Texas Down Payment Assistance Programs

What Is Texas Down Payment Assistance?

Texas down payment assistance (DPA) is help — usually a grant, a forgivable second loan, or a low-interest deferred second lien — that covers some or all of the down payment and closing costs on a Texas home purchase. Texas offers more of it than most buyers realize: two state programs (TSAHC and TDHCA), a federal Mortgage Credit Certificate (MCC) tax credit, the Texas Veterans Land Board (VLB) for veterans, and a number of city and county programs.

Which program fits you depends on your loan type, how long you plan to stay in the home, your county, your household income, and whether you qualify as a first-time buyer or through an eligible profession. The cards above link to a full guide on each program; the sections below explain how they work.

How Texas Down Payment Assistance Works

Most Texas DPA comes in one of three structures. A grant never has to be repaid. A forgivable second lien is recorded against the home but is forgiven over time as long as you stay, typically three to ten years. A deferred second lien carries no monthly payment but is due when you sell or refinance. TSAHC programs are usually a grant when paired with an FHA, VA, or USDA loan, or a forgivable second with conventional financing; TDHCA’s My First Texas Home uses a deferred second lien.

You apply through a participating lender, not directly with the agency. That is where ShopDPA helps: tell us about your situation and we will show you the programs that may fit, then connect you with a licensed mortgage professional in our Texas partner network. Program details can be verified at tsahc.org and welcomehome.tdhca.texas.gov.

The Texas Mortgage Credit Certificate (MCC)

An MCC is a federal tax credit equal to 15% of the mortgage interest you pay each year, for the life of the loan. It is non-refundable, so the benefit in any year is limited by your federal tax liability — verify your projected liability with a tax professional. In Texas, both TSAHC and TDHCA issue MCCs to first-time buyers; veterans are exempt from the first-time-buyer rule.

Pairing DPA With Your Loan Type

Texas DPA pairs with every major loan type. FHA is the most common pairing; VA is a strong fit for veterans (closing-cost help on top of zero down); USDA covers eligible rural counties; and conventional financing can unlock reduced mortgage insurance alongside DPA.

Help for Texas Veterans

Texas veterans and active-duty service members may use a VA loan (zero down, no monthly mortgage insurance, and a waived funding fee for veterans rated 10% or more service-connected disabled) and may also qualify for the Texas Veterans Land Board (VLB) home loan and the Homes for Texas Heroes program. See the Veterans & Military card above, or verify VLB details at glo.texas.gov/vlb.

Texas DPA Income Limits

Every Texas DPA program ties eligibility to your county’s income limits, which vary by county, household size, and program. TSAHC’s programs share one income limit; TDHCA’s My First Texas Home and My Choice Texas Home each have their own. The Homes for Texas Heroes program may allow higher limits than the standard program. Confirm your county’s current-year limit with a participating lender at application.

Credit Score Requirements

TSAHC and TDHCA programs typically require a minimum 620 credit score on most loan types. Some lenders add overlays that raise the effective minimum to 640 or 660. A 620-plus score with an income under your county’s limit qualifies most buyers for at least one program.

Recapture Tax (IRC §143)

The federal recapture tax applies only if three conditions all happen: you sell within nine years of purchase, your income exceeds the program’s adjusted limit at sale, and you realize a gain on the sale. If any one of those is not met, no recapture tax is owed. In practice, very few homeowners trigger it, and both TSAHC and TDHCA run reimbursement programs that may refund the recapture amount if you do. Confirm your specific situation with a tax professional.

Texas Down Payment Assistance: Frequently Asked Questions