First-Time Buyer Programs
Available in Texas
A comprehensive, plain-language guide to major down payment assistance programs, grants, and affordable loan options available to first-time homebuyers in Texas.
with USDA & VA Loans
Through Multiple Programs
for Most DPA Programs
Verify Residency Requirements
With Your Lender
Program Status
Program terms change. Assistance levels, rates, income limits, purchase price limits, and funding availability must be verified before making an offer. Last verified: June 20, 2026.
Official Sources Used
In This Guide
If you think you can't afford a home, you may be wrong.
Most first-time buyers believe they need a large savings account, a 20 percent down payment, and perfect credit to buy a home. That belief keeps a lot of qualified people on the sidelines, renting month after month, while programs designed specifically for them go unused.
The reality is that Texas has a broad set of statewide, local, and federal first-time buyer assistance options. Between grants, forgivable loans, subsidized mortgage rates, and zero-down-payment options, many buyers can purchase a home with little to no money out of pocket.
- • Some of these programs stack together, meaning you can combine them for even greater benefit.
- • This guide walks through the major statewide and local programs relevant to San Antonio and the Hill Country.
- • It explains exactly who qualifies and helps you figure out which combination of options fits your situation.
If you are buying a home anywhere in Texas — including the Hill Country, San Antonio, Boerne, Fair Oaks Ranch, or any of the surrounding Hill Country communities — the programs in this guide apply to you.
A critical note up front: You do not generally need a long Texas residency history to use these programs, but the home must become your primary residence, and some programs require specific residency affidavits or program-specific documentation. Out-of-state buyers should verify this with the participating lender before writing an offer.
One more thing before we get into the details: Program eligibility is only half the issue. The real question is whether the program works with the property, the lender, the contract timeline, the seller concessions, the buyer's cash position, and the long-term plan.
A program that looks perfect on paper can fall apart when the seller will not allow a 45-day closing, or the lender does not participate, or the second lien conflicts with a refinance two years from now. That is the gap between a checklist and actual guidance. Everything that follows is written with that gap in mind — not just what these programs are, but how they behave in real transactions.
Program Stacking Warning
Program stacking must be verified by the participating lender before contract. Assistance cannot usually create unrestricted cash back to the buyer, and some combinations are prohibited or limited by the first-mortgage investor, DPA provider, or tax-credit rules. Do not assume programs can be combined — confirm with a lender who has closed the specific combination you are considering.
Key Takeaway
- •Texas has a broad set of statewide, local, and federal first-time buyer assistance options.
- •Grants, forgivable loans, subsidized rates, and zero-down options can combine for significant benefit — but stacking must be verified by the lender.
- •You do not generally need a long Texas residency history to use these programs, but the home must become your primary residence, and some programs require specific residency affidavits or program-specific documentation. Out-of-state buyers should verify this with the participating lender before writing an offer.
- •The real question is not just which program but how it performs in a live transaction.
The Five Questions I Screen Before Recommending a Program
Before I recommend any program, I ask every buyer five questions. The answers narrow the field fast — and save time chasing programs that do not fit.
Have you owned a home in the last three years?
This single answer eliminates or opens entire categories of programs. TDHCA's My First Texas Home, for example, requires that you have not owned a home in the past three years. If you have, My Choice Texas Home, SETH, and TSAHC programs still work — but the first-time-only options fall away. Getting this out of the way early prevents wasted effort.
Is your income inside the current program limit for the county?
Every DPA program ties its income limits to Area Median Income calculations that vary by county and household size. A buyer who qualifies in Bandera County may be over the limit in Kendall County — or vice versa. Income limits also change annually, so last year's numbers do not guarantee this year's eligibility.
Does the property price, loan type, and credit profile fit the program?
Programs layer constraints. My First Texas Home has purchase price caps. SETH requires a minimum 640 credit score while TDHCA and TSAHC accept 620 for FHA, VA, and USDA loan types (TSAHC requires 640 for HFA Conventional). Some programs only work with FHA or conventional loans, not USDA. The best program on paper is irrelevant if the property, the loan, or the credit score does not meet the program's specific parameters.
Does the property location open or close USDA or local-program options?
