Down payment assistance can reduce the cash needed to buy a home, but the form of assistance matters. A grant, a forgivable second loan, and a repayable second loan have different costs and exit rules. This guide compares the main TDHCA and TSAHC options, explains the tradeoffs, and uses a $400,000 purchase example so you can compare an assisted loan with an ordinary mortgage.
Who Counts as a “First-Time Buyer” in Texas? (It’s Not What You Think)
For programs that require first-time buyer status, the definition generally looks at ownership and occupancy of a principal residence during the previous 3 years. It does not necessarily mean you have never owned any real estate. Each program also has separate income, property, credit, and occupancy requirements.
Someone who sold their principal residence more than 3 years ago may meet the ownership-history test. An investment property never occupied as a principal residence can be treated differently. Divorce does not automatically erase recent ownership. Veterans and purchases in designated targeted areas may qualify for exceptions under the applicable program.
Program 1: My First Texas Home (TDHCA)
TDHCA’s My First Texas Home pairs an eligible 30-year fixed-rate mortgage with down payment and closing cost assistance. The program matrix includes different assistance structures, including a 3-year forgivable option and a 30-year deferred repayable option. The mortgage rate and assistance percentage depend on the option reserved; do not assume every assisted loan is below market or forgiven after 3 years.
What You Get
- A 30-year fixed-rate mortgage at the program’s reserved rate; compare it with a same-day unassisted loan quote
- Assistance options shown on the current program rate sheet, with eligible uses and amounts determined by the selected option
- Either a forgivable or deferred repayable second loan, depending on the option; read the actual repayment and forgiveness triggers
- Works with FHA, VA, and USDA loan types
- MCC combination options may be available, subject to separate eligibility and current reservation rules
Austin-Area Income Limits (Travis & Williamson Counties, 2026)
TDHCA’s limits sheet effective February 12, 2026 lists the following My First Texas Home household-income limits for the Austin-Round Rock-San Marcos area, including Travis and Williamson counties. These limits belong to this program; they are not the limits for every assistance product.
| Household Size | Travis County (Austin) | Williamson County | Targeted Area Limit |
|---|---|---|---|
| 1–2 people | $134,400 | $134,400 | $161,280 |
| 3+ people | $154,560 | $154,560 | $188,160 |
Source: TDHCA’s income and purchase-price limits sheet, effective February 12, 2026. The last column applies to designated targeted areas, not an entire county. Confirm the address, household-income calculation, and current limit when reserving the loan; the table does not determine eligibility by itself.
Key Requirements
- Program minimum credit score is generally 620, with loan-type and lender requirements also applying
- Must not have owned a primary residence in the past 3 years (waived for veterans and targeted area purchases)
- Must occupy the home as primary residence within 60 days of closing
- Required homebuyer education under the selected program’s rules, including applicable spouse requirements
- Must work through a TDHCA-approved participating lender — you cannot apply directly to TDHCA
- A valid program reservation and funding availability; a place in an eligible income range does not reserve assistance
Program 2: My Choice Texas Home (TDHCA)
My Choice Texas Home removes the first-time buyer requirement. A repeat buyer can compare its assistance options with an ordinary mortgage, subject to the program’s income, property, and underwriting requirements. The useful comparison is cash at closing plus total borrowing cost, not the assistance percentage alone.
My Choice has its own income limits and loan options, including eligible government and conventional products. Read the selected assistance terms: a deferred repayable second loan is still a debt even when it has no monthly payment, while a forgivable option depends on satisfying its conditions. Use the current program matrix and rate sheet rather than assuming every option has the same 3-year forgiveness rule.
Program 3: TSAHC Home Sweet Texas & Homes for Texas Heroes
TSAHC is a nonprofit housing organization, distinct from the TDHCA state agency. Its Home Sweet Texas and Homes for Texas Heroes programs offer eligible mortgage and assistance combinations. Available assistance levels and grant or forgivable-loan choices vary with the product and current rate sheet.
Home Sweet Texas — For All Eligible Buyers
Home Sweet Texas does not generally require first-time buyer status for its basic down payment assistance. Income and underwriting limits still apply, and adding an MCC introduces separate rules. Use TSAHC’s current county and product-specific limits rather than a single income figure for all Austin-area borrowers.
Homes for Texas Heroes — For Essential Workers
Homes for Texas Heroes serves eligible occupations and veterans under TSAHC’s definitions, including qualifying educators and public safety workers. Confirm that your role meets the current definition and ask for the applicable fees in writing. Base assistance and MCC eligibility are separate; a Heroes designation does not automatically satisfy the MCC’s ownership-history requirements.
