How to get First Time Home Buyer Grants in Texas -The state of Texas is known for having the best barbecue brisket in America, a strong sense of pride and a diverse population. The cost of living in the state is lower unlike other parts of the country with affordable median property prices. However purchasing a house for the first time can be challenging for low-income groups, especially in costlier cities such as Austin.
This guide will throw light on Government First Time Home Buyer Programs and assistance in Texas that will fetch you low-interest rates on mortgages and help you with down payment and closing cost assistance to reduce your burden.
Highlights of this Post
What Are The Different Sources In Texas That Offer First-Time Home Buyer Assistance Programs?
While searching for housing options and first-time home buyer programs it is important to be familiar with the agencies or government departments that provide the home buyer resources to reduce your housing burden.
The following are the important government agencies that provide homebuyer resources in Texas.
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TDHCA
The Texas Department of Housing and Community Affairs was established in 1991 and is a popular Texas housing agency that administers more than $2 million in federal grants, financing programs and federal tax credits. Low or moderate-income earners in Texas who are looking for opportunities to buy their property can avail a lot of programs and resources from this agency and make the overall process affordable and clear.
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HUD
The US Department of Housing and Urban Development provides a lot of housing programs for low-incomr home buyers including low-income veterans and their surviving spouses. The US Department of Housing and Urban Development provides extensive guidance and solutions on rights as a home buyer and gives you tips on how to purchase a home and avail affordable mortgage.
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VA
VA stands for Veteran Affairs and it offers affordable mortgage loans to veterans, members of the military and their eligible spouses. Low-income veterans in Texas who are struggling to get a down payment due to low savings or monthly income can receive a lot of first-time home buyer programs. They can receive 100% of the price covered by the mortgage.
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USDA
The U.S. Department of Agriculture Development offers programs for first-time home buyers in rural Texas. USDA loans are not available if candidates qualify for conventional loans. On meeting the credit score requirements candidates can secure 100% financing for their loan. The household income should be less than 115% of the area’s median income to qualify for assistance.
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How To Qualify For First-Time Home Buyer Programs In Texas?
To be eligible for the first-time homebuyer assistance program applicants need to meet the following essential criteria.
- Should be a first-time home buyer, a person who has not purchased a home in the last three years or a veteran
- Have a minimum credit score of 620
- Have completed an approved homebuyer education course
- Living in the home for which they are looking for an assistance program
- Have income below a particular level for the city or county they are living in. The income limits established by TDHCA range from $74500 to $101600 for one or two-person households and range between $85675 to $115920 for three or more-person households. The purchase limits range between $294600 and $2359460 in some areas of Texas.
- Get a 30-year fixed-rate mortgage
- Live in the home as your primary residence
How To Apply For First-Time Home Buyer Programs In Texas?
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Prequalify For Mortgage Loan
The first and foremost step towards purchasing your home and applying for a first-time home buyer program is to determine the mortgage loan you can afford. Lenders will review your employment information and credit report. Once you determine how much you can afford monthly for your home your lender will get you pre-approved for the loan based on your price range.
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Search For Eligible Properties
The next step is to check out properties through local building contractors, local newspapers, online resources or with the help of a real estate agent. For instance, the eligible properties of My First Texas Home include single units, condominium development, single-family units, duplexes and manufactured housing. Once you find a property that aligns with your needs you can make an offer, negotiate a present and execute the contract.
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Arrange Relevant Documents
First-time home buyers need to submit their financial and personal information to their participating lender while applying for the First-Time Home Buyer program. Following is the list of documents that they need to submit.
- Tax returns over the past three years
- Pay stubs
- Recent bank statements for all their accounts
- W-2 forms for the past two years
- Proof of your current income
- Information about the long-term debt the executed sales contract
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Find A Qualified Lender
To take advantage of first-time home buyer grants and loans programs in Texas you need to work with the participating lender who has been approved by the program sponsor.
For instance, you need to work with Texas Department of Housing And Community Affairs-approved lenders and Texas State Affordable Housing Corporation-approved lenders. Make sure you’re working with a lender who has completed TDHCA down payment assistance or Texas homeownership program continuing education training.
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Review Fees, Rates And Requirements
It is a good idea to shop around and avail of competing quotes from at least three lenders to make a well-informed decision. You need to compare the interest rate, exact closing costs and other fees that are available through the lender.
What Are The Available First-Time Home Buyer Assistance Programs?
The Texas State Affordable Housing Corporation and the Texas Department of Housing and Community Affairs offer tons of opportunities to Texas homeowners when purchasing a property for the first time. Some of the grants and loan programs that you can avail of to turn your home ownership dream into reality are as follows.
