What Is Down Payment Assistance in Texas? A Complete Guide for 2026

Texas offers up to 5% of your loan amount in down payment assistance through two state agencies: the Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC). These funds come as grants or forgivable second liens — meaning you may never have to pay them back. Programs like My First Texas Home, My Choice Texas Home, Homes for Texas Heroes, and Home Sweet Texas are available to buyers with credit scores as low as 620 and household incomes within county-specific limits. Both first-time and repeat buyers have options, and the assistance covers down payments and closing costs on FHA, VA, USDA, and conventional loans. The Cook Brothers Mortgage Team at Cornerstone First Mortgage (NMLS #173855) is approved to originate through every major Texas DPA program and can walk you through eligibility, amounts, and the application process.

What Is Down Payment Assistance?

For many aspiring homeowners in Texas, saving up for a down payment feels like the single biggest obstacle standing between them and their dream home. The good news is that Texas offers some of the most generous down payment assistance (DPA) programs in the country, designed to help qualified buyers bridge the gap between what they have saved and what they need to close on a home.

Down payment assistance is exactly what it sounds like: financial help that covers part or all of your down payment and, in many cases, your closing costs. These programs are funded by state housing agencies, local governments, and nonprofit organizations. They exist because homeownership is one of the most powerful wealth-building tools available to American families, according to the Federal Reserve's Survey of Consumer Finances, and state leaders want to make it accessible to as many Texans as possible.

If you have been putting off buying a home because you think you need tens of thousands of dollars in savings, this guide will show you that there is another path forward.

How Does Down Payment Assistance Work in Texas?

Texas DPA programs work by pairing a primary mortgage loan with a secondary source of funds that covers your down payment and sometimes your closing costs. When you use a DPA program, you are not simply receiving free money with no strings attached. Instead, you are accessing a structured benefit that is tied to your first mortgage.

Here is the general process:

1. You apply for a mortgage through an approved lender who participates in one or more Texas DPA programs.
2. The lender evaluates your eligibility based on the specific program requirements, including income limits, credit score thresholds, and purchase price caps.
3. If you qualify, the DPA funds are layered on top of your primary loan and delivered at closing.
4. Depending on the program, your DPA may come as a grant, a forgivable second lien, or a deferred second lien.

The key takeaway is that you work with a single lender who handles both your primary mortgage and the DPA component. You do not need to apply to a separate agency on your own. That is where our team at Cook Brothers Mortgage Team at Cornerstone First Mortgage (NMLS #173855) comes in. We are approved to originate loans through every major Texas DPA program and can guide you through the entire process.

The Two Major Texas Housing Agencies

Texas has two state-level housing agencies that administer the most widely used DPA programs:

Texas Department of Housing and Community Affairs (TDHCA)

TDHCA is the larger of the two agencies and operates two flagship programs:

• My First Texas Home - Designed for first-time home buyers (or those who have not owned a home in the past three years), this program offers up to 5% of the loan amount in DPA, delivered as a deferred, forgivable second lien.
• My Choice Texas Home - Open to first-time and repeat buyers alike, this program also provides up to 5% in DPA as a deferred second lien, though the terms differ slightly from My First Texas Home.

Both TDHCA programs pair their DPA with competitive 30-year fixed-rate first mortgages, including FHA, VA, and USDA loan options.

Texas State Affordable Housing Corporation (TSAHC)

TSAHC administers two programs that are especially popular because one of them offers assistance in the form of a non-repayable grant:

• Homes for Texas Heroes - Available to teachers, first responders, corrections officers, veterans, and other public servants, this program provides DPA as either a grant or a second lien.
• Home Sweet Texas - Open to all eligible buyers regardless of profession, this program also offers grant and second lien options.

TSAHC programs are notable because the grant option never has to be repaid, making them some of the most attractive DPA offerings in the state.

Types of Down Payment Assistance

Not all DPA is structured the same way. Understanding the differences will help you identify which program is the best fit for your situation.

Grants

A grant is the most favorable form of DPA. It is money provided to you at closing that does not have to be repaid, period. TSAHC offers grant options through both of its programs. If you qualify for a grant, you are essentially receiving free money toward your home purchase. The grant typically covers up to 5% of the loan amount.