The Grant vs. Forgivable Loan Choice
A grant can avoid a second-loan repayment obligation, while a forgivable loan requires you to satisfy its conditions. Compare the mortgage rates and fees attached to each option. For example, if one option costs $80 more per month, that is $2,880 over 3 years. Weigh that cost against the assistance retained and what happens if you sell or refinance before forgiveness.
| Program | Who Qualifies | Assistance Amount | Repayment | MCC Eligible |
|---|---|---|---|---|
| My First Texas Home | First-time buyers (3-yr rule) | Current rate-sheet options | Forgivable or deferred repayable option | Separate eligibility/reservation |
| My Choice Texas Home | All buyers (no first-time req.) | Current rate-sheet options | Selected second-loan terms apply | Confirm eligible combination |
| Home Sweet Texas (TSAHC) | Eligible first-time or repeat buyers | Product/rate-sheet dependent | Grant or selected second-loan terms | Separate MCC requirements |
| Homes for Texas Heroes (TSAHC) | Qualifying occupations/veterans | Product/rate-sheet dependent | Grant or selected second-loan terms | Confirm MCC eligibility and fees |
| Mortgage Credit Certificate (MCC) | Separate ownership/income rules | Certificate percentage of eligible interest | N/A — tax credit, not a loan | Eligible program combination required |
Program 4: Understanding the Mortgage Credit Certificate
An MCC is a qualified mortgage credit certificate used to calculate a federal income-tax credit. It can benefit an eligible borrower with sufficient tax liability, but it is not a reduction in the mortgage bill and is not automatically a cash refund.
How the MCC Works
Use the certificate’s stated percentage, not the mortgage rate. For a simple hypothetical example, assume $20,000 of eligible annual interest and a 20% certificate rate:
- Eligible annual interest assumed: $20,000
- Calculated credit: $20,000 × 20% = $4,000
- Actual usable credit depends on the tax-liability limitation
- IRS Form 8396 applies the $2,000 calculation cap when the certificate rate exceeds 20%; it is not a universal cap
- Use IRS Form 8396 to calculate the annual credit and any permitted carryforward
- Eligibility, interest paid, refinancing, and occupancy changes can affect future years
Do not multiply one year’s example by 10 and treat it as guaranteed savings. Interest usually changes as the loan is repaid, tax liability can change, and selling or refinancing may affect the benefit. Include only a supportable credit estimate when comparing options.
Important 2026 MCC Update
TSAHC’s published FAQ says its MCC is available with its DPA and No-DPA (0%) programs until further notice; the standalone MCC route is closed. That does not mean positive down payment assistance is mandatory. Confirm current reservation availability and the permitted loan combination before selecting a mortgage.
How to Actually Use These Programs: Step by Step
The single most important thing to understand about every program on this list: you cannot apply to TDHCA or TSAHC directly. All assistance is delivered through approved participating lenders. That means your first step is finding a lender who is actively working with these programs — not every lender participates, and some who do participate rarely use them and are not up to date on current guidelines.
- Check basic eligibility first. Use TSAHC’s free online Eligibility Quiz at tsahc.org to get a quick read on whether you qualify for TSAHC programs. For TDHCA programs, visit welcomehome.tdhca.texas.gov. These take about two minutes and give you a useful starting point.
- Find a participating lender early. Use each provider’s approved-lender directory. Ask which specific product the lender is quoting and request a comparison with an unassisted mortgage. Familiarity with the program helps, but no lender can promise approval or a closing date before reviewing the file.
- Bring it up at your very first lender conversation. Discuss assistance and an MCC during pre-approval so the lender can check reservation and documentation deadlines before closing. Do not assume either can be added retroactively after the purchase.
- Complete the homebuyer education course. Complete the education required for the specific program and confirm the accepted provider, participants, and certificate timing with the lender. Do not assume every product accepts the same course.
- Check current funding and reservation timing. Check current reservation availability and expiration dates when you are ready to buy. A blanket rule to apply early in the fiscal year is less useful than knowing whether your chosen loan can be reserved through your expected closing date.
- Do not change jobs, open new credit, or move large sums of money without first discussing the effect with your lender. Employment, credit, and asset documentation changes can require the loan to be reviewed again.
