Down Payment Assistance Programs in Texas: A Complete 2026 Guide for Austin Homebuyers

Last Updated: March 2026

TL;DR: Texas homebuyers in 2026 have access to multiple down payment assistance programs offering up to $40,000 in grants and forgivable loans. State programs from TDHCA and TSAHC cover most buyers earning under $115K, while local Austin and Travis County programs can add even more — and many can be stacked together.

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Key Takeaways

• Up to 5% of your loan amount is available through TDHCA's My First Texas Home and TSAHC's Home Sweet Texas programs
• City of Austin offers up to $40,000 in zero-interest, forgivable assistance for qualifying buyers
• Travis County's Hill Country Home DPA covers ALL of Travis County — not just first-time buyers
• Programs can be stacked — one Austin buyer reduced her out-of-pocket costs from $26,000 to under $6,000 by combining two programs
• Many buyers don't know which programs exist until they ask — a lender decides eligibility, program by program

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Table of Contents

• What Is Down Payment Assistance?
• State Programs: My First Texas Home (TDHCA)
• State Programs: Home Sweet Texas (TSAHC)
• The Mortgage Credit Certificate: Your Annual Tax Break
• City of Austin Down Payment Assistance
• Travis County Hill Country Home DPA
• Program Comparison Table
• The Stacking Strategy: How to Maximize Your Assistance
• Who Qualifies? Requirements Checklist
• Common Mistakes to Avoid
• FAQ

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What Is Down Payment Assistance?

Down payment assistance (DPA) programs help homebuyers cover the upfront costs of purchasing a home — including the down payment and closing costs — through grants, forgivable loans, or deferred second mortgages.

In Texas, most DPA programs are funded by state agencies (TDHCA and TSAHC), local housing finance corporations, and occasionally federal programs like HUD's HOME Investment Partnerships Program. The money doesn't just disappear — you're either getting a grant (no repayment ever) or a forgivable loan (forgiven after a set number of years, as long as you stay in the home).

According to Sully Ruiz, a licensed Texas REALTOR® (TREC #0742907) with Keller Williams Austin NW: "Most buyers assume down payment assistance is for low-income families only." Many Texas programs set their income limit as a percentage of the area median income, and TSAHC and TDHCA publish the current limits by county.

Photo by Jeff Le on Unsplash

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State Programs: My First Texas Home (TDHCA)

The Texas Department of Housing and Community Affairs (TDHCA) runs one of the state's most widely used DPA programs for first-time buyers. It's called My First Texas Home, and it's the workhorse of the Texas DPA system.

My First Texas Home offers a 30-year fixed-rate mortgage combined with up to 5% of the loan amount in down payment and closing cost assistance. The assistance comes as a deferred second lien — meaning no payments on the DPA portion until you sell, refinance, or pay off the home.

Who Qualifies for My First Texas Home?

• First-time buyer requirement: Yes (defined as not having owned a home in the past 3 years, OR purchasing in a federally designated targeted area)
• Credit score: 620 minimum
• Income limit: Approximately $103,500 for a household of four in the Austin metro (varies by county and household size) — this is 115% of the Area Median Income (AMI)
• Loan types: FHA, VA, USDA, and some conventional options
• Homebuyer education: Required — typically a 6-hour online course

How Much Can You Get?

Up to 5% of the loan amount, per TDHCA, and it can go toward the down payment and closing costs. A participating lender shows the exact figures for a specific home on your Loan Estimate.

Visit welcomehome.tdhca.texas.gov to check current rates and income limits.

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State Programs: Home Sweet Texas (TSAHC)

The Texas State Affordable Housing Corporation (TSAHC) runs the Home Sweet Texas Home Loan Program, which has a feature that sets it apart from TDHCA: the grant option.

TSAHC's Home Sweet Texas program offers up to 5% of the loan amount in DPA, with the option to receive the assistance as either an outright grant (no repayment, ever) or a 3-year forgivable second lien. The grant option is rare in Texas DPA — most programs require eventual repayment. TSAHC's grant disappears completely the day you close. Minimum credit score is 620, and income limits vary by county.

Grant vs. Forgivable Loan: Which Should You Choose?

Option	Repayment	Best For
TSAHC Grant	Never repaid	Buyers who plan to refinance or sell within 5 years
3-Year Forgivable Lien	Forgiven after 3 years	Buyers staying long-term who want lower rate
TDHCA Deferred Lien	Repaid at sale/refi	Buyers with long-term plans who want the most flexibility

Homes for Texas Heroes: If you're a teacher, first responder, nurse, veteran, or correctional officer, TSAHC has a separate track just for you with the same DPA benefits and often a slightly better interest rate.