Forgivable Second Liens

A forgivable second lien is a secondary loan placed on your property that is forgiven over time. TDHCA's My First Texas Home program, for example, provides DPA as a second lien that is forgiven after a set period, usually three years, as long as you remain in the home. If you sell or refinance before the forgiveness period ends, you may need to repay part or all of the second lien.

Deferred Second Liens

A deferred second lien is a secondary loan with no monthly payments required. Repayment is deferred until you sell the home, refinance, or pay off the first mortgage. This option is common in programs designed for repeat buyers or for buyers who do not qualify for the forgivable option.

Repayable Second Liens

Some programs offer DPA as a second mortgage with monthly payments at a low interest rate. These are less common in Texas state programs but may appear in local city or county programs.

Eligibility Basics

While each program has its own specific requirements, most Texas DPA programs share the following general eligibility criteria:

• Income limits: Your household income must fall below a certain threshold, which varies by county and household size. In many Texas metro areas, households earning up to $120,000 or more can still qualify.
• Credit score: Most programs require a minimum credit score of 620, though some options are available with scores as low as 580.
• Purchase price limits: The home you are buying must fall below a maximum purchase price, which varies by county.
• Occupancy: You must occupy the home as your primary residence.
• Homebuyer education: Most programs require you to complete a homebuyer education course, often available online and free of charge.
• First-time buyer status: Some programs require that you have not owned a home in the past three years. Others are open to repeat buyers.

The best way to find out whether you qualify is to check your eligibility using our quick online tool. It takes just a few minutes and gives you a clear picture of which programs may work for you.

How Much Help Can You Actually Get?

The amount of DPA you can receive depends on the program, but most Texas programs offer between 3% and 5% of the total loan amount. Here is what that looks like in practice:

Home Price	3% DPA	5% DPA
$250,000	$7,500	$12,500
$300,000	$9,000	$15,000
$350,000	$10,500	$17,500
$400,000	$12,000	$20,000

For many buyers, 5% is more than enough to cover both the down payment and a significant portion of closing costs. Use our DPA calculator to see exactly how much you could receive based on your target home price.

An Overview of the Four Major Programs

Here is a quick comparison to help you understand the landscape:

Program	Agency	Buyer Type	DPA Type	DPA Amount
My First Texas Home	TDHCA	First-time	Forgivable 2nd lien	Up to 5%
My Choice Texas Home	TDHCA	All buyers	Deferred 2nd lien	Up to 5%
Homes for Texas Heroes	TSAHC	Eligible professions	Grant or 2nd lien	Up to 5%
Home Sweet Texas	TSAHC	All buyers	Grant or 2nd lien	Up to 5%

Each program has nuances that can make one a better fit than another depending on your income, credit profile, profession, and buying history. We recommend reading our detailed guides on each program to learn more:

• How Does the My First Texas Home Program Work?
• How Does TSAHC Down Payment Assistance Work?

Frequently Asked Questions

Do I have to be a first-time home buyer to qualify for DPA in Texas?

No. While some programs like My First Texas Home require first-time buyer status, others such as My Choice Texas Home and Home Sweet Texas are available to repeat buyers as well.

Can I use DPA with an FHA loan?

Yes. All four major Texas DPA programs work with FHA loans, and many also support VA and USDA loans. FHA loans are particularly popular because they allow credit scores as low as 580 with certain DPA options.

Is down payment assistance really free?

It depends on the program. TSAHC grants never have to be repaid. TDHCA forgivable second liens are forgiven after a set period. Deferred second liens must be repaid when you sell, refinance, or pay off the first mortgage. None of these programs require monthly payments on the DPA portion.

How long does it take to close with DPA?

Closing timelines are similar to a standard mortgage, typically 30 to 45 days. Working with an experienced DPA lender like Cook Brothers Mortgage Team at Cornerstone First Mortgage can help ensure a smooth, on-time closing.

Will using DPA affect my interest rate?

DPA programs typically offer competitive 30-year fixed rates that are comparable to market rates. In some cases, the rate may be slightly higher than a conventional loan without DPA, but the overall savings from the down payment assistance far outweigh any minor rate difference.

Can I combine DPA with seller concessions?

Yes, in most cases you can. Seller concessions can cover additional closing costs, which means your out-of-pocket expense could be very minimal. Your loan officer can help you structure the transaction to maximize your benefits.