USDA Rural Development loans only apply in designated rural areas — which, in this part of Texas, can change from one side of a county line to the other. San Antonio's HIP program applies only within city limits. SETH excludes certain counties and cities entirely. The address determines the menu of available programs before anything else.
How long do you expect to own the home before selling or refinancing?
Many DPA programs use forgivable second liens that require three years of primary residency before the debt is forgiven. If you plan to refinance in 18 months or sell within two years, a forgivable lien may create an unexpected repayment obligation. A deferred repayable lien or a grant may be the better structural choice. Matching the program timeline to the buyer's timeline avoids surprises.
These five questions take less than five minutes to answer — but they shape every recommendation that follows. The right program is the one that fits your situation, your timeline, and the property you are buying.
Key Takeaway
- •Homeownership status in the past 3 years is the single biggest eligibility filter.
- •Income limits vary by county — qualifying in one county does not guarantee qualification in the next.
- •The property address determines which programs are available before anything else.
- •Match the program timeline to your ownership timeline to avoid repayment surprises.
Program Snapshot
A bird's-eye view of every major program before you read the full details below.
Quick visual comparison of major Texas first-time buyer down payment assistance programs. Each card shows the program name, assistance amount, type, and best-for description.
TSAHC
Heroes / Home Sweet Texas
Grant or forgivable lien
Best for: Teachers, first responders, veterans — and anyone. Widest eligibility.
TDHCA
My First Texas Home
Forgivable or repayable
Best for: First-time buyers (no home in 3 yrs). Texas's standard DPA workhorse.
TDHCA
My Choice Texas Home
Forgivable or repayable
Best for: Repeat buyers. Same DPA, no first-time requirement.
SETH
5-Star Advantage
Forgivable or repayable
Best for: Repeat buyers across most TX counties. Higher credit threshold.
USDA
Rural Development
$0 Down
Best for: Rural Hill Country properties. Annual guarantee fee replaces PMI.
VA Loans
Eligible Veterans
$0 Down
Best for: Veterans with COE. Best zero-down terms available.
What Is a Second Lien?
A second lien means the assistance is secured against the property behind the first mortgage. Even if no monthly payment is due, the lien can matter if you sell, refinance, transfer title, or stop occupying the home before the required period ends.
View Full Reference Table
| Program | DPA Type | Max Assistance | Credit Min | Income Limit | Homebuyer Education | Best For |
|---|---|---|---|---|---|---|
| TSAHC — Homes for Texas Heroes / Home Sweet Texas | Grant or forgivable 2nd lien† | Up to 5% of loan | 620 for FHA / VA / USDA; 640 for HFA Conventional | Income-based | Homebuyer ed. required; verify time & format | Teachers, first responders, veterans, anyone |
| TDHCA My First Texas Home + DPA | Forgivable or repayable 2nd lien | Up to 5% | 620 | County-based | Homebuyer ed. required; verify time & format | First-time buyers; TDHCA standard DPA |
| SETH 5-Star Program | 0% interest second lien — 3-year forgivable option or 30-year deferred repayable option. | Up to 5% of loan | 640 | Income limits apply | SETH-approved online course required; certificate valid 12 months | Repeat buyers, most TX counties |
| TSAHC — Mortgage Credit Certificate | Federal tax credit | 15% of annual mortgage interest; verify current rate | Varies | Income limits apply | Varies | Reducing tax bill; stacks with TSAHC DPA only (stand-alone MCC discontinued) |
| San Antonio HIP (City DPA) | 0% second lien; HIP 80 fully forgivable on schedule; HIP 120 is 75% forgivable / 25% perpetual. Currently closed for FY2026. | Verify current terms | Verify | 80% or 120% AMI | Course required | Currently closed for FY2026; if City Council renews, funding available October 1, 2026 |
| USDA Rural Development (Guaranteed) | No DPA needed | No down payment | 640 (typical) | County-based | Not required | Rural property only; annual fee vs. PMI |
| VA Loans (eligible veterans) | No DPA needed | No down payment; no PMI | No VA min (620 typical) | N/A | Not required | Veterans; competitive rates; COE needed |
| FHA Loans (with local DPA) | Pairs with DPA grants | 3.5% down | 580 | FHA itself — none; DPA partner — limits apply. | FHA itself — not required; DPA partner may require it. | More lenient DTI; mortgage ins. required |
† TSAHC credit score: 620 minimum for FHA, VA, and USDA loan types; 640 minimum for HFA Conventional. The grant option generally applies to government loans (FHA, VA, USDA). HFA Conventional uses the 3-year deferred forgivable second lien, not the grant.
