Is home ownership a longtime dream and a goal you have been working towards, but you just can’t seem to save enough money to make it happen? If you have good credit and sufficient income to manage house payments, but the down payment and closing costs are holding you back, you will be happy to know that you can actually buy a home. There are several Down Payment Assistance programs out there to help buyers secure their own home. These programs change from year to year depending on funding.
Each Down Payment Assistance program has different requirements for qualification and different repayment scenarios. You should review in detail each of these options with a qualified mortgage lender who can explain the pros and cons of each and help you decide if this is right for you.
Pros and Cons
Keep in mind that some of the assistance is actually “free money” but some of the assistance is just deferred payment, meaning that the assistance is financed into the loan. And/Or the loan comes with a substantially higher interest rate or stipulations on how long you need to own the home to receive full benefits. They also come with more upfront legwork for paperwork. Understanding where the money comes from and how you pay it back is very important in determining if it’s right for you. Also, not everyone will qualify. You may have great credit and a good job, but if you make too much money, you may not qualify. Also, if you qualify within the income brackets, but your credit needs some work or your work history does not meet the guidelines, you may not qualify. Some programs are subject to income and property value limitations and some programs, which have government subsidies may have a recapture tax if the home is sold too early. Some programs are limited to certain areas too.
It can be complicated to figure out which program is right for you . There is no cost or obligation to see if you do qualify, so it’s definitely worth speaking to a Qualified Lender about the programs.
Not all Lenders work with these programs. There are lenders who will “give it a try” but they are not experienced with the complexities of the qualification process and the paperwork involved. They may end up wasting your time and possibly your money or get your hopes up to only be disappointed later. Please use a qualified lender if you want to consider using one of these programs, as it can be a confusing and complicated process that requires an experienced lender who can explain all of it to you
Wendy Dabrusin| Sr. Loan Officer| NMLS #208235
7200 North Mopac Expy, Suite 260 Austin, TX 78731
My First Texas Home (“MFTH”)
The My First Texas Home (MFTH) program offers home loans with budget-friendly monthly payments and down payment and closing cost assistance of up to 5 percent of the mortgage loan, a welcome boost for many low income first time homebuyers.
Buyers can also maximize their benefits of owning a home by combining a My First Texas Home (MFTH) loan with the Department’s Texas Mortgage Credit Certificate Program. The Texas Mortgage Credit Certificate features a dollar-for-dollar reduction on a homebuyer’s federal tax liability.
My Choice Texas Home (MCTH)
The My First Texas Home (MCTH) program offers up to 5% of the loan amount for down payment and closing cost assistance in the form of a 30-year fixed annual percentage rate mortgage. Available to first-time and repeat homebuyers alike. Homebuyers may also combine TDHCA homebuyer and mortgage credit programs for maximum benefit.
Eligible Applicants: Qualifying homebuyers from all profession
Program Availability: Statewide through participating lenders
Beneficiaries: Homebuyers earning up to 115% AMFI; up to 140% AMFI in targeted areas of the state.
Texas Mortgage Credit Certificate (MCC) Program
Texas Mortgage Credit Certificate (MCC) Program First-time homebuyers with low or moderate incomes are eligible for this program, which helps borrowers lower their tax liability by turning their annual mortgage interest payments into a federal tax credit. It is a dollar for dollar reduction against your federal income tax liability, which can help you qualify and meet mortgage payment requirements. The size of the credit is 40 percent of the yearly mortgage interest paid, but cannot exceed $2,000.
Hill Country Home Down payment Assistance
The Travis County Housing Finance Corporation is pleased to offer the Hill Country Home Down Payment Assistance (DPA) Program! The program is designed to help homebuyers obtain FHA, VA or USDA-RD loan financing to purchase a home anywhere in Travis County, including the City of Austin. A lack of funds for the down payment is often a significant obstacle to homeownership. In an effort to remove this barrier, low to moderate income homebuyers that qualify for the Hill Country Home DPA program will receive a 30-year fixed rate loan, with assistance of either 4%, 5%, or 6% of the initial principal balance of the loan amount to use for down payment or closing cost assistance. The assistance is in the form of a 0% interest, 10-year forgivable second mortgage loan. In each case , a portion is charged by the participating lender, so net down payment assistance ranges from 2.5% to 4.5% depending on qualification. For more information on this, please contact a participating lender.
Financing is available for new or existing homes, and can include single-family homes, condominiums, or townhomes. Manufactured homes are not permitted to participate in the program. Unlike many other DPA programs, the Hill Country Home DPA Program is not restricted to first-time homebuyers, though buyers must occupy the home as their principal residence. The Program offers an interest rate on the First Mortgage Loan that is slightly above market rate, so it is the borrower’s decision and choice to receive the First Mortgage Loan under the Hill Country Home DPA Program with the net 3.5% DPA grant, or 2.5% DPA grant depending on qualifying factors, rather than to receive another 30-year fixed rate mortgage loan without DPA at a lower rate from its lender or from another lender. The interest rate for the program varies daily based on market conditions – ask your lender for the current rate.
SETH 5 Star Texas Advantage Program
SETH 5 Star Texas Advantage Program provides eligible homebuyers Down Payment and Closing Cost Assistance in the form of a Grant. There are several options of assistance available. Borrowers will select the amount of assistance and loan option that best meets their needs. The maximum amount of assistance provided is our 5% Grant and is based on the final loan amount. Grants are provided for our Freddie Mac conventional loan products. Other options provide assistance in the form of a 3 year Community Second Loan which is completely forgiven after 3 years. The program includes a 30 year fixed rate FHA, VA, USDA, or Conventional mortgage loan.