Common Myths About Texas DPA

Down payment assistance programs have been around for decades, yet misinformation continues to prevent qualified buyers from taking advantage of them. Let's address the most persistent myths head-on.

Myth: DPA Is Free Money with No Strings Attached

While some programs do offer grants that never need to be repaid, most DPA comes with conditions. Forgivable second liens require you to live in the home for a set period, typically three years, before the balance is forgiven. Deferred second liens must be repaid when you sell, refinance, or pay off your first mortgage. Understanding the structure of your DPA ensures there are no surprises down the road. The key point is that even with conditions, DPA dramatically reduces or eliminates the cash you need to bring to closing, which is the primary barrier for most Texas buyers.

Myth: DPA Is Only for Low-Income Buyers

This is one of the most damaging misconceptions. Texas DPA income limits are based on the Area Median Family Income (AMFI) for your county, and in most Texas metro areas, households earning well into six figures can qualify. For example, in the Austin MSA, the income ceiling for a family of three or more can exceed $125,000. In the Dallas-Fort Worth MSA, similar thresholds apply. Many teachers, nurses, first responders, and mid-career professionals earning solid salaries are well within the qualifying range. If you have not checked the limits for your specific county and household size, do not assume you are over the threshold.

Myth: Bad Credit Disqualifies You Entirely

While credit score requirements exist, they are lower than most people expect. Several Texas DPA programs work with FHA loans that accept credit scores as low as 580. At the 620 threshold, nearly every program becomes available. If your credit is below 580, that does not mean homeownership is off the table — it means a short period of credit repair could open the door. We regularly work with buyers who improve their score by 40 to 60 points within a few months through targeted strategies like paying down revolving balances and disputing inaccurate items on their credit report.

Myth: DPA Makes Closing Take Forever

Buyers sometimes worry that adding a DPA layer will slow down their transaction. In practice, an experienced lender who processes DPA loans regularly can close within the same 30-to-45-day window as a standard mortgage. The key is working with a lender who is already approved with TDHCA and TSAHC and has established workflows for DPA closings. At Cook Brothers Mortgage Team, DPA loans are a core part of our business, not an afterthought. We submit reservation requests and compliance documentation in parallel with standard underwriting to keep your timeline on track.

Myth: You Cannot Combine DPA with Other Savings or Concessions

Some buyers believe that accepting DPA means they cannot also use seller concessions or contribute their own savings toward the transaction. In reality, you can often layer multiple benefits. Seller concessions can cover additional closing costs, you can use personal savings for earnest money or rate buydowns, and some local city or county programs can be combined with state DPA. The result is that many buyers close with minimal out-of-pocket expense, sometimes under $1,000 total.

How Much Can You Receive in DPA?

The amount of assistance available depends on the program and your loan amount. Most Texas DPA programs provide between 3% and 5% of the total first mortgage loan amount. Here is what that looks like across a range of purchase prices common in the Texas market:

Purchase Price	3.5% FHA Down Payment	5% DPA Amount	DPA Covers Down Payment?	Remaining for Closing Costs
$200,000	$7,000	$10,000	Yes	$3,000 toward closing costs
$275,000	$9,625	$13,750	Yes	$4,125 toward closing costs
$325,000	$11,375	$16,250	Yes	$4,875 toward closing costs
$375,000	$13,125	$18,750	Yes	$5,625 toward closing costs
$425,000	$14,875	$21,250	Yes	$6,375 toward closing costs

As the table shows, when you pair an FHA loan requiring just 3.5% down with a 5% DPA program, the assistance not only covers the entire down payment but also provides thousands of dollars that can be applied toward closing costs. For many buyers, this means the total cash needed at closing drops to a few hundred dollars for items like the appraisal deposit and earnest money.

For conventional loans requiring 3% to 5% down, DPA still covers the full down payment, though there may be less leftover for closing costs depending on the program and loan amount.

Maximizing Your DPA Benefit

To get the most value from DPA, consider these strategies:

• Negotiate seller concessions to cover remaining closing costs that DPA does not reach
• Choose an FHA loan when possible, since the 3.5% down payment requirement leaves more DPA funds available for closing costs
• Compare grant vs. second lien options — grants never need repayment, but second lien programs may offer slightly lower interest rates on the primary mortgage
• Ask about lender credits — in some rate environments, your lender can provide a credit toward closing costs in exchange for a slightly higher interest rate, further reducing your cash to close

Frequently Asked Questions About Texas DPA

Can I use DPA if I have owned a home before?

