Houston Down Payment Assistance

The median home in the Houston metro sells for somewhere in the mid-$300,000s, and the number that stops most buyers cold isn’t the price — it’s the down payment they think they need to clear it. Twenty percent on a $330,000 home is $66,000, and almost nobody buying their first place in Harris County is sitting on that. Here’s what gets lost in the worry: Texas funded billions in homebuyer assistance last year, much of it built precisely for Houston buyers who earn a normal living and don’t have a six-figure savings account. The wall is real. It’s also shorter than it looks once you know which programs you can actually use.

Houston down payment assistance is help — usually a grant, a forgivable second loan, or a no-payment deferred lien — that may cover part or all of the down payment and closing costs on a Houston-area home. Eligible Harris County buyers may combine state programs from TSAHC and TDHCA with the federal Mortgage Credit Certificate tax credit, depending on county income limits, credit score, occupation, and program funding cycles. This guide walks through every Houston-area program with real numbers, the actual eligibility rules, and primary-source links so you can verify everything yourself. If you have a 620 credit score and an income under your county’s ceiling, you may qualify for at least one program — often more.

Think you won’t qualify? Four things Houston buyers get wrong

Most people who could use Houston down payment assistance never apply, and it’s almost always because of something they believe that isn’t true. Read these before you count yourself out.

• “I make too much money.” Probably not. The TSAHC limit in Harris County may reach approximately $126,375 — and it applies at any household size, so a dual-income couple often still fits. My Choice Texas Home runs higher still, up to roughly $173,400 on conventional financing per the TDHCA income limits.
• “I’m not a first-time buyer.” Doesn’t matter for several programs. TSAHC’s Homes for Texas Heroes has no first-time requirement for teachers, first responders, and other qualifying roles, and TDHCA’s My Choice Texas Home was built specifically for repeat buyers, per TSAHC.
• “I need 20% down.” You don’t. Paired with FHA financing, Houston DPA may cover most of a 3.5% down payment plus closing costs, and VA and USDA buyers already start at zero down. The assistance sits on top of a normal first mortgage.
• “My credit isn’t good enough.” The program floor is 620 on most loan types for both TSAHC and TDHCA — below the U.S. average FICO of around 715. Some lenders set overlays above that, which is exactly why the lender you work with matters.

If even one of those was the reason you’d written this off, it’s worth a couple of minutes to find out where you actually stand. Our short form takes under 60 seconds — no SSN, no credit pull.

What is down payment assistance in Houston, Texas?

Houston buyers have access to several overlapping sources of down payment and closing-cost help. Most of it falls into one of three structures: grants (no repayment), forgivable second loans (no monthly payment, forgiven over time if you stay in the home), or deferred second liens (no monthly payment, due only when you sell or refinance). The right structure depends on which program you qualify for and how long you plan to stay in the home.

• TSAHC (Texas State Affordable Housing Corporation) — statewide programs that work across Harris County and the surrounding suburbs, typically delivering a grant of up to 5% of the loan amount when paired with FHA, VA, or USDA financing.
• TDHCA (Texas Department of Housing and Community Affairs) — statewide programs administered through the Texas Homebuyer Program portal at welcomehome.tdhca.texas.gov, including My First Texas Home and My Choice Texas Home.
• Federal MCC tax credit — worth 15% of your annual mortgage interest each year for the life of the loan, with no fixed annual cap at that rate and subject to your federal tax liability. Issued at closing under IRS §25.
• City of Houston HAP — the Homebuyer Assistance Program run by the City of Houston Housing & Community Development Department. Important: HAP is administered directly by the city, not by ShopDPA or our partner-network lenders. We cover what it is so you understand the option; to apply, you work with the city or a HAP-approved counseling agency.

Houston down payment assistance income limits (2026)

Every Houston-area program sets a maximum household income, and the limits are higher than most buyers expect — often well into six figures. They vary by program, and for the TDHCA programs they vary by household size. We feature the non-targeted, above-80%-AMFI figures, which is the tier most working Houston households fall into.

A quick read: Home Sweet Texas and Homes for Texas Heroes use a single TSAHC income limit that applies at any household size, so many Houston households fit comfortably. My First Texas Home is tiered by household size and is for first-time buyers on FHA, VA, or USDA loans, while My Choice Texas Home carries the highest limits, adds repeat buyers and conventional financing, and has no purchase price cap. Limits may be higher in HUD-targeted census tracts, which cluster inside the inner loop.

