2025 Texas First-Time Homebuyer Programs and Loans
Texas is one of the fastest-growing states in the country, and new homebuyers within the state can take advantage of the state’s programs for first-time homebuyers. The state has several options, including down payment assistance programs, low-interest mortgages and tax credits. To qualify, you generally need a credit score of 620 or higher, and income restrictions may apply.
First-time homebuyer programs in Texas
Texas’ housing market is highly competitive. According to the Texas Real Estate Research Center, the median housing price for houses in the state was $335,773 as of October 2024, up nearly 21% from the median price in 2021. For conventional mortgages, that means a typical homebuyer would need about $17,000 for a 5% down payment.
To help make homeownership more achievable, the Lone Star State has several programs to assist homebuyers:
- Home Sweet Texas Home: Good for low- and middle-income households
- My Choice Texas Home: Good option for repeat homebuyers
- Homes for Texas Heroes: Good option for teachers, public servants and veterans
- My First Texas Home: Good for first-time homebuyers
- Texas Bootstrap Loan Program: Good for those purchasing or renovating a fixer-upper
Home Sweet Texas Home
The Homes Sweet Texas Home Loans Program provides home loans and down payment assistance to low- and moderate-income families. Through the program, families can qualify for a low-interest mortgage loan and receive funding to use toward the down payment. You can opt to receive the down payment assistance either as a grant — which doesn’t have to be repaid — or as a deferred forgivable second lien loan that only has to be repaid if you refinance or sell within three years of purchasing the home.
If you qualify as a first-time homebuyer, Home Sweet Texas Home also qualifies for the state’s mortgage credit certificate (MCC) program. This program reduces your federal income taxes by allowing you to get a portion of what you spent on mortgage interest back as a tax credit. Effective as of January 16, 2025, the MCC gives homebuyers a 20% credit rate.
Requirements
- Credit score of 620 or higher
- Income cannot exceed 80% of the area’s median income
- Not profession specific
- Completion of a homebuyer education course approved by the Department of Housing and Urban Development (HUD)
Pros and cons
| Pros | Cons |
|---|---|
Not limited to certain professions Grants available for down payment assistance Open to first-time and repeat homebuyers | Income restrictions apply Limits on home purchase price Homebuyer education course required |
My Choice Texas Home
My Choice Texas Home is a program available to new and repeat homebuyers. Through the program, you can qualify for a 30-year, low-interest mortgage with up to 5% of down payment and closing cost assistance. It’s available statewide.
Requirements
- Credit score of 620 or higher
- Completion of a homebuyer education course
- Occupy the home as a principal residence within 60 days of mortgage closing
- Meet income limits for the property’s county
- Must be approved for a qualifying mortgage through an approved Texas Homebuyer Program lender
Pros and cons
| Pros | Cons |
|---|---|
Available to repeat homebuyers Down payment and closing cost assistance Single-family, owner-occupied duplexes and manufactured homes are eligible | Income restrictions apply Homebuyer education course required Not eligible for the Texas MCC program |
Homes for Texas Heroes
Homes for Texas Heroes is a program that gives homebuyers low-interest mortgages and up to 5% of the loan amount in the form of a grant for down payment assistance. Only those who work in certain roles are eligible:
- Allied health or nursing faculty
- Corrections officers
- County jailers
- EMS personnel
- Firefighters
- Juvenile corrections officers
- Military veterans
- Peace officers
- Public security officers
- School counselors
- School librarians
- School nurses
- Teachers
- Teacher aides
This program is eligible for the Texas MCC program.
Requirements
- Qualifying profession
- Income must not exceed 115% of area median income (140% in select areas)
- Completion of a HUD-approved homebuyer education course
Pros and cons
| Pros | Cons |
|---|---|
Higher income limits Eligible for MCC program Grants for down payment assistance available | Not available to all professions Must work with an approved lender |
My First Texas Home
My First Texas Home is a program designed solely for military veterans and first-time homebuyers. With this program, qualifying participants can take out a 30-year, low-rate mortgage with up to 5% of the first mortgage amount to use toward the down payment and closing costs. This program can be combined with the MCC program.