Current TSAHC rates (as of March 2026):

• FHA with 5% grant: 7.250% on the first mortgage
• FHA with 5% forgivable lien: 6.875%
• FHA with no DPA: 6.125%

Interest rates are higher when DPA is attached — that's the tradeoff. But in most cases, the upfront cash savings outweigh the slightly higher monthly payment, especially for buyers who plan to refinance within 3-5 years.

Learn more at tsahc.org/homebuyers-renters.

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The Mortgage Credit Certificate: Your Annual Tax Break

The Mortgage Credit Certificate (MCC) is the most overlooked tool in the Texas DPA toolkit. It's not cash at closing — it's a federal tax credit that saves you money every single year you own the home.

An MCC gives you a tax credit of up to $2,000 per year based on the mortgage interest you pay. Unlike a deduction (which reduces taxable income), a credit directly reduces your tax bill dollar-for-dollar. The MCC can give you up to $2,000 of your mortgage interest back every tax season for as long as you live in the home.

The MCC must now be combined with TSAHC's DPA program (the standalone MCC was discontinued in 2025). The credit rate is currently set at 15%.

Over a 10-year period, an MCC could save you up to $20,000 in federal taxes. That's money in your pocket every April.

Requirements:

• Must be a first-time homebuyer (or purchase in a targeted area)
• Income limits apply (similar to TSAHC programs)
• Must be used with TSAHC DPA

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City of Austin Down Payment Assistance

If you're buying within Austin city limits, the City of Austin Down Payment Assistance Program is one of the most generous local programs in the state — but it's also the hardest to qualify for.

The City of Austin offers up to $40,000 in down payment and closing cost assistance as a zero-interest loan. Loans under $14,900 are forgiven after 5 years; loans above that are forgiven after 10 years. To qualify, buyers must earn 80% or less of the Austin area median income — roughly $72,000 per year for a family of four. The purchase price limit is $579,250.

Photo by Vitaly Gariev on Unsplash

Is the City of Austin Program Right for You?

The income limit is the gating factor. At 80% AMI ($72K for a family of four), this program serves lower-income buyers more than middle-income ones. But if you qualify, $40,000 is transformational.

Learn more at austintexas.gov/homebuyer.

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Travis County Hill Country Home DPA

The Travis County Housing Finance Corporation's Hill Country Home Down Payment Assistance Program fills the gap between the city's strict income limits and the state's less generous local options.

Travis County's Hill Country Home DPA offers 4%, 5%, or 6% of the loan amount as a 0% interest, 10-year forgivable second mortgage to homebuyers anywhere in Travis County. Income limits extend up to 140% of AMI — currently $138,460 — making this the most accessible local program for middle-income buyers. Unlike the City of Austin program, it is not restricted to first-time buyers.

Key Details

• Coverage area: All of Travis County, including Austin, Bee Cave, Lakeway, Pflugerville, and surrounding communities
• DPA amount: 4%, 5%, or 6% of the first mortgage loan
• Format: 0% interest, forgiven after 10 years, per the Travis County Housing Finance Corporation
• Income limit: $138,460 (140% AMI) — the most generous on this list
• Credit score: 640 minimum (slightly higher than state programs)
• Loan types: FHA, VA, USDA, or Freddie Mac HFA Advantage
• NOT limited to first-time buyers — if you've owned before, you can still qualify

Learn more at corporations.traviscountytx.gov/homebuyers.

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Program Comparison Table

Program	Who Offers It	DPA Amount	Income Limit (Family of 4)	Must Be First-Time?	Format
My First Texas Home	TDHCA (state)	Up to 5% of loan	~$103,500	Yes	Deferred 2nd lien
Home Sweet Texas	TSAHC (state)	Up to 5% of loan	Varies by county	No (some options)	Grant or 3-yr forgivable lien
Homes for Texas Heroes	TSAHC (state)	Up to 5% of loan	Varies by county	No	Grant or 3-yr forgivable lien
Mortgage Credit Certificate	TSAHC (state)	Up to $2K/yr tax credit	Similar to TSAHC	Yes	Annual tax credit
City of Austin DPA	City of Austin	Up to $40,000	~$72,000 (80% AMI)	Yes	Zero-interest, forgivable loan
Hill Country Home DPA	Travis County HFC	4%, 5%, or 6% of loan	$138,460 (140% AMI)	No	0%, 10-yr forgivable 2nd mortgage

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The Stacking Strategy: How to Maximize Your Assistance

Here's where it gets powerful: most of these programs can be layered together. A skilled REALTOR® and lender can combine multiple sources of DPA to dramatically reduce your out-of-pocket costs at closing.

Each program has its own rules on what it can be combined with, so the order matters: a lender who works with these programs can tell you which ones stack on your loan and show the result line by line on your Loan Estimate.