Programs, limits, and availability change. Verify current terms with a licensed lender before making decisions. San Antonio HIP is not currently funded for FY 2026 — see the local programs section below for details.
TSAHC Loan-Type Rules at a Glance
- •FHA / VA / USDA — 620 minimum credit score; Grant or 3-year forgivable second lien.
- •HFA Conventional — 640 minimum; 3-year forgivable second lien only (grant not available).
- •DPA cannot be used for principal reduction.
Program Minimum Does Not Mean Lender Approval
The published minimum credit score or income rule only gets you into the conversation. Lenders add overlays on top of program rules, and underwriting still controls the final decision.
TDHCA may publish a 620 minimum — but your lender may require 640. USDA and VA set no formal minimums, but individual lenders impose their own credit, DTI, reserve, and documentation requirements. The lender, the master servicer, the automated underwriting system, and investor overlays can all impose stricter rules than the program publishes.
Always ask your lender what they actually require, not just what the program advertises.
Why Texas is particularly
good for first-time buyers
Texas's lack of state income tax can help with monthly household cash flow, but lenders still qualify borrowers primarily using gross income, debts, credit, assets, and program rules.
The state also funds multiple down payment assistance programs through its housing agencies, and several national programs (USDA, VA, FHA) have favorable treatment for Texas properties.
- • San Antonio remains relatively affordable compared with many national and California markets. Boerne and Fair Oaks Ranch are higher-priced Hill Country submarkets, but they may still compare favorably with many California communities on price per square foot, lot size, home size, school quality, and overall lifestyle value.
- • When you combine a lower purchase price with down payment assistance and a competitive mortgage rate, the monthly payment on a Texas home can be significantly lower than many buyers expect.
Texas also has strong consumer protections for homebuyers, including:
- • The option period — a uniquely Texas feature that gives buyers an unconditional exit right during due diligence.
- • A title-based closing system that provides additional security.
- • Well-established infrastructure for processing first-time buyer transactions with DPA programs — Many Texas lenders are familiar with these programs, but buyers should work with a lender who closes them regularly.
Key Takeaway
- •No state income tax helps with monthly cash flow, but lenders still qualify using gross income and debts.
- •San Antonio remains relatively affordable compared with many national and California markets. Boerne and Fair Oaks Ranch are higher-priced Hill Country submarkets, but they may still compare favorably with many California communities on price per square foot, lot size, home size, school/community profile, and overall lifestyle value — for a deeper look, see our Hill Country Buyer's Guide.
- •The Texas option period gives buyers an unconditional exit right during due diligence — a protection most states do not offer.
- •Work with a lender who closes DPA transactions regularly — not one who just lists the program on their website.
Comparing the Major Programs
The table below provides a side-by-side comparison of the primary first-time buyer programs in Texas. Program details, income limits, and assistance amounts change periodically. Always verify current terms with the administering agency or an experienced lender before making decisions.