Requirements
- Credit score of 620 or higher
- First-time homebuyer or military veteran
- Meet income and property value limits for your selected county
Pros and cons
| Pros | Cons |
|---|---|
Up to 5% of loan amount for down payment assistance Three-year second lien is forgivable Eligible for MCC | Income and property value limits apply Only available to veterans and first-time homebuyers Homebuyer education required |
Texas Bootstrap Loan Program
Not limited to first-time homebuyers, the Texas Bootstrap Loan Program helps low-income Texans purchase property to build or repair a home. Participants will receive up to $45,000 as a loan, and it’s repaid over a term of 30 years at 0% interest. In exchange, participants contribute at least 65% of the labor themselves.
Requirements
- Cannot exceed 80% of the area median family income and 80% of the state median income
- Provide at least 65% of the labor, and you must work with a certified administrator
- Live in the state for at least six months before applying
Pros and cons
| Pros | Cons |
|---|---|
0% interest loan 30-year term | Income limits apply Loan capped at $45,000 Involves labor commitment |
Texas first-time homebuyer qualifications
Texas has several homebuyer programs, and their eligibility requirements vary by program. In general, you need to fall into the low- to moderate-income category and have a credit score of at least 620 to qualify. According to Experian, the average credit score of Texas was 695 as of 2024, so many residents should be able to easily qualify.
Steps to apply for a first-time homebuyer program
The process to find out whether you’re eligible for one of Texas’ programs is easy, and the state has a website to guide you through the process. Follow these steps to apply for a Texas first-time homebuyer program:
- Take an eligibility quiz: The Texas State Affordable Housing Corporation (TSAHC) website has an eligibility quiz you can use to find out what programs you may be eligible for. The program will ask about your job, whether you’re a first-time homebuyer, your household size and your household income. Based on the information you provide, the site will tell you what programs are available to you.
- Find a lender: To take advantage of Texas’ programs, you must work with a loan officer employed by an approved mortgage company. You can find a qualifying loan officer through the TSAHC website.
- Complete a homebuyer education class: Texas’s first-time homebuyer programs have a homebuyer education requirement, and the course must be approved by the TSAHC. In-person classes range in cost from $0 to $50, while online classes range from $0 to $99.
- Find a realtor: Now you’re ready to find a realtor and start shopping for a home. You can use any realtor you’d like; you aren’t limited to a TSAHC-recommended realtor.
Understanding Texas first-time homebuyer down payment assistance
Texas operates several homebuyer programs to help low- to moderate-income families become homeowners. In Texas, 89% of down payment assistance programs were funded as of the fourth quarter of 2024, according to the Down Payment Resource’s homeownership program index.
Depending on your profession and income and whether you’ve bought a home previously, you may qualify for a deferred second mortgage, grants or mortgage credit certificates.
Deferred second mortgage
A deferred second mortgage can be used to cover down payment and closing costs. This type of loan is repayable over a specific period, but the rates and terms vary by state and program.
The mortgage only has to be repaid if you sell or refinance your home within a certain period. For example, Texas’s Home Sweet Texas Home Loan program allows you to receive a deferred forgivable second lien. The loan only has to be repaid if you sell or refinance your home within three years of purchasing it.
Requires repayment? Yes, if sold or refinanced within a certain period.
Forgivable second mortgage
A forgivable second mortgage can be used for closing costs and down payments. And if you live in the home for a certain length of time, the loan may be forgiven.
Requires repayment? No
Grant
Some assistance comes in the form of grants that don’t have to be repaid. The Home Sweet Texas Home Loan Program includes a grant option for down payment assistance; participants can receive up to 5% of the loan amount for the down payment and closing costs.