TDHCA My First Texas Home
The program is available only to veterans, first-time first-home buyers and home buyers who have not purchased a home in the past three years. It provides a 30-year fixed-rate mortgages with lower rates of interest.
The TDHCA lend up to 5% of the first home loan amount for closing costs and down payment assistance with no interest. By applying for the My First Texas Home Program you can also obtain a loan from the Department Of Veterans Affairs (VA), the Federal Housing Administration (FHA) or the United States Department of Agriculture (USDA).
You need to have at least 620 credit score to qualify for this program. The purchase price and income limits for this program are based on the city or county where you wish to purchase a home. The assistance should be repaid when you decide to sell your property, or refinance or pay off your mortgage so that the funds can be reused by other home buyers in Texas.
TDHCA My Choice Texas Home
My Choice Texas Home is quite similar to My First Texas Home however it is not limited to first-time Texas home buyers. The income limitation to avail of FHA, VA and USDA loans is higher compared to My First Texas Home.
Candidates can also choose conventional loans with this program for instance Fannie Mae HFA Preferred Conventional Loans. It is an affordable mortgage that local and state housing agencies can provide low-income borrowers with income less than 80% of the area’s median income.
To qualify for assistance you need to have a credit score as low as 620 and also fulfill the income and purchase limitation of the program. Both first-time and repeat home buyers can apply for the program and receive low-rate mortgages and assistance up to 5% to cover their down payment and closing cost expenses. The down payment and closing cost assistance is a zero-interest no monthly payment second mortgage.
TSAHC Home Sweet Texas Home Loan Program
The Texas State Affordable Housing Corporation provides the Home Sweet Texas Home Loan Program with a 30-year fixed-rate mortgage with 5% down payment assistance. The nonprofit provides an eligibility quiz on its official website that candidates can take to see if they qualify for assistance.
The purchase price and income limits for this program are based on the county of the home buyers. This program can enable first-time home buyers to purchase an FHA, USDA, or VA loan if they have a credit score of a minimum of 620. Fannie Mae HFA Preferred as well as Freddie Mae HFA Advantage Conventional Loans can also be obtained if you have a credit score of 640.
This program helps you to get down payment assistance in the form of a grant that need not be repaid if you are obtaining an FHA, VA or USDA loan. For obtaining HFA Conventional Loans you can receive down payment assistance in the form of a second mortgage which the organization will forgive if you stay in your home for a minimum of three years.
TSAHC Homes For Texas Heroes Program
First-time home buyers who are veterans or employed in specific public service professions are eligible to qualify for Homes For The Texas Heroes Program. The eligible professions include the following
- County jailers
- K12 education
- Correction officers
- military veterans
- Peace officer
- Public security officer
- Professional educator
- nurse faculty member
- Firefighters
- Emergency medical so this is personal
- Allied health faculty member.
You can also save around $500 if you obtain a mortgage credit certificate option that includes certain fees. The program offers a certain mortgage amount that you can put towards closing costs or down payments. There is no criteria to live in the home for a minimum time as well. Homes for Texas Heroes features a 30-year fixed mortgages with a lot of rates and loan options for applicants who need support to pay their upfront costs.
Texas Bootstrap Loan Program
A unique home buyer program known as Texas Bootstrap Loan assists first-time home buyers in many ways. The program works in different ways and instead of assisting you in purchasing a home, it helps you to build a home. The features of the program are as follows.
- The program can be time-consuming and labor-intensive however it works for low-income households in Texas with limited home purchasing option
- Candidates will be under the supervision and guidance of a Nonprofit Owner Builder Housing Provider certified by Texas.
- Candidates have to perform a minimum of 65% of the labor work associated with building a home
- The maximum assistance is up to $45,000 even though they can seek financing from other mortgage lenders
- Candidates cannot have income more than 60% of the local or state median income.
Texas Mortgage Credit Certificate Program
The Texas Mortgage Credit Certificate program offers additional savings to first-time home buyers in Texas based on their federal income tax. The features of the program include the following.
- The program is available to veterans, first-time Texas home buyers or home buyers who have not purchased a home over the past three years
- There isn’t any minimum credit score requirement with this program and you can combine the advantages of the program with My First Texas Home Mortgage Loan
- The Texas mortgage credit certificate program is a dollar-for-dollar reduction on your federal tax liability for as long as you all money on the mortgage loan and live in your home
Federal First-Time Home Buyer Loan Programs
Apart from the Texas State first-time home buyer programs you can avail of nationally recognized loan programs to fulfill your homeownership dream.