| Program | DPA Amount | Type | Min. Credit | Loan Types | First-Time Only? |
|---|---|---|---|---|---|
| TDHCA My First Texas Home | Up to 5% of loan | Deferred 2nd lien — repayable (30-yr) or forgivable (3-yr)* | 620 | FHA, VA, USDA, Conventional | Yes |
| TDHCA My Choice Texas Home | Up to 5% of loan | 30-year deferred repayable second lien or 3-year deferred forgivable second lien | 620 | FHA, VA, USDA, Conventional | No |
| TSAHC Homes for Texas Heroes | Up to 5% of loan | Grant or 3-year forgivable second lien for government loans; HFA Conventional uses 3-year forgivable second lien only. Grant not available for HFA Conventional. DPA cannot be used for principal reduction. | 620 for FHA / VA / USDA; 640 for HFA Conventional | FHA, VA, USDA, Conventional | No* |
| TSAHC Home Sweet Texas Home | Up to 5% of loan | Grant or 3-year forgivable second lien for government loans; HFA Conventional uses 3-year forgivable second lien only. Grant not available for HFA Conventional. DPA cannot be used for principal reduction. | 620 for FHA / VA / USDA; 640 for HFA Conventional | FHA, VA, USDA, Conventional | No* |
| SETH 5 Star Texas Advantage | Up to 5% of loan | 0% interest second lien — 3-year forgivable option or 30-year deferred repayable option. | 640 | FHA, VA, USDA, Conventional | No |
| HUD Good Neighbor Next Door | 50% off list price | 0% interest 2nd lien, forgiven after 3 yrs | Varies | FHA, Cash | No, but ownership restrictions apply; verify current HUD GNND rules. |
| VA Home Loans | $0 down payment required | Guaranteed loan (no DPA needed) | No VA minimum (lenders often require 620) | VA | No |
| USDA Rural Development | $0 down payment required | Guaranteed loan (no DPA needed) | No USDA minimum (lenders often require 640) | USDA Guaranteed | No |
| FHA Loans | 3.5% minimum down | Government-insured (DPA can cover down payment) | 580 (for 3.5% down) | FHA | No |
| Conventional 97 | 3% minimum down | Standard Conventional 97 is not automatically DPA-compatible; HFA conventional products may pair with DPA depending on provider and lender. | 620 | Conventional | Yes |
| Fannie Mae HomeReady / Freddie Mac Home Possible | 3% minimum down | Income-restricted conventional | 620 | Conventional | No |
* TDHCA My First Texas Home is limited to first-time buyers (no homeownership in past 3 years); DPA is available as either a 30-year deferred repayable second lien or a 3-year deferred forgivable second lien (up to 5% of the loan amount). TDHCA My Choice Texas Home is open to repeat buyers with no first-time requirement and provides up to 5% DPA as a deferred second lien — income limits and credit score requirements apply. The specific DPA option available depends on the selected TDHCA program and current rate sheet at the time of application. The TDHCA MCC may not be combined with an outside DPA program from a source other than TDHCA. TSAHC down payment assistance (Homes for Texas Heroes and Home Sweet Texas Home) is also available to both first-time and repeat buyers. Income limits and credit score requirements apply. The TSAHC Mortgage Credit Certificate (MCC) may only be used with TSAHC DPA or TSAHC No-DPA 0% programs (stand-alone MCC discontinued indefinitely) and may have separate first-time buyer eligibility rules — check current terms with the administering agency. TDHCA MCC and TSAHC MCC are not interchangeable. Always confirm current program terms with the administering agency.
† TSAHC credit score: 620 minimum for FHA, VA, and USDA loan types; 640 minimum for HFA Conventional. The grant option generally applies to government loans (FHA, VA, USDA). HFA Conventional uses the 3-year deferred forgivable second lien, not the grant.
Manufactured Homes & Large-Acreage Parcels — Read This Before You Shop
Most DPA programs have additional restrictions on manufactured or mobile homes, and some exclude them entirely. FHA, VA, and USDA each impose their own manufactured-home standards — foundation requirements, HUD certification dates, property classification. If you are shopping for a manufactured home or a non-subdivision lot in the Hill Country, confirm property-type eligibility with the lender before making an offer. The property-condition details are covered later in this guide, but the restriction is significant enough to flag here: the wrong property type can disqualify an otherwise eligible buyer from every DPA option in the table above.
TDHCA has a specific acreage review issue: land appurtenant to the residence is generally limited to one acre unless an exception applies. Larger Hill Country parcels should be screened before offer, especially if the land has agricultural use, income potential, outbuildings, or unusual site value.
Key Takeaway
- •11 programs side by side — from zero-down VA/USDA to 5% DPA assistance through grants or second liens, depending on program and loan type, plus 3% down conventional options.
- •Most DPA programs accept a 620 credit score for FHA, VA, and USDA — SETH and TSAHC HFA Conventional require 640.
- •Among the major statewide Texas DPA options, TDHCA My First Texas Home is first-time-buyer focused; My Choice Texas Home, TSAHC, and SETH are not necessarily limited to first-time buyers. Conventional 97 requires at least one first-time homebuyer, and MCCs have first-time/veteran/targeted-area rules.
- •Program terms change — always verify current availability before making an offer.