TSAHC programs for Houston buyers

TSAHC runs programs that may be available to eligible Houston-area buyers whether you’re inside Houston city limits or in a surrounding suburb — Sugar Land, Katy, The Woodlands, Pearland, Cypress, Spring, and beyond:

• Home Sweet Texas Home Loan Program — for first-time and repeat buyers. Typically delivers DPA as a grant (up to 5% of the loan amount) when paired with FHA, VA, or USDA, or as a forgivable second when paired with conventional. The Harris County income limit may reach approximately $126,375 (non-targeted, any household size).
• Homes for Texas Heroes — for teachers, peace officers, firefighters, EMS, corrections officers, school staff, school counselors, school and nursing-faculty nurses, and veterans. The standout: no first-time-buyer requirement, and the income limit is the same TSAHC figure as Home Sweet Texas — up to approximately $126,375 in Harris County, at any household size.
• TSAHC MCC — the federal Mortgage Credit Certificate paired with a TSAHC first mortgage. Worth 15% of your annual mortgage interest each year, with no fixed annual cap at that rate, subject to your tax liability. Pairs with FHA, VA, USDA, or conventional first mortgages.

For Houston buyers, the most-used TSAHC combination is the Home Sweet Texas grant paired with FHA financing — the Harris County limit (around $126,375, any household size) combined with FHA’s low down payment covers a meaningful slice of the Houston buyer pool. Primary source for TSAHC eligibility specifics: the TSAHC homebuyers page.

TDHCA programs for Houston buyers

TDHCA’s Texas Homebuyer Program, administered through welcomehome.tdhca.texas.gov, runs two programs that may be available to Houston-area buyers:

• My First Texas Home (MFTH) — for first-time homebuyers and qualifying veterans (the first-time rule may be waived for veterans and for purchases in HUD-targeted census tracts, several of which sit inside Loop 610). Government loans only (FHA, VA, USDA), with a deferred second lien for DPA and closing costs. The Houston income limit may reach approximately $101,100 for 1–2 persons or $116,265 for 3 or more.
• My Choice Texas Home (MCTH) — for repeat buyers, with no first-time requirement. Adds conventional financing on top of FHA, VA, and USDA, and carries no purchase price limit. The Houston income limit may reach approximately $173,400 (conventional) or $171,870 (FHA, VA, USDA). Note: MCTH does not allow MCC pairing — TDHCA only pairs the MCC with My First Texas Home.

TDHCA maintains a directory of approved lenders that originate across the Houston metro at welcomehome.tdhca.texas.gov/lenders. Not every lender is approved to offer these programs, which is part of why working with a participating lender in our partner network matters.

The MCC tax credit for Houston buyers

The Texas Mortgage Credit Certificate (MCC) is a federal tax credit issued at closing under IRS §25. It lets eligible Houston buyers claim a percentage of their annual mortgage interest as a dollar-for-dollar federal income tax credit, every year they own the home. TSAHC issues its certificate at a 15% credit rate, and because that rate is at or below 20%, there is no fixed annual dollar cap — your benefit is limited instead by the federal income tax you actually owe. The credit is available for the life of the loan and may be reissued after a refinance.

Because the credit is non-refundable, it can reduce your federal tax bill to zero but won’t pay you cash beyond that. If your liability in a given year is lower than your calculated credit, you claim what you owe and may generally carry the unused portion forward up to three years under §25. A CPA can model the expected benefit for your specific Houston income and deductions before you commit to a TSAHC MCC or TDHCA MCC at closing. One MCC per loan — you may use a TSAHC MCC or a TDHCA MCC, never both on the same mortgage. Primary source for the mechanics: IRS Form 8396 and IRS Publication 530.

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

Down payment assistance sits on top of a regular first mortgage. The most common pairings for Houston-area buyers:

• FHA + Houston DPA — the most common combo. FHA alone allows a 3.5% down payment, and with TSAHC or TDHCA layered on top, the DPA may cover the down payment plus much of the closing costs — out-of-pocket often drops well under a few thousand dollars.
• VA + Houston DPA — Houston-area veterans already get zero down on VA, so DPA may cover closing costs instead of the down payment. Disabled veterans rated 10% or higher skip the VA funding fee, and the Texas VLB second-lien program pairs with VA in a two-note structure.
• USDA + Houston DPA — USDA Rural Development loans cover certain areas outside the Houston core (verify a specific property at the USDA eligibility map). Zero down on USDA, with DPA available for closing costs; income caps tend to be lower.
• Conventional + Houston DPA — conventional financing through Freddie Mac HFA Advantage or Fannie Mae HFA Preferred unlocks reduced mortgage insurance and pairs cleanly with TSAHC or TDHCA. 3% minimum down, and often better long-term economics than FHA if you have 680+ credit and plan to stay 7+ years.