Candidates who have low credit scores or limited resources and savings can opt for federal-sponsored FHA loans. These loans are available nationwide and are available to those who are unable to obtain conventional mortgages due to low credit scores. Candidates with a minimum credit score of 580 required a down payment as low as 3.5%.
The US Department of Agriculture offers mortgage loans that do not require any down payment and are available to first-time home buyers who are purchasing a property in an eligible rural area. Candidates need to have a credit score of 640 or above to qualify.
Texas first-time home buyers who are veterans or members of the military can qualify for mortgages given by the Department of Veterans Affairs that do not require any down payment.
An eligible extremely low-income home buyer makes a 3% down payment on a Freddie Mac home mortgage. The loan provides different sources for down payments such as family gifts, co borrowers, secondary financing, sweat equity and employee assistance.
You need to have a credit score of 660 and once you pay 20% of your mortgage the insurance on your mortgage will be canceled which will lower your loan payment.
The Fannie Mae HomeReady Mortgages allow down payment as low as 3% for eligible low-income borrowers. You need to have a minimum 620 credit score to apply. The Fannie Mae HomeReady mortgages like HomePossible mortgages provide flexibility for financing down payments such as grants and gifts.
The Fannie Mae Standard 97 LTV loan is designed for first-time home buyers irrespective of their income level. The minimum credit score requirement is 620. This mortgage requires a 3% down payment and requirements for the debt-to-income ratio. Borrowers can receive closing costs and down payment assistance from third-party sources.
Local Texas Home Buyer Assistance Programs
Texas is the land of opportunity for home-owning opportunities and job growth. Qualified home buyers can get great affordable mortgages and receive down payment assistance in many ways by applying for the local Texas home buyer assistance programs.
The Dallas city’s Housing and Neighborhood Revitalization Department offers an assistance program to help the people who cannot afford the money for paying the down payment and closing costs. They provide the help with money up to $40,000 as assistance, but this money or help is given based on need
In Arlington city the first time home buyer grants get help with this grant program up to $20,000 for paying the down payment and closing costs of the house. This loan has no interest of any kind, but if the buyer sells it, refinanced it, or leases it during the five years of buying the house then they have to pay back the loan amount. If the applicants want to qualify for this grant program then they have to pay at least $1,000 towards the purchase of a house.
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This is the assistance program that is offered by the city. They provide the $14,999 as a deferred loan to the first-time homebuyers to purchase the home. From this amount money, up to $3,000 can be used to give as a closing cost. Even these loans can be forgiven over five years. But the loan can be forgiven in one condition that if the borrower does not sell, refinance, lease, or transfer the title, without the lender’s consent. Along with this, the applicant must have to contribute or give at least $1,000 or 2% of the purchase price of the property.
This is the grant program that is offered by the Midland Community Development Office. If you want to buy a home in Midland then this program provides you up to $15,000 for buying a home in Midland. But along with this, the applicant must have to give $1,000 from their side to buy the home.
The Bryan‘s Community Development Services Department offers no-interest loans up to $7,500, for the down payment and closing costs of the house.
The loan is forgiven after five years if the applicant or borrower still owns and lives in the house. Along with this, the applicant must have to give at least $1,000 towards the purchase of the house in Bryan.
The Austin Neighborhood Housing and Community Development Department provides an offer of up to $14,999. They offer this money as a no-interest, forgivable loan to help make a down payment. The applicant must have to contribute at least $500 for the purchase of a house.
This program helps only eligible families. The program helps them to pay the down payment and closing cost of the property. For this, they provide help worth up to $7,500. For getting the benefits of this grant, the applicant must be a resident of Texas City for the preceding 12 months.
If you want to have a house in Houston and need a grant for this then you can get the grant from Houston city. They have the grant for the homebuyers and help them with $30,000. This is the grant amount for paying the down payment and closing costs which is provided to the borrower as a deferred, forgivable loan. For buying the house the applicant must have to pay at least $350 from their side
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Conclusion
The process of purchasing a home for the first time can be intimidating and overwhelming for many homebuyers. There are a lot of challenges such as rising prices and tight supply of affordable homes in Texas. Fortunately, there are programs offered by the Texas Department of Housing and Community Affairs including a variety of state community and federal home buyer programs that help Texans home buyers with avoidable plans, financial counseling and many other help. If you are a first-time home buyer in Texas then you can take help of the aforementioned resources to afford a home.