The down payment may be the easy part — the monthly payment is where Texas surprises buyers
First-time buyers, especially those relocating from California, often focus so intently on the down payment that they underestimate the monthly-cash-flow reality of owning a home in Texas. DPA solves the upfront problem. It does nothing for the monthly one.
Here is what shows up on your monthly statement that you may not be budgeting for:
- • Texas property taxes. Texas has no state income tax, but property tax rates are among the highest in the country. Combined rates (the sum of all taxing entity rates) in the Hill Country typically run 1.5% to 2.5% of assessed value, depending on the county, MUD, and school district. On a $400,000 home, that is $500 to $830 per month in property taxes alone. California's Prop 13 caps annual assessment increases at 2%. Texas does not have California's Prop 13-style acquisition-value system. Texas homestead protections work differently: once the residence homestead exemption and cap apply, appraised value increases are generally limited to 10% per year, excluding new improvements. That still does not prevent tax bills from rising due to reassessment after purchase, tax rates, insurance, HOA dues, or MUD/PID assessments.
- • Homeowners insurance. Texas homeowners insurance premiums are well above the national average, driven by hail, wind, and storm exposure. Expect $2,000 to $4,000+ annually depending on the property, construction type, and coverage level.
- • HOA dues. Many Hill Country communities carry HOA assessments ranging from $50 to $300+/month. These are not optional and are not included in your mortgage payment unless escrowed.
- • MUD or PID assessments. Municipal Utility Districts (independent taxing authorities levying ad valorem taxes) and Public Improvement Districts (created by a city or county, imposing special assessments rather than taxes) are common in newer Hill Country developments (especially in the 78006 and 78015 corridors). These add $100 to $400+/month to your housing costs and are easy to miss if you are not looking for them.
- • Escrow adjustments. Your lender estimates property taxes and insurance at closing. If the estimate is low — which happens frequently in Texas, especially with new construction or recent reassessments — your monthly escrow payment can increase in year two, sometimes substantially.
A buyer moving from a $1.2M California home may think a $400,000 Texas home is a steal. It may be — on purchase price. But the monthly-cash-flow comparison is more complex than the price tag suggests. See our full cost of living comparison for a detailed breakdown. Run the full monthly payment — principal, interest, taxes, insurance, HOA, and MUD/PID — before committing to a budget. This is especially important for California relocators accustomed to Prop 13's assessment caps.
New Construction Escrow Shock
Buyers purchasing new construction often qualify using a tax estimate based on unimproved or partially improved land value. When the fully improved home is appraised and assessed — sometimes in year two — the property tax bill can jump significantly.
Example
A buyer purchasing a $400,000 new-build in Boerne qualifies using an estimated annual tax of $6,800 (based on partially improved land value). After the home is fully improved and reassessed, the actual annual tax comes in at $10,400. That is an extra $300 per month in escrow — enough to strain a tight budget, especially if the buyer also underestimated insurance, HOA, or maintenance costs.
Advice: Ask the builder or listing agent what the current tax assessment is based on, and model your payment using the fully improved value, not the estimate on the tax certificate at the time of purchase.
Practical step: Ask your lender for a full monthly-payment breakdown — including property taxes at the actual county rate, insurance quotes, HOA dues, and any MUD/PID assessments — before you write an offer.
Not every property works
with every program
DPA programs do not exist in a vacuum — they sit on top of a mortgage loan, and that loan type imposes its own property requirements. In the Hill Country, where properties range from modern subdivisions to rural acreage with wells and septic systems, this matters more than most buyers expect.
FHA loans have property-condition standards enforced through the appraisal. Peeling paint, roof issues, structural deficiencies, missing handrails, or health-and-safety concerns can trigger a required repair before closing. For sellers on a tight timeline, an FHA offer with DPA can look more demanding than a conventional cash offer.
VA loans have their own Minimum Property Requirements (MPRs). The VA appraisal checks for safe, sanitary, and structurally sound conditions. Issues with well water quality, septic systems, or termite damage can become obstacles. VA appraisals also set a maximum value — if the property does not appraise, the deal stalls.
