New Construction Down Payment Assistance in Texas: Using Builder Incentives and DPA Together

Walk into a model home this fall and you’ll probably see the offer before you see the kitchen: a reduced rate, money toward closing costs, sometimes both, as long as you use the builder’s preferred lender. It’s tempting, especially with rates above 7%.

Here’s what the sign doesn’t mention. Texas’s statewide down payment assistance programs work on new construction too, and a buyer who knows how the two fit together can sometimes get both. The catch is in the details: which lender you use, how much builder money your loan allows, and when you lock your rate on a home that isn’t finished yet.

This guide covers new construction down payment assistance in Texas: whether you can use TSAHC and TDHCA programs on a new build, how builder incentives work, whether you have to use the builder’s lender, and how to time a new-home purchase so the assistance doesn’t slip away. For the general rules on what any seller can contribute, see our guide to seller concessions in Texas.

What new-home buyers often assume, and what’s true

• You might hear that down payment assistance is only for older homes. Not in Texas. Both TSAHC and TDHCA list new homes as eligible.
• You might hear that you have to use the builder’s lender. The CFPB’s guide for new-construction buyers says homebuilders often have an associated lender, but “You don’t have to use that lender, and you have the right to shop around for a better deal.” The incentive may depend on it, though, so compare both ways.
• You might hear that builder incentives and state assistance can’t be combined. They can, through a lender approved for the programs, as long as the total stays within your loan’s limits.
• You might hear that new homes cost far more than resale. The gap has narrowed. The Texas A&M Real Estate Research Center reported a median new-home price of $341,500 in March 2026 against $326,200 for existing homes.

Each of these comes down to specifics, which the sections below lay out.

Can you use down payment assistance on a new build in Texas?

Yes. The TSAHC program guidelines (section 4.2) list new or existing detached single-family homes and new or existing condos, townhomes, and homes in planned unit developments as eligible for Home Sweet Texas and Homes for Texas Heroes. The TDHCA Lender Guide (section 2.2) lists new or existing single-family homes, condos, planned unit developments, manufactured homes, and duplexes for My First Texas Home and My Choice Texas Home.

The home type is only part of it. All four programs have income limits, and My First Texas Home, TSAHC’s bond assistance, and mortgage credit certificates generally require first-time buyer status, with exceptions for qualified veterans and homes in targeted areas. Our TSAHC income limits and TDHCA income limits pages list them by county.

Price limits depend on the option you choose. Here are the non-targeted limits for a one-unit home in the major metros.

Manufactured homes have their own rules. TSAHC requires them to be affixed to land and treated as real property under Texas law, at least 400 square feet, built in 1994 or later, and doublewide or larger for government loans, with a 640 minimum credit score. TDHCA accepts single and doublewide homes titled as real property, with a 0.50% manufactured-home pricing adjustment that the lender may pass on to you as a fee. Our Texas purchase price limits page breaks the limits down by area.

How builder incentives work

Builders tend to offer the same handful of incentives, and each one is treated a little differently by your loan program.

Builders count as interested parties under every major loan program, so their contributions fall under the same limits as any seller’s. Fannie Mae’s rules also count buydowns funded by a lender affiliated with the builder toward those limits. And builders have been leaning on these tools: the Texas A&M Real Estate Research Center’s May 2026 Housing Insight said builders have been more aggressive in offering affordability adjustments to attract buyers.

Do you have to use the builder’s lender?

No. The CFPB says plainly that you don’t have to use a builder’s associated lender and that you have the right to shop around. Federal rules back that up. Under the CFPB’s Regulation X rules on affiliated business arrangements (12 CFR 1024.15), a builder’s referral to an affiliated lender or title company is protected only if, among other conditions, the builder gives you a written disclosure of the relationship and estimated charges and doesn’t require you to use that provider.

What the rules don’t do is spell out builder price incentives tied to a lender. The federal definition of “required use” in 12 CFR 1024.2 covers having to use a particular provider “to have access to some distinct service or property” and says optional package discounts aren’t required use, but it doesn’t mention builder incentives by name. In a 2010 advance notice of proposed rulemaking, HUD said it had received complaints that some buyers were committing to a builder’s affiliated lender in exchange for construction discounts or discounted upgrades without enough time to compare offers. Whether any particular offer is structured properly is a legal question; what you control is the comparison.

Title insurance is different. Under 12 CFR 1024.16 and section 9 of RESPA, a seller, including a builder, can’t require you to buy title insurance from a particular title company as a condition of the sale.

Action step: get a full Loan Estimate from the builder’s lender with the incentive and one from a participating lender with Texas assistance, then compare the rate, the total cash to close, and the monthly payment, not just the headline incentive.

