Texas First-Time Homebuyer and Down Payment Assistance Programs
Texas homebuyer programs
The Texas Department of Housing and Community Affairs (or TDHCA) is a state agency that has been established by the governor and legislature to provide affordable and quality housing. Texans have the option to apply for loan programs with flexible down payments and closing cost assistance.
TDHCA partners with lenders to offer homebuyers Federal Housing Administration and Department of Veterans Affairs, Department of Agriculture and Fannie Mae (Freddie Mac) loans with fixed-rate 30-year mortgage loans. These loans can be used to help borrowers qualify for additional financial assistance from TDHCA.
TDHCA Homebuyer Assistance
The state has different income and property price limits, but this is what a typical Texas borrower will need to be eligible for assistance.
- The minimum credit score for borrowers must be 620
- Borrowers must have the income and loan requirements.
- The property must be in Texas. It cannot exceed the limited purchase price. Borrowers who select homes in “target areas”, which are areas with slow economic growth, may be eligible for a higher income and may be allowed to go above the purchase price limit.
- The following properties are eligible: Single-family homes, condos, manufactured houses, and duplexes as long as the homebuyer resides in one unit.
- A buyer must be approved by a lender that participates in Texas Homebuyer Program.
My First Texas Home
First-time homebuyers, meaning you haven’t owned a house as your primary residence in the last three years, and veterans can apply to the My First Texas Home Program. It is a 30-year mortgage at a low interest rate.
Qualified Home buyers can receive a zero-interest, no monthly payment second mortgage, up to 5% can be used for the down payment or closing costs. Although this is technically a loan you don’t have to repay the money unless the property is sold, refinanced, or paid off with the first 3 years.
You may also be eligible for the Texas Mortgage Credit Certificate. This will reduce your federal tax liability dollar-for-dollar. You don’t have to have a minimum credit score in order to be eligible. The reason one would want this is that it can help to lower your debt to income level therefore you may be eligible for a larger purchase. But here’s the catch. It does cost $500 to be eligible for this credit? There are very few funds available for this product. Your money could have run out by the time you submit your application.
Texas State Affordable Housing Corp.
Texas State Affordable Housing Corp. (or TSAHC) was established to assist low- and moderate-income families in obtaining homeownership in areas that are not served by affordable housing. Although TSAHC funding does not come from the state it is worth looking into if you are looking to purchase your first home and need financial assistance.
Home Sweet Texas Home Loan Program
Although the Home Sweet Texas Home Loan Program is aimed at first-time borrowers, the income limits can vary by county. However, the average household income is $97,000 to the minimum.
You will be granted a fixed-rate 30-year mortgage if you are approved. You can also choose down payment assistance, which you don’t have to repay. You can also choose a deferred forgivable second mortgage. This will allow you to repay the loan only if it is sold or refinanced within three years. You can get down payment assistance up to 5% of your total loan amount.
Homes for Texas Heroes Program
The Homes for Texas Heroes Program has a few exceptions to the Home Sweet Texas Home Loan Program.
It is only available to teachers, firefighters, corrections officers and veterans. The income limits are higher than Home Sweet Texas Home: they can be up to 115% of median family income in the region where the house is located, or up to 140% if targeted areas.
What to do if you don’t have a good credit rating?
It doesn’t mean that you can’t get these programs if your credit score isn’t good enough. You can make small changes to improve your credit score in just a few months.
The most important thing you should do is to pay your bills on-time every month. And that’s not only for loan payments and credit cards. Credit bureaus may also report utility bills and rent if they are sent to collect. A credit score can be affected by late payments of more than 30 days. This could lead to a drop in credit score of around 100 points.
If you are considering applying for a loan, even though you’re trying to improve your credit score, it is best to decline any new credit card offers.
If you are concerned about your credit score, The Richard Woodward Mortgage Team can do a soft pull initially to see where you are. If your score is good enough, then you can proceed. If it is not, Richard will coach you on what to do to improve your scores. If you are in need of credit restoration, Richard can assist you with that as well for a low fee.
How do you get started?
Take the Texas Homebuyer Program’s readiness test to find out if your eligibility for these programs. Just complete a free application here and Richard will give you the green light to move forward or coach you in the right direction. For a list of documentation, you will need to visit our application page.
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