Photo by Mikel Mirjane on Unsplash

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Who Qualifies? Requirements Checklist

Most Texas DPA programs share common requirements. Use this checklist to see where you stand:

Income

• Household income under ~$103,500 (TDHCA/TSAHC) or $138,460 (Travis County)
• City of Austin: under ~$72,000 for a family of four

Credit

• Credit score of 620+ (TDHCA and TSAHC) or 640+ (Travis County)
• Reasonable debt-to-income ratio (usually 45% max)

Property

• Purchasing a primary residence (not investment or vacation home)
• Home is within the program's service area
• Home type permitted (manufactured homes generally excluded)

Buyer Status

• First-time buyer for TDHCA and most TSAHC options (not owned a home in 3+ years)
• Travis County HFC: not restricted to first-time buyers

Education

• Completed a HUD-approved homebuyer education course (required for most programs)

Lender

• Working with a TDHCA- or TSAHC-approved lender (your agent can provide a referral list)

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Common Mistakes to Avoid

1. Assuming you don't qualify without checking. Income limits are higher than most people expect. Many middle-income families in Austin qualify for at least one DPA program.

2. Not asking about the MCC. Lenders don't always mention it. The Mortgage Credit Certificate can save you thousands per year in taxes — ask your lender directly.

3. Picking the wrong program for your situation. A grant is great if you plan to sell or refinance soon. A deferred lien may work better long-term. Your REALTOR® and lender should run the math for your specific scenario.

4. Not comparing lenders. DPA programs require TDHCA- or TSAHC-approved lenders, but rates and fees vary between approved lenders. Get at least 2–3 quotes.

5. Waiting too long to apply. Some programs have limited funding that runs out mid-year. The earlier in the calendar year you apply, the better your chances of accessing the most generous options.

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FAQ

Q: Do I have to be a first-time buyer to use down payment assistance in Texas?

A: Not for all programs. TSAHC's Home Sweet Texas and the Travis County Hill Country Home DPA are both available to repeat buyers. TDHCA's My First Texas Home does require first-time buyer status (defined as not having owned a home in the past 3 years, with exceptions for federally targeted areas).

Q: Can I use DPA with an ITIN loan?

A: Some programs do allow ITIN borrowers, but requirements vary by lender and program. Start with a free consultation →

Q: How do I know which DPA program is right for me?

A: The best way is to sit down with a REALTOR® who knows the local programs and a TDHCA/TSAHC-approved lender. The right combination depends on your income, credit, household size, where you're buying, and how long you plan to stay. Use Sully's Start the short buyer form → as a starting point.

Q: Will using DPA slow down my home purchase?

A: It can add a few business days to the underwriting process, but most DPA loans close within the standard 30–45 day timeline. Working with an experienced lender and REALTOR® minimizes delays.

Q: Does DPA affect my interest rate?

A: Yes — programs with DPA attached typically carry a slightly higher interest rate than loans without assistance. For example, TSAHC's FHA loan with a 5% grant currently runs around 7.25%, versus 6.125% without DPA. The tradeoff is upfront cash savings versus a slightly higher monthly payment. Your lender should help you calculate the break-even point.

Q: What is a homebuyer education course and how long does it take?

A: Most DPA programs require a HUD-approved homebuyer education course. Online options are available through providers like eHomeAmerica and Framework. The course typically takes 6–8 hours and can be completed on your own schedule. Upon completion, you receive a certificate required for your loan application.

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Ready to Find Out What You Qualify For?

Down payment assistance programs in Texas are real, funded, and available right now — but navigating them without guidance can mean leaving thousands on the table.

Start the short buyer form →

Book a free consultation with Sully →

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About the Author

Sully Ruiz is a Texas-licensed real estate sales agent (TREC #0742907). Her sponsoring broker is Keller Williams Austin NW. She works with buyers and sellers in Austin and Central Texas, in English and Spanish — as their real estate agent, not their lender.

Book a free consultation →

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Market data is for informational purposes only and is subject to change. Sources are believed to be reliable but are not guaranteed. Contact Sully Ruiz for a personalized market analysis. Results may vary based on individual circumstances. Consult with a licensed lender and REALTOR® before making any real estate decision.

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Sources

• Texas Department of Housing and Community Affairs — My First Texas Home Program — accessed March 2026
• Texas State Affordable Housing Corporation — Home Buyer Programs — accessed March 2026
• Travis County Housing Finance Corporation — Hill Country Home DPA — accessed March 2026
• City of Austin — Down Payment Assistance Program — accessed March 2026
• HUD — Housing Counseling Agencies (Texas) — accessed March 2026
• CFPB — Down Payment Assistance Guide — accessed March 2026