Waco Down Payment Assistance: 2026 Programs & Income Limits

Waco spent a decade as one of the most-watched small cities in America, after Magnolia, the Silos, and a downtown revival put it on the map and pulled prices up from where they used to sit. That climb left a lot of longtime Wacoans wondering whether buying still pencils out. For most of them it does, because even after the surge, Waco home prices stay well below the program limits. Down payment assistance is built to close the upfront gap that rising prices made feel a little wider.

Anchored by Baylor University, the Brazos River, and a healthcare and manufacturing base, Waco sits right at the midpoint of I-35 between Dallas and Austin, which is part of why it grew. A lot of first-time home buyers in Waco assume the boom priced them out, or that assistance is only for the lowest incomes. Both ideas are usually wrong, and checking takes only a couple of minutes. Here is the full 2026 picture.

What the Waco boom convinced buyers to believe

The assumptions that keep Waco buyers renting tend not to survive a closer look:

• “The Magnolia boom priced me out.” On the program side, no. Waco prices still run under the roughly $544,232 limit, so the cap rarely blocks a purchase, and assistance covers much of the down payment.
• “Assistance is only for very low incomes.” Not so. The McLennan County TSAHC income limit may reach approximately $123,500 at any household size, which clears most local households.
• “It is only for first-time buyers.” For most programs it is not. Home Sweet Texas and My Choice Texas Home both welcome repeat buyers.
• “I need 20% down or perfect credit.” Neither. Assistance pairs with FHA at 3.5% down and conventional at 3% down, and most programs start around a 620 score.

Which of these applies to you depends on your income against the McLennan County limits and your credit. A couple of minutes settles it, and many Waco buyers are surprised how close they already are.

What down payment assistance in Waco actually is

Down payment assistance in Waco is money that covers your down payment and usually part of your closing costs, so you bring less cash to the table. It comes mostly from two statewide agencies rather than the city: the Texas State Affordable Housing Corporation (TSAHC) and the Texas Department of Housing and Community Affairs (TDHCA).

Each may provide up to about 5% of your loan amount, offered as a grant or a forgivable second lien, depending on the option you pick. The assistance attaches to a normal first mortgage, FHA, conventional, VA, or USDA, so the underlying loan is ordinary. Our Texas down payment assistance hub covers how the statewide help works in depth.

Waco city and county down payment assistance, and how we fit

The City of Waco has at times run its own homebuyer assistance for income-eligible buyers inside the city, with its own rules and funding cycles, and McLennan County has offered help in surrounding areas. These local programs can be worth asking about if your income is on the lower end, but they tend to be limited and tied to available funding.

Plainly: ShopDPA does not administer any City of Waco or McLennan County program, and for most buyers the statewide path is more dependable. The help that is open year-round, available in larger amounts, and usable by repeat buyers comes from the statewide TSAHC and TDHCA programs, which is where the licensed lenders in our network connect qualified McLennan County buyers. Any local program is education here, not the engine.

Waco down payment assistance income limits (2026)

Income limits are measured against the area median. The figures below show approximately how high the limits may reach for non-targeted areas in McLennan County. Read them as “up to” guides; a participating lender confirms your exact number.

TSAHC applies one income limit at any household size, while TDHCA brackets by household. My Choice Texas Home may reach about $147,560 for conventional loans, or about $167,960 on FHA, VA, and USDA loans, which covers most Waco households. Because local prices sit under the cap, income and credit are usually the only real questions.

TSAHC programs for Waco buyers

TSAHC is the program many Waco buyers use. TSAHC’s down payment assistance may provide up to about 5% of the loan amount, structured three ways: a no-assistance option (first mortgage plus an optional MCC, often at the lowest rate), a grant you never repay, or a three-year forgivable second lien.

• Home Sweet Texas is the general track. If your McLennan County income fits the limit, you may qualify regardless of profession or whether you have owned before.
• Homes for Texas Heroes serves teachers, police officers, firefighters, EMS, corrections officers, nursing faculty, and veterans. Waco ISD, Midway ISD, and China Spring ISD staff, the city’s first responders, and Baylor and McLennan Community College nursing faculty fit here. See our Homes for Texas Heroes guide for the full occupation list.

Not every lender is approved to offer TSAHC programs, which is one reason working with a participating lender in our network matters. TSAHC publishes its full program terms on its homebuyer pages.

TDHCA programs for first-time home buyers in Waco

TDHCA runs the other statewide track, and for many first-time Waco buyers it is the entry point:

• My First Texas Home is for first-time buyers (no ownership in the last three years) and qualified veterans, pairing a competitive first mortgage with assistance at the lower income limits above.
• My Choice Texas Home removes the first-time requirement and lifts the income ceiling, which fits repeat buyers and dual-income households.

Both live on TDHCA’s homebuyer site. For most McLennan County households there is usually a fit between the two agencies; the work is picking the right one, which the eligibility step handles. Our guide to TSAHC and how it differs from TDHCA lays out the comparison.

The MCC tax credit for Waco buyers

A Mortgage Credit Certificate is one of the best benefits for a first-time home buyer in Waco to know about. An MCC is a federal tax credit under IRS Form 8396 that may return up to 15% of the mortgage interest you pay each year, with no annual cap, taken straight off your federal tax bill. A credit lowers what you owe dollar for dollar, which is stronger than a deduction.

The real benefit depends on your loan amount, your rate, and your federal tax liability, so it is an “up to” figure rather than a flat promise. On a Waco-sized loan it may add up to a steady yearly benefit, and it continues as long as you keep the loan and live in the home. TSAHC issues the MCC for qualifying first-time buyers, and our Texas MCC guide walks through the math.

