walk you through every step.

Ready to Get Started?

The My First Texas Home program has helped thousands of Texans achieve homeownership, and you could be next. With up to 5% in forgivable down payment assistance and competitive fixed interest rates, this program makes buying your first home more affordable than you might think.

Check your eligibility today to see if you qualify. Or reach out directly to our team at Cook Brothers Mortgage Team at Cornerstone First Mortgage. Call Tanner Cook at 480-420-4918 or Zac Cook at 480-406-2016 to discuss your options with a DPA specialist.

Zac Cook is a licensed mortgage loan originator (NMLS #2111496). This content is for informational purposes only and does not constitute financial advice. Loan approval is subject to credit and property qualification. Equal Housing Lender.