What $400K Looks Like With vs. Without Assistance
This hypothetical example isolates the assistance arithmetic: a $400,000 purchase, 3.5% down ($14,000), and a $386,000 base loan at an assumed 6.5% for 30 years. A hypothetical 5% grant based on that base loan is $19,300. Actual program rates can differ from unassisted rates. FHA upfront and annual mortgage insurance, taxes, insurance, fees, and escrow deposits are excluded here and must be added to a real quote.
| Item | Without Assistance | With hypothetical 5% grant |
|---|---|---|
| Purchase Price | $400,000 | $400,000 |
| Down Payment (3.5% FHA) | $14,000 out of pocket | $14,000 funded by eligible assistance |
| Illustrative grant | $0 | $19,300 (5% of $386,000) |
| Base-loan monthly principal + interest | About $2,440 | About $2,440 at same assumed rate |
| MCC in this comparison | Not included | Not included |
| Cash for other closing costs | Buyer funds required costs | Up to $5,300 remaining assistance for eligible costs |
| Key tradeoff | More buyer cash at closing | Less initial cash; compare actual rate, fees, and assistance terms |
Arithmetic: $400,000 × 3.5% = $14,000 down; $400,000 − $14,000 = $386,000 base loan; $386,000 × 5% = $19,300 assistance; $19,300 − $14,000 = $5,300 potentially available for other eligible costs. This is not a current TSAHC offer or a promise of zero cash due. Financing FHA upfront mortgage insurance would increase the loan and payment. No MCC benefit is assumed.
Frequently Asked Questions: Will I Qualify?
Do I qualify if I owned a home more than three years ago?
You may meet the ownership-history test if you have not owned and occupied a principal residence during the required 3-year period. Other eligibility rules still apply, and some assistance products do not require first-time buyer status at all.
Does my spouse’s ownership history affect my eligibility?
It can. My First Texas Home reviews applicable spouse ownership history, including a non-purchasing spouse, and provides specified exceptions. My Choice and base TSAHC assistance have different rules. Give the lender the complete ownership history instead of assuming one spouse’s eligibility settles the question.
Can I qualify if I’m buying a home in a higher price range?
It depends on the exact product and address. For example, TDHCA’s February 12, 2026 My First Texas Home sheet lists Austin-area purchase limits of $598,019 in non-targeted areas and $730,912 in targeted areas. These are not universal limits for TSAHC, My Choice, or MCC products. Ask the lender to identify the applicable current limit in the program document.
What is the minimum credit score to qualify?
The published program minimum is often 620, but the loan type, underwriting findings, assistance option, and lender can require more. A score alone cannot determine approval or a better rate; request an actual eligibility review and compare written quotes.
Can I use down payment assistance with a VA loan?
Eligible TDHCA and TSAHC products can work with VA loans. Assistance may help with permitted closing costs, but VA down payment requirements depend on eligibility and the transaction. Confirm the selected product and any separate MCC requirements rather than assuming veteran status guarantees every benefit.
Is the MCC tax credit the same as the mortgage interest deduction?
No. A deduction reduces taxable income; a credit reduces calculated tax, subject to its limits. Form 8396 requires a corresponding reduction in deductible mortgage interest. A tax professional can apply the certificate and deduction rules to your return.
What happens to the down payment assistance if I sell or refinance early?
Read the signed assistance documents. A forgivable loan can require repayment if a triggering event happens before its conditions are met; a deferred repayable loan remains due under its own terms. Grant treatment differs. An MCC is separate and may involve federal recapture after certain sales. Compare the actual payoff terms before planning a sale or refinance.
Can I qualify if I have student loan debt?
Student debt does not automatically disqualify you. The lender must calculate the payment used for qualification under the loan type and program rules, including treatment of deferred or income-based payments. Request that calculation before relying on a budget based only on the amount you currently pay.
Do these programs work with new construction?
Eligible new construction can qualify, but confirm property requirements, completion timing, and rate or assistance reservation deadlines. Also budget the tax and insurance payment for the completed home rather than the builder’s land-only tax bill.
Is there a homebuyer education requirement?
Confirm the selected program’s approved course, required participants, fee, and completion deadline with the lender. Complete it in time for closing rather than assuming a generic online certificate satisfies every product.
Next Steps
Send me your target price, approximate cash available for the purchase, and expected ownership timeline. I can help organize the home search and the questions for an approved participating lender so you can compare assisted and unassisted quotes side by side.
- Check the Austin Metro Market Snapshot — current inventory, days on market, and price trends updated regularly.
- Browse all current listings filtered to the price range your real monthly budget supports.
- Talk to Vlad directly — we can compare the cash-to-close and full-payment questions before you choose a home.