Yes. While certain programs like TDHCA's My First Texas Home require that you have not owned a home in the past three years, other programs are open to repeat buyers. TDHCA's My Choice Texas Home and TSAHC's Home Sweet Texas both welcome buyers who currently own or have previously owned a home. Additionally, even programs with a first-time buyer requirement define "first-time buyer" as someone who has not owned a primary residence in the previous three years, so if enough time has passed since your last ownership, you may still qualify.

What if I make too much money to qualify?

First, verify that you are actually over the limit. Many buyers overestimate their qualifying income because they include items that do not count, such as non-recurring overtime or employer-paid benefits. Second, check whether the property you are considering is in a TDHCA-designated targeted area, which carries higher income limits and waives the first-time buyer requirement. Third, compare programs — TSAHC and TDHCA have different income methodologies, and one may work even when the other does not. Finally, if you are slightly above the limit, a strategy as simple as reducing overtime hours temporarily or making a pre-tax retirement contribution could bring your qualifying income within range.

Can I buy any home in Texas with DPA?

DPA programs are available statewide, covering all 254 Texas counties. However, the home must meet certain requirements: it must be your primary residence, it must fall below the program's maximum purchase price limit for your county, and it must pass the standard inspection and appraisal requirements for your loan type. Eligible property types typically include single-family homes, townhomes, condos (with FHA or VA approval where applicable), and in some cases manufactured homes on a permanent foundation. Investment properties and vacation homes are not eligible.

How long does the closing process take with DPA?

The closing timeline for a DPA loan is typically 30 to 45 days from contract execution, which is consistent with standard mortgage transactions. The DPA reservation step — where your lender locks in your program funds — adds no meaningful delay when handled by an experienced DPA lender. The lender submits the reservation request shortly after your loan application, and approval usually comes within a few business days. The rest of the process follows the same underwriting, appraisal, and title workflow as any other mortgage.

What happens to the second lien after closing?

For forgivable second liens like TDHCA's My First Texas Home, the second lien remains on your property title but carries no monthly payment. After you fulfill the occupancy requirement (typically three years of living in the home), the lien is forgiven and released. If you sell, refinance, or convert the home to a rental property before the forgiveness period ends, the outstanding balance becomes due. For deferred second liens, there are no monthly payments, but the full balance is due when you sell, refinance, or pay off the first mortgage. Grant funds from TSAHC have no lien or repayment obligation at all.

Can I use DPA with a VA loan?

Yes. Both TDHCA and TSAHC programs support VA loans. Since VA loans already require zero down payment, the DPA funds can be applied entirely toward closing costs, making the VA-plus-DPA combination one of the lowest-cash-to-close options available. This is particularly beneficial for Texas veterans and active-duty service members stationed at one of the state's many military installations.

Do I need to complete a homebuyer education course?

Most Texas DPA programs require completion of a HUD-approved homebuyer education course. The course covers the basics of the mortgage process, budgeting, and maintaining your home. Many approved courses are available entirely online and can be completed in a few hours. Some are free of charge. Your lender will provide a list of approved course providers when you begin your application. The course must typically be completed before closing, but it does not need to be done before you start house hunting or get pre-approved.

Can I use DPA to buy a new construction home?

Yes. DPA programs apply to both existing homes and new construction. If you are purchasing from a builder, the same DPA funds can be used toward your down payment and closing costs. Some builders also offer their own incentives, such as closing cost credits or upgrades, which can often be combined with DPA for an even better deal. The key consideration with new construction is timing — builder timelines can vary, so your lender will coordinate the DPA reservation to align with your expected closing date.

Ready to Get Started?

Texas has some of the best down payment assistance programs in the nation, and qualifying might be easier than you think. Whether you are a first-time buyer, a teacher, a veteran, or simply someone who needs a little extra help getting to the closing table, there is likely a program that fits your situation.

Take the first step today. Check your eligibility with our free qualifier quiz and find out which Texas DPA programs you may qualify for. If you have questions, our team is here to help. Call Tanner Cook at 480-420-4918 or Zac Cook at 480-406-2016 to speak with a DPA specialist.

Tanner Cook is a licensed mortgage loan originator (NMLS #2090424). 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.