Requires repayment? No
Mortgage credit certificate
A mortgage credit certificate is a tax credit that lowers your tax liability. In Texas, qualifying homeowners can get an annual tax credit of up to 20% of the mortgage interest paid.
Requires repayment? No
Keep these things in mind about DPA programs
Down payment assistance (DPA) programs can make homeownership more attainable, but there may be strings attached. For example, for programs that involve deferred second mortgages, you may have to repay the amount of the loan if your circumstances change and you need to sell or refinance your loan within a certain period, such as three years after the purchase date.
How much of a down payment do I need to buy a house in Texas?
In Texas, the average down payment for first-time homebuyers was $36,193. But depending on the house you buy, you can put down a lower down payment and still qualify for conventional, FHA, VA and USDA loans thanks to these requirements and the Texas down payment assistance programs.
Can I qualify for down payment assistance in Texas?
To qualify for down payment assistance in Texas, you typically need to meet the following requirements:
- You must live in the state
- You must be purchasing a primary residence
- You must have a credit score of 620 or higher
- You must meet area income limits
How do I apply for Texas first-time homebuyer down payment assistance?
To start the process, take the eligibility quiz on the TSAHC website. Based on your profession, income and location, it will tell you what homebuyer assistance programs you may be eligible for and how to apply.
Here’s what you need to know about the process of applying for a home loan.Other first-time homebuyer loan programs
Conventional loans
A conventional loan is not backed by a government agency and is available from banks and credit unions. With good credit, you may qualify for a mortgage with competitive rates and a down payment as low as 3%.
Federal Housing Administration (FHA) loans
FHA loans are not just for first-time homebuyers, but they can make homeownership more accessible for some people. You can qualify for a loan with a down payment of just 3.5% if your credit score is 580 or higher. FHA mortgage rates vary by lender.
U.S. Department of Veterans Affairs (VA) loans
VA loans are available to active service members, military veterans and surviving spouses and do not require a down payment. VA loan mortgage rates vary by lender.
U.S. Department of Agriculture (USDA) loans
USDA loans are available to homebuyers looking to buy rural properties in designated areas. Like VA loans, USDA loans allow you to buy a home with 0% down.
What are the best first-time homebuyer loans?
First-time homebuyer programs make homeownership more attainable with low down payment and credit score requirements. Conventional and FHA loans allow you to buy a home with a down payment of as little as 3.5%, and FHA loans have low credit score minimums.
Other loans, like USDA and VA loans, allow you to buy a home without a down payment, but their eligibility requirements are more restrictive.
| Loan program | Best for first-time homebuyers who: |
|---|---|
| Conventional | Have good credit and a down payment of 5% or more |
| FHA | Have a lower credit score and want a smaller down payment |
| VA | Are military service members |
| USDA | Are buying a property in an eligible rural area |
Home price trends in Texas major areas
After several years of significant increases, Texas home prices have steadied, as evidenced in the following areas:
→ Austin-Round Rock-Georgetown: The Austin-Road Rock-Georgetown area is a technology hub; major companies like Tesla, Amazon and more are based there. Over the past five years, home prices have increased by nearly 50%, but prices have actually decreased slightly over the last year.
→ El Paso: In the last year, home prices are up 6.86%, and over five years, home prices have increased by more than 63%.
→ Dallas-Plano-Irving: Dallas-Plano-Irving has continued to experience price increases. In the past year, home prices in the area have increased by 3.91%, and its prices have increased by 56.27% over the past five years.
Is there a first-time homebuyer tax credit in Texas?
Although there used to be a federal tax credit for first-time homebuyers, that credit was discontinued. However, first-time homebuyers in Texas may be eligible for the mortgage credit certificate, which is an annual benefit that gives you a credit of up to 20% of the mortgage interest paid — a significant tax break for homeowners.
What are the current mortgage rate trends in Texas?
In Texas, the rates for 30-year fixed-rate mortgages exceed 7% in 2025. The current mortgage rate predictions from LendingTree experts forecast that interest rates will remain above 6% in 2025.