USDA Guaranteed loans require the property to be in a USDA-eligible rural area — eligibility is property-location specific and intended for qualifying rural areas, with 100% financing available for qualified borrowers through approved lenders. USDA requires an appraisal and property-condition review, but a separate full home inspection is not automatically required by USDA. Additional inspections may be required by the lender, appraiser, inspector, or state law. Private-well properties require a safe water test, and septic or other inspections may be triggered by property conditions.
Conventional loans (including those paired with DPA) generally have the most flexible property-acceptance standards, but the lender's underwriting requirements still apply.
For buyers shopping in Boerne, Fair Oaks Ranch, Kendall County, Bandera County, and rural Hill Country, pay attention to:
- • Well and septic. Properties on well water may require testing and compliance with local health standards. Septic systems — especially aerobic systems common in the Hill Country — need to be permitted and functional. FHA, VA, and USDA all scrutinize these more closely than conventional.
- • Manufactured homes. Most DPA programs have restrictions on manufactured or mobile homes. FHA has specific manufactured-home requirements; VA and USDA do as well. Conventional loans may be more flexible. Verify before you fall in love with a property.
- • Condos. FHA and VA require the condo project to be on an approved list or meet specific project-level requirements. A unit that qualifies conventionally may not qualify for FHA or VA financing.
- • Large acreage. Properties with significant acreage can trigger appraisal complications, access issues, or USDA eligibility questions depending on how the land is zoned and used.
The practical takeaway: Choose the loan program first, then shop properties that fit that program — not the other way around. A property that is perfect for a conventional buyer may create obstacles for a buyer using FHA with DPA. Your agent and lender should be aligned on property-type constraints before you start touring.
Hazard Insurance Deductible Requirements
TDHCA's guide includes hazard insurance requirements: a maximum 2% deductible for homeowners hazard coverage and 5% for other perils such as wind/hail. This matters in the Hill Country and San Antonio because roof age, wind/hail deductibles, and insurance bindability can affect qualification and escrow.
Major Programs, Explained
TDHCA — My First Texas Home
Texas Department of Housing and Community Affairs
The Texas Department of Housing and Community Affairs (TDHCA) runs My First Texas Home, one of the most widely used first-time buyer programs in the state. It provides program mortgage rates and down payment assistance of up to 5 percent of the total loan amount. The rate may differ from a standard market quote, so buyers should compare TDHCA with and without DPA against a conventional lender quote.
TDHCA offers multiple DPA options — buyers may choose between a 30-year deferred repayable second lien and a 3-year deferred forgivable second lien. The specific structure available depends on the selected TDHCA option and current rate sheet at the time of application. Both options carry 0 percent interest and are structured as second liens.
- • Who qualifies: First-time homebuyers (you cannot have owned a home in the past three years). The home must become your primary residence, and some programs require specific residency affidavits or program-specific documentation. Out-of-state buyers should verify eligibility with the participating lender.
- • Income limits: Vary by county and household size. In the San Antonio-New Braunfels MSA (Atascosa, Bandera, Bexar, Comal, Guadalupe, and Wilson counties), the income limits for My First Texas Home are: 100% AMFI — $104,227 for 1–2 person households; 115% AMFI — $119,861 for 3+ person households; 120% targeted area — $125,072 for 1–2 person households; 140% targeted area — $145,918 for 3+ person households. The percentage tier and household size must match the figure — a 1–2 person household at 100% AMFI caps at $104,227, not $125,072. Kendall County falls under a separate HMFA with higher limits: $143,900 for 1–2 person households and $165,485 for 3+ person households.
- • Credit score: Minimum 620 for all loan types.
- • Loan types: FHA, VA, USDA, and conventional mortgages are all eligible.
- • How to apply: Work with a TDHCA-approved lender. You do not apply directly to TDHCA.
- • Quick eligibility check: TDHCA publishes current program details through its Welcome Home lender portal, including the My First Texas Home program matrix and income and purchase price limits.
Program Income vs. Loan-Qualifying Income
Do not assume the income number used to approve your mortgage is the same income number used to qualify for DPA. Some programs count household members, non-purchasing spouses, or ownership-interest parties differently. A buyer can qualify for the mortgage but fail the DPA income test, or vice versa.
Non-Purchasing Spouse Rule
Texas is a strict community property state. If a married buyer uses a TDHCA or TSAHC program and the property will be owner-occupied, the non-purchasing spouse's income must still be counted toward the program's household income eligibility cap — even if that spouse is not on the loan or title.