How Waco DPA works with FHA, VA, USDA, and conventional loans

Assistance is not its own loan type. It rides on top of a standard first mortgage, and the right base loan depends on your credit, your cash, and what you are buying. In Waco, FHA and conventional financing are both common, and the surrounding county opens up USDA options.

Parts of McLennan County outside the city fall in USDA-eligible rural territory, which is worth checking since USDA allows zero down. Veterans have their own path: beyond a VA home loan, the Texas Veterans Land Board offers below-market loan options for Texas veterans. Our Texas VA loan guide covers the veteran path in detail.

TSAHC vs TDHCA: which Waco program fits?

The two agencies overlap, so here is how they compare at a glance for a McLennan County household.

For most Waco buyers the choice comes down to two questions: are you a first-time buyer, and where does your income sit against each limit? With many first-time and entry-level buyers here, the My First Texas Home and Heroes paths see heavy use. A participating lender can compare both on your real numbers.

Where you buy in Waco changes the picture

Because most of Waco falls under the price limit, where you buy is less about clearing the cap and more about the home and neighborhood you want.

• North Waco, East Waco, and the older central neighborhoods hold many affordable homes well under the limit, popular with first-time buyers.
• Hewitt, Woodway, and the Midway area offer newer family homes, most of which still fit.
• China Spring and parts of Woodway near the river run higher, though many homes remain under the cap; a lender can confirm a specific property.

Buyers comparing the area look at Hewitt, Woodway, Bellmead, and Robinson nearby, which sit in the same McLennan County limits. Our Texas down payment assistance hub covers the statewide programs that reach the whole area.

Waco schools and the Homes for Texas Heroes program

Waco is served by several districts, with Waco ISD at the center alongside Midway ISD, China Spring ISD, and others. Add Baylor University, McLennan Community College, and the Baylor Scott & White medical district, and the area is full of people whose jobs qualify them for the Homes for Texas Heroes program.

Teachers, aides, counselors, librarians, and school nurses across those districts qualify, as do Waco’s police officers, firefighters, EMS, and the area’s veterans. The Heroes program offers the same assistance as Home Sweet Texas, framed for your profession, with no first-time-buyer requirement. Our Texas teacher home loan guide explains how district employment verification works.

Credit score requirements for Waco DPA

Most TSAHC and TDHCA programs start around a 620 credit score. That is well short of “perfect,” and it surprises buyers who assumed assistance demanded a spotless file. Your score shapes your interest rate and which assistance option fits, but 620 is the number to aim for, and some loan types flex around it depending on the rest of your application.

If you are under 620 right now, treat it as a timeline rather than a closed door. A participating lender or a HUD-approved housing counselor can usually point to the few specific moves that may lift your score into range, which is encouraging for first-time Waco buyers building credit.

Homebuyer education for Waco buyers

Most assistance programs require a short homebuyer education course before you close. It covers budgeting, the loan process, and what to expect at closing, and buyers who take it tend to do better over the long run. You can find a HUD-approved counselor through the CFPB’s housing counselor tool, and your lender confirms which specific course your program accepts.

Recapture tax for Waco DPA buyers (IRS §143)

Some TSAHC and TDHCA bond-backed programs carry a federal recapture provision under IRS §143. A recapture tax may apply only if all three of these happen together: you sell within nine years, your income at sale is significantly above the program limits, and you realize a capital gain. If any one of those is not true, there is generally nothing to recapture.

Very few buyers ever owe it, and both agencies offer reimbursement programs that may cover a recapture tax if it is ever triggered. The mechanics live on IRS Form 8828. We mention it for honesty, not alarm; a participating lender explains how it applies to the program you choose.

Step by step: from form to closing day in Waco

1. Check where you stand. Spend a couple of minutes on the eligibility step so we understand your income, location, and goals.
2. Connect with a participating lender. We introduce you to a licensed mortgage professional in our network who is approved to offer TSAHC and TDHCA programs in the Waco area.
3. Get pre-qualified and pick your program. Your lender checks your income against the McLennan County limits, reviews your credit, and helps you choose the assistance option that fits.
4. Finish homebuyer education. Complete the short HUD-approved course your program requires, online or in person.
5. Shop, offer, and close. House-hunt across Waco with your assistance lined up and bring far less cash to closing than you expected.

Documents to have ready for pre-qualification

You do not need these to begin, but they speed things up once you connect with a lender:

• Recent pay stubs (about 30 days) and the last two years of W-2s or tax returns
• Two months of bank statements
• A government-issued ID
• Your DD-214 if you are using a VA loan or the Heroes/veteran track
• A rough idea of your target Waco neighborhoods and price range

Waco down payment assistance: frequently asked questions

Waco down payment assistance: frequently asked questions

† ShopDPA is The Texas Down Payment Assistance Marketplace, a home loan and down payment assistance referral service. We are not a mortgage lender, mortgage broker, or loan officer, and we do not originate, fund, or service loans. We connect Texas homebuyers with licensed mortgage professionals and with down payment assistance programs. We are not affiliated with the City of Waco, McLennan County, Baylor University, Magnolia, TSAHC, TDHCA, HUD, the IRS, the VA, or any government agency. Program terms, income limits, purchase-price limits, and tax-credit amounts are set by the applicable agency, lender, or insurer and may change; confirm current details with a participating licensed lender. Equal Housing Opportunity.