There is no repayment or recapture period for the assistance provided. There is no second lien on the property. This program DOES NOT have a First Time Homebuyer requirement. Buyers must be income eligible and purchasing a home in one of the program areas. All buyers on the mortgage loan will need to complete the on-line SETH Homebuyer Education Class. The mortgage rate for this program is published daily for Lenders on the eHousingplus.com website- visit the SETH Program Page. You must be an approved Lender to provide this program to your clients. This program is available for the entire State of Texas except the city limits of El Paso, Grand Prairie, and Travis County.
SETH Gold Star Program
SETH 5 Star Texas Advantage Program provides assistance in the form of a forgivable Community Second Loan. Forgiveness structures offered include 3, 7, and 10-year terms. The assistance provided can be used for the down payment and closing costs when purchasing a home. The maximum amount of assistance is 7% and is based on the final loan amount. The program also includes a 30 year fixed rate FHA, VA, USDA, or Conventional mortgage. There is no pre-payment penalty or federal recapture tax for the mortgage loan. This program is available in Texas outside of Travis County and the city limits of El Paso, McKinney and Grand Prairie.
Homes for Texas Heroes
Offered through the State Affordable Housing Corporation (and not through the Texas Department of Housing and Community Affairs), this loan program is designed specifically for allied health faculty member, corrections officer, county jailer, emergency medical services personnel, firefighter, juvenile corrections officer, nursing faculty member, peace officer, professional educator, public security officer and veterans. This is a 30-year, fixed-interest mortgage program with down-payment assistance of 3 percent, 4 percent or 5 percent that does not need to be repaid. While there is no first-time homebuyer requirement, those who are purchasing their first home can also apply for a Mortgage Credit Certificate (MCC). Texas Heroes who use the down payment and MCC assistance together will receive their MCC for free, saving $500.
Home Sweet Texas Home
Offers home loans and down payment assistance to low and moderate-income families to achieve the dream of homeownership. This is a 30-year, fixed-interest mortgage program with down-payment assistance of up to 6 percent of the loan amount. The down payment assistance is either a gift that never needs to be repaid or a repayable 2nd lien. There is no first-time homebuyer requirement, however, those who are purchasing their first home can also apply for a Mortgage Credit Certificate (MCC) to get a tax credit on the mortgage interest paid every year.
Texas Bootstrap Loan Program
The Texas Department of Housing and Community Affairs (Department) administers the Owner-Builder Loan Program, also known as the Texas Bootstrap Loan Program (Bootstrap).
The Texas Bootstrap Loan Program is a self-help housing construction program that provides very low-income families (Owner-Builders) an opportunity to purchase or refinance real property on which to build new housing or repair their existing homes through “sweat equity.” Owner-builder’s household income may not exceed 60% of Area Median Family Income.
All Owner-Builders are required to provide at least 65% of the labor necessary to build or rehabilitate their housing by working with a state-certified Nonprofit Owner-Builder Housing Provider (NOHP). There are various ways for how Owner-Builders may fulfill their sweat equity requirement. They may contribute the labor personally; they may build or rehabilitate housing for others; and/or they may receive non-contract labor assistance from friends, family, or volunteers. If the Owner-Builder has a documented disability or other limiting circumstances and cannot provide any of the personal labor required, he or she may fulfill their sweat equity requirement entirely through non-contract labor assistance from friends, family, or volunteers. All construction activity in the Texas Bootstrap Loan Program must be under the supervision of a state certified NOHP.
The maximum Bootstrap loan may not exceed $45,000 per household. Owner-Builders may obtain additional loan funds from other Department and non-Department sources as long as the total amount of amortized repayable loan funds from all sources does not exceed $90,000.
Veterans Land Board – Veterans Land Loan Program
The VLB Veterans Land Loan Program is the only one of its kind in the nation, giving Texas Veterans the opportunity to borrow up to $150,000 to purchase land at competitive interest rates while typically requiring a minimum 5% down payment for tracts one acre or more.
The program is easy to use and offers Texas Veterans exclusive financing towards purchase of their own piece of Texas. The bonds used to fund the program are retired from loan repayments and the cost of administering the program is financed through a small fee charged on each loan.
Veterans Land Board also offers the VLB Veterans Housing Assistance Program (VHAP), to aid Texas Veterans in purchasing a home. Eligible Texas Veterans have an opportunity to purchase a home with a competitive, low-interest loan with little or no down-payment. Veterans, military members and their spouses may receive up to $424,100 on a fixed-rate loan for 15, 20, 25 or 30 year terms*. Veterans with a VA service-connected disability rating of 30% or greater qualify for a discounted interest rate.
I am certified as a Qualified Realtor with VLB.
Rent to Own
Another option for a delayed purchase, but to still be able to move into a home is a rent to own option. Read More Here.
Please Contact Me, Christina Legrand with RE/MAX 1, to set up an informational appointment or to get more info.
Home Buyer Questionnaire
Are you planning to use down payment assistance to purchase a home?Download this Down Payment Assistance Guide to learn more about Down Payment Assistance Programs and Grants.
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