This is a frequent point of failure in cross-state transactions where one spouse relocates first while the other remains employed in California. The California spouse's income still counts toward the Texas program's household income limit.
Disclose the full household situation to the participating lender early in the process to avoid a denied application at income verification.
TDHCA Mortgage Credit Certificate (MCC): In addition to the DPA options above, TDHCA offers its own MCC — a separate benefit that provides a federal tax credit reducing your annual tax liability by a percentage of your mortgage interest, capped at $2,000 per year. An MCC only helps to the extent the buyer has federal tax liability; it is not a refund check for buyers who owe no federal income tax.
- • As of June 2026, the credit rate is 15 percent of annual mortgage interest (up to $2,000/year).
- • The TDHCA MCC can be combined with the TDHCA My First Texas Home loan for additional savings.
- • This is a tax credit, not a deduction — it directly reduces the taxes you owe.
- • The TDHCA MCC has its own income and purchase price limits, which may differ slightly from the base program.
- • Stacking restriction: Per TDHCA's lender guide, the TDHCA stand-alone MCC may not be combined with an outside DPA program or otherwise subsidized loan or grant from a source other than TDHCA. The TDHCA MCC pairs with TDHCA first mortgages — it is not interchangeable with the TSAHC MCC described below.
MCC Tax Treatment
- •Not a payment reduction — the MCC does not lower the mortgage payment due to the lender.
- •Requires federal tax liability — the credit cannot exceed your annual federal income tax liability.
Quirks and gotchas: The DPA is a second lien on your home. For the 3-year forgivable option, if you sell or refinance before forgiveness ends, you repay the assistance. For the 30-year deferred repayable option, the full amount is due upon sale or refinance. Funding availability can change — confirm before making an offer.
In practice: The second lien structure can create friction with contract terms. A seller needing 30-day close may not align with a lender who needs 45 to process DPA. A buyer who plans to refinance within three years needs to know whether the forgivable lien will complicate that move.
Last verified: June 20, 2026. Source — Texas Department of Housing and Community Affairs, tdhca.texas.gov
TDHCA — My Choice Texas Home
Texas Department of Housing and Community Affairs
My Choice Texas Home is a distinct TDHCA program that provides program mortgage rates and down payment assistance options of up to 5 percent of the total loan amount. Buyers should compare the TDHCA rate with and without DPA against a standard lender quote before choosing. The critical difference from My First Texas Home: no first-time-buyer requirement. Repeat buyers, move-up buyers, and anyone who has previously owned a home are eligible.
- • Assistance type: Up to 5 percent of the loan amount, structured as either a 30-year deferred repayable second lien or a 3-year deferred forgivable second lien, subject to the current rate sheet.
- • Credit score: Minimum 620 for all loan types.
- • Loan types: FHA, VA, USDA, and conventional mortgages are all eligible.
- • Income limits: Vary by county and household size, tied to HUD median income calculations. Always check the current TDHCA income and purchase price limits table.
- • Purchase price limits: No purchase price limit, subject to agency guidelines — unlike My First Texas Home, which does impose caps.
- • How to apply: Work with a TDHCA-approved lender. You do not apply directly to TDHCA.
- • Quirks and gotchas: 30-year deferred repayable second lien or 3-year deferred forgivable second lien, subject to current rate sheet.
- • Because My Choice Texas Home is open to repeat buyers, it can be in higher demand among buyers who do not qualify for first-time-only programs.
- • Funding availability, rates, and assistance levels can change. Confirm availability before making an offer.
For current rate information, refer to TDHCA's My Choice Texas Home program matrix. The second-lien structure is the same as My First Texas Home, which means the same practical constraints apply.
Last verified: June 20, 2026. Source — Texas Department of Housing and Community Affairs, tdhca.texas.gov
TSAHC — Homes for Texas Heroes & Home Sweet Texas Home
Texas State Affordable Housing Corporation
The Texas State Affordable Housing Corporation (TSAHC) offers two primary programs, each with different eligibility criteria but similar benefit structures. Both provide down payment assistance of up to 5 percent of the loan amount.