TSAHC vs TDHCA: which Houston program fits?

Both are statewide Texas agencies, both work in Harris County, and both require a 620 FICO. The differences come down to who they serve and how the assistance is structured:

The City of Houston HAP — what it is, and how we fit in

The City of Houston Homebuyer Assistance Program (HAP) is a city-funded program that may provide eligible first-time buyers with a forgivable second loan toward down payment, closing costs, and pre-paid items on a home inside Houston city limits. Funding comes from the U.S. Department of Housing and Urban Development HOME Investment Partnerships Program and is allocated year-to-year through the city’s Housing & Community Development Department.

What HAP may cover, per the city’s official program page (verify funding availability before applying):

• A forgivable second loan toward down payment, closing costs, and pre-paid items
• The home must be within Houston city limits — HAP does not cover Sugar Land, Katy, The Woodlands, Pearland, or other suburbs outside the city
• First-time-buyer requirement, with some exceptions for displaced homemakers and target-area purchases
• Household income generally may not exceed 80% of the Houston-Sugar Land-The Woodlands MSA area median income
• HUD-approved homebuyer education required before closing
• Forgiveness typically over five years if you keep the home as your primary residence

To apply, you submit directly to the City of Houston Housing & Community Development Department or through a HAP-approved counseling agency — the official program page is at houstontx.gov/housing. Confirm current dollar amounts, eligibility rules, and funding availability there before you count on it.

How ShopDPA fits in: we are not affiliated with the City of Houston HAP and do not process HAP applications. We connect Houston-area buyers with licensed mortgage professionals in our Texas partner network who run TSAHC, TDHCA, and the federal MCC. Many buyers who qualify for HAP also qualify for state assistance that may work alongside it — but the state programs are what our partner lenders originate, not HAP itself.

Houston-area school districts and the Heroes program

The Houston metro contains some of the largest school districts in Texas. For TSAHC Homes for Texas Heroes participants — teachers, school counselors, school nurses, and full-time school staff — employment is verified with a letter from your ISD HR department. Major Houston-area districts include:

• Houston ISD (HISD) — the largest district in Texas, covering most of the City of Houston including the inner loop.
• Cypress-Fairbanks ISD (Cy-Fair) — Cypress, Tomball, and northwest Harris County.
• Klein ISD and Spring ISD — Klein, Spring, and northern Harris County.
• Katy ISD — Katy, Cinco Ranch, and western Harris/Fort Bend.
• Fort Bend ISD — Sugar Land, Missouri City, Richmond, and Fort Bend County.
• Pearland ISD and Alvin ISD — Pearland, Manvel, and southern Brazoria County.
• Conroe ISD — Conroe and southern Montgomery County, including The Woodlands.

Most districts have a benefits coordinator familiar with the Heroes program letter requirements. If you teach anywhere in the Houston metro, the Heroes program likely reaches you.

Where you buy changes which programs apply

“Houston” is really a metro of 6.5 million people across several counties, and the line that matters most for assistance is the city limit:

• Inside Houston city limits — HAP-eligible. Includes Midtown, Montrose, East End, Third Ward, the Heights, Garden Oaks, Memorial, and most inner-loop neighborhoods. The HUD-targeted census tracts that allow higher TDHCA income ceilings cluster here.
• Sugar Land / Fort Bend County — outside the city, so HAP does not apply, but TSAHC and TDHCA do. Heavy overlap with Fort Bend ISD.
• Katy / western Harris-Fort Bend — outside city limits. Katy ISD. A major first-time-buyer corridor along the Grand Parkway.
• The Woodlands / Conroe / Montgomery County — outside the city. TSAHC and TDHCA available. Conroe ISD covers The Woodlands.
• Pearland / Friendswood / Brazoria-Galveston — outside the city. TSAHC and TDHCA available.
• Cypress / Spring / Tomball / northern Harris — outside the city. Cy-Fair, Klein, and Spring ISD coverage.

If you’re shopping across several neighborhoods, our short form can sort out the best fit based on the county and district you land in. We don’t need an exact address — a target area is enough.

Credit score requirements for Houston DPA

The credit floor is set by two layers: the program minimum (from TSAHC, TDHCA, the city, or HUD) and the lender overlay — extra underwriting standards a given lender adds on top.

