If you’re thinking of buying a home, there are several down payment assistance programs that encourage homeownership here in Texas. 

The money they provide varies from person to person, but it generally ranges from $5,000 to $17,000. One of the main benefits of these programs is that the minimum credit score to qualify for them remains at just 620. If you’ve been following the mortgage industry lately, you know that many banks and mortgage companies have increased their minimum credit score. Some aren’t even considering applications from anyone with a score of less than 700. At the same time, the interest rate will be the same as a conventional or FHA loan. 

Additionally, sellers can contribute to the closing costs so that you end up paying very little out of pocket. In these cases, the earnest money, inspection fees, and appraisal fees are the only costs you’d pay out of pocket. 

“There are several down payment assistance programs that encourage homeownership here in Texas.”

To get a better idea of what kind of assistance you’d receive, here are some recent examples of purchase prices of homes that closed in 30 days or less:

  • $285,000: With an interest rate of 3.875%, the buyer received $11,193
  • $205,000: With an interest rate of 3.25%, the buyer received $6,038
  • $158,000: With an interest rate of 3.75%, the buyer received $6,206
  • $250,000: With an interest rate of 3.25%, the buyer received $9,818

Here are some of the more popular down payment assistance programs, their benefits, and their requirements: 

1. SETH (Southeast Texas Housing Finance Corp).

  • Offers a grant of up to 5% of the loan amount
  • Minimum credit score: 640
  • Maximum purchase price: $484,350
  • Maximum income: $90,620 (does not have to be both borrowers’ income)
  • You don’t have to be a first-time buyer
  • Conventional, FHA, VA, and USDA loans allowed
  • Down payment assistance for up to 5% of the loan amount
  • Rates as low as 2.75%

2. TDHCA (Texas Department of Housing and Community Affairs)

  • TDHCA Program 79 offers a second lien of 5% of the loan amount (There are no payments and no interest on the second lien—it is paid off when the house is sold or refinanced)
  • Minimum credit score: 620
  • Maximum purchase price: $294,600 
  • Maximum income: $90,620
  • You don’t have to be a first-time buyer
  • Mortgage credit certificate can be combined
  • Down payment assistance for up to 5% of the loan amount
  • Rates as low as 2.75%

3. TSAHC (Texas State Affordable Housing Corp)

  • Offers the Texas Heroes Program for teachers, police officers, firemen, veterans, and others—as well as the Home Sweet Home Program for everyone else
  • Offers a non-repayable grant or bond for up to 5% of the loan amount
  • Minimum credit score: 620
  • Maximum purchase price: $294,600
  • Maximum income: $90,620 (does not have to use both borrowers’ income)
  • You don’t have to be a first-time buyer
  • Down payment assistance for up to 5% of the loan amount
  • Rates as low as 3%

4. MCC (Mortgage Credit Certificate) 

  • You’ll receive a 20% to 25% tax credit on the interest you pay each year you have the mortgage with a maximum of $2,000 per year. This gives you the ability to lower the taxes taken out of your paycheck or possibly receive cash back when you file your taxes.

If you’d like to know more about these and other programs, talk to a loan officer who’s familiar with them—not every loan officer knows how they work. I know plenty of excellent loan officers I’d be happy to refer you to, so just give me a call if you’d like to know more. 

As always, if you have questions about this or any real estate topic, feel free to reach out to me as well. I’m here to help.