The catch: your lender has to offer TSAHC or TDHCA programs

State assistance only comes through approved lenders. TSAHC’s lender page says buyers must work with a loan officer at a TSAHC-approved mortgage company, and TDHCA offers its programs through its network of participating lenders. Not every lender is approved, so ask the builder’s lender directly whether it offers these programs. It’s the first question to settle.

Builder-paid buydowns with Texas programs

Rate buydowns are a common builder incentive, and TSAHC and TDHCA treat them differently.

• TSAHC: its guidelines (section 3.1) allow permanent and temporary buydowns on non-bond FHA, VA, USDA, and conventional loans, funded by the builder, seller, lender, or another interested party, but not by you. Temporary buydowns are limited to 2-1, 1-1, and 1-0, a buydown agreement must be in the file, and buydowns aren’t allowed on TSAHC’s bond loans.
• TDHCA: its Lender Guide (section 6.4) allows permanent buydowns only on My Choice Texas Home, paid through seller or builder concessions or your own funds, never with TDHCA’s assistance. They aren’t allowed on My First Texas Home. TDHCA’s buydown section covers only permanent buydowns, and its program overview says temporary buydowns are not permitted, so don’t plan on a 2-1 buydown with a TDHCA loan unless a participating lender confirms it in writing.

Whatever program you use, lenders qualify you at the full note rate, not the bought-down rate. Our guide to buying a house with high interest rates shows what a 2-1 buydown costs and saves on a typical Texas loan.

Timing a new build with assistance: contracts, rate locks, and the 60-day window

This is where new construction gets tricky. Both TSAHC and TDHCA tie the assistance to a rate lock, and the lock comes with a clock.

• A signed contract comes first. TSAHC (section 7.2) requires a sales or construction contract signed by you and the builder when the rate is locked. TDHCA (section 7.3) requires the same when the loan is reserved.
• The loan has about 60 days. TSAHC’s guidelines say the loan must be purchased by its servicer within 60 days of the lock, with extensions available at a cost of 0.125% per 15 days. TDHCA says loans are due to be purchased within 60 days of reservation, with extension fees it says are not intended to be charged to you, though fees caused by switching to a different property can be. With TSAHC, a locked loan can’t be moved to a different address, so settle on your lot before you lock.
• The home has to be done. For a standard purchase loan, expect the home to be finished before closing. FHA, for example, requires the lender to certify the home is 100 percent complete, and the TREC new-home contract for homes under construction ties completion to final inspection and approval by the local authorities and the lender.

Put together, if your home is months from completion, a lock now may expire before closing. Builders and lenders often time the lock to the expected completion date.

Action step: before you sign, ask the builder for a realistic completion date and ask a participating lender when they’d lock your program rate and assistance, and what happens if construction runs late.

New construction rules for FHA and VA loans

One point the VA makes on its guide to resolving builder disputes applies to every buyer: the VA program “guarantees your loan, not your home’s condition.” An appraisal isn’t an inspection, so a private home inspection before closing is worth considering even on a brand-new house.

Texas new-home contracts, title, and warranties

When a real estate agent prepares a new-home contract, the Texas Real Estate Commission requires one of two forms, both effective July 1, 2026: the New Home Contract (Incomplete Construction), TREC No. 23-20, and the New Home Contract (Completed Construction), TREC No. 24-20.

• Paragraph 12A(1)(b) holds the builder’s contribution toward your expenses, written as a not-to-exceed dollar amount.
• Paragraph 6A decides whether the builder or you pay for the owner’s title policy.
• Warranties: the forms say the seller makes no other express warranties except those in the contract, a separate writing, or the law, and assigns the manufacturers’ warranties to you at closing. Get the builder’s warranty in writing.
• Construction defects: both forms carry the notice required by Chapter 27 of the Texas Property Code, which generally requires written notice to the builder at least 60 days before filing suit and gives the builder a chance to inspect and offer to repair.

Many builders use their own contracts and addenda instead, so read whatever you’re given closely and have your agent or an attorney review the full package before you sign.

New construction can be one of the better deals in Texas right now, with builders competing for buyers and prices closer to resale than they’ve been in years. The buyers who get the most out of it know their loan’s limits, check whether the lender can offer state assistance, and time the lock to the build. A participating lender can show you the numbers both ways before you commit.

New construction and down payment assistance: FAQ

New construction and down payment assistance: FAQ

† 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, loan officer, home builder, real estate broker, or attorney, 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 any home builder or builder-affiliated lender, or with Fannie Mae, Freddie Mac, HUD, FHA, the VA, the CFPB, the Texas Real Estate Commission, TSAHC, TDHCA, or any government agency. Rules summarized here are subject to change and lender overlays and are not a commitment to lend or legal advice. Confirm current requirements with a participating licensed lender and your real estate professional or attorney. Equal Housing Opportunity.