• TSAHC programs: 620 FICO minimum on most loan types (640 for HFA conventional)
• TDHCA programs: 620 FICO minimum on both My First and My Choice Texas Home
• Houston HAP: typically aligned with the FHA or conventional first mortgage; verify with the city’s application
• Lender overlays: some lenders apply 640 or 660 minimums above the program floor

For context, the U.S. average FICO is around 715, so a 620 minimum sits well below the national average. If your score is borderline, the lender you’re introduced to matters — some work with manual underwriting and lower-FICO scenarios that others won’t touch.

HUD homebuyer education for Houston buyers

Every major Houston DPA program — TSAHC, TDHCA, and Houston HAP — requires a HUD-approved homebuyer education course before closing. Courses run 6–8 hours and cover budgeting, mortgage basics, the Texas closing process, and how to avoid foreclosure. Two paths:

• Online courses — Framework Homeownership and eHome America are the most common. Self-paced, $75–$99, often completable in one sitting.
• HUD-approved counseling agencies in Houston — several serve the metro with in-person classes, often at no cost. Find one through HUD’s Find a Housing Counselor tool.

Save the certificate — your loan officer needs it before clear-to-close, and Houston HAP requires it before you submit.

Recapture tax for Houston DPA buyers (IRS §143)

The federal recapture tax under IRC §143 applies to certain mortgage-revenue-bond–financed loans, which includes most TSAHC and TDHCA first mortgages. Here’s the accurate version: recapture can apply only when three conditions all happen:

• You sell the home within 9 years of buying it
• Your household income at the time of sale exceeds the program’s adjusted limit for Harris County and your family size
• You realize a capital gain on the sale

If any one of those three doesn’t happen, no recapture is owed, and most Houston DPA borrowers never trigger all three. Even when it does apply, both TSAHC and TDHCA run reimbursement programs — eligible borrowers hit with recapture may be reimbursed for the federal tax owed. Save your closing documents and contact the issuing agency before you file the year you sell. This is general information, not tax advice; talk to a CPA before selling if you think recapture might apply.

Step by step: from form to closing day

The path a Houston-area buyer takes through ShopDPA:

1. Tell us about your situation through our short form. Under 60 seconds, no SSN, no credit pull, no cost.
2. See your options. We line up the Texas state programs — TSAHC, TDHCA, MCC — that may fit your Harris, Fort Bend, Brazoria, Montgomery, or Galveston purchase, plus a note on whether HAP may be relevant if you’re buying inside the city.
3. Meet your Texas loan officer. A licensed mortgage professional in our partner network walks you through what your options actually look like for your income, credit, and target area. The lender does the underwriting; ShopDPA introduces.
4. Complete homebuyer education. A 6–8 hour HUD-approved course, online or in person at a Houston agency.
5. Apply for the program. Your lender submits the TSAHC or TDHCA enrollment. If HAP is the right fit, you apply directly with the City of Houston.
6. Close on your home, with the assistance layered in along the way.

ShopDPA is a Texas home loan referral service. We connect Texas buyers with licensed mortgage professionals in our partner network. We are not a mortgage broker, lender, or loan officer, and we do not originate, fund, or service loans.

Documents to have ready for pre-qualification

• Photo ID — driver’s license or state ID
• Income — last 2 pay stubs, last 2 W-2s, last 2 years of federal tax returns (1040 plus all schedules)
• Self-employment, if applicable — last 2 years of business returns plus a year-to-date profit & loss statement
• Assets — last 2 months of bank statements (all accounts) and recent retirement or brokerage statements
• Large deposits — a letter of explanation and paper trail for any deposit over about $500 not from payroll
• VA buyers — DD-214 (or a current Statement of Service for active duty); your lender can pull the Certificate of Eligibility
• Heroes program — a current employer verification letter on letterhead, usually from your ISD HR department
• Homebuyer counseling certificate — from your HUD-approved course
• Purchase contract — the fully executed sales contract, once you’re under contract

Houston down payment assistance: frequently asked questions

† ShopDPA is an independent Texas home loan referral service. We are not a mortgage broker, lender, or loan officer, and we are not affiliated with TSAHC, TDHCA, the City of Houston, HUD, the IRS, or any government agency. Program details, income limits, and dollar figures are summarized from primary sources and may change; confirm current terms with the issuing agency or a participating lender before applying. This page is general information, not financial, legal, or tax advice.