A key distinction from TDHCA: TSAHC down payment assistance is available to both first-time and repeat buyers — you do not need to be purchasing your first home to qualify for the DPA.
Current homeowner caveat: TSAHC's non-bond DPA is not limited to first-time buyers. However, TSAHC says if a borrower purchased their current home using TSAHC DPA, they must sell that current home before using TSAHC DPA again.
Homes for Texas Heroes
This program is reserved for specific professions that serve the community. Eligible occupations include:
- • Teachers, teacher aides, and school librarians
- • School counselors and school nurses
- • Firefighters and EMS personnel
- • Police officers and correctional officers
- • Veterans and active-duty military
- • Nursing faculty at accredited institutions
Home Sweet Texas Home
This program is open to all income-eligible buyers who meet the general requirements — you do not need to work in a specific profession. If you do not qualify for the Heroes program, this is the broader option.
- • The grant option is non-repayable after the required post-closing period and is not a second lien — unlike the forgivable second lien, which requires three years of primary residency before the balance is forgiven.
- • Education requirement: At least one borrower must complete a TSAHC-accepted homebuyer education course before closing; verify the accepted provider with the lender.
- • Income limits: Vary by county and household size, tied to Area Median Income (AMI).
- • Moving to Texas: Yes, you may be eligible. The home must become your primary residence, and some programs require specific residency affidavits or program-specific documentation. Verify with the participating lender.
- • How to apply: Work with a TSAHC-approved lender. Bill Ross is a TSAHC Participating Realtor (2026 designation).
- • Check your eligibility: TSAHC provides an online eligibility quiz and program overview where you can quickly determine which TSAHC program fits your situation — occupation, income, and household size all factor in.
- • Current income limits: For the most up-to-date income and purchase price thresholds, refer to TSAHC's published income limits, which are updated periodically by county and household size.
TSAHC DPA by Loan Type
| Loan Type | Minimum Credit | DPA Structure |
|---|---|---|
| FHA / VA / USDA | 620 | Grant or 3-year forgivable second lien may be available |
| HFA Conventional | 640 | 3-year forgivable second lien; grant option not available |
| Manufactured homes | Stricter rules; verify before offer | — |
Quirks and gotchas:
- • The forgivable loan is a second lien; if you sell or refinance before the 3-year forgiveness period, you repay the remaining balance.
Execution reality: Not every lender is approved to originate TSAHC loans. Ask your lender specifically whether they close them regularly.
Forgivable Second Liens: A Real Lien That May Be Cancelled After Occupancy
A forgivable second lien is a real, recorded lien on your property — not an informal arrangement. If you stay in the home for the required period, the lender cancels the remaining balance and releases the lien. But until that forgiveness occurs, it is a binding debt obligation on title.
Concrete example: A program provides $15,000 as a forgivable second lien. The buyer lives in the home for 5 years. At the end of year 5, the lien is cancelled and the buyer owes nothing. But if the buyer sells in year 2, the full remaining balance becomes due.
Programs like TDHCA My First Texas Home and TSAHC Home Sweet Texas Home offer forgivable second liens of up to 5 percent of the loan amount. On a $300,000 home, that is $15,000; on a $400,000 purchase, it is $20,000.
The key point: you must keep the home as your primary residence for the forgiveness period (typically 3 to 5 years). If you sell, refinance, or move out early, the lien is not forgiven — you repay the remaining balance. The forgiveness only activates when you meet every condition. Treat this as a recorded obligation with a potential cancellation, not free money with a small caveat.
One practical note: when a forgivable lien is satisfied, confirm how the lien release is recorded. An administrative release must be filed, and delays can surface during a refinance or sale.
TSAHC Mortgage Credit Certificate (MCC): TSAHC also offers its own Mortgage Credit Certificate — a federal tax credit reducing your annual tax liability by a percentage of mortgage interest paid (up to $2,000 per year). An MCC only helps to the extent the buyer has federal tax liability; it is not a refund check for buyers who owe no federal income tax.
Important TSAHC MCC caveats — read before counting on this benefit:
- • TSAHC MCC can only be used with TSAHC DPA. Until further notice, the TSAHC MCC can only be used with TSAHC down payment assistance programs (Homes for Texas Heroes, Home Sweet Texas Home) or TSAHC's No-DPA 0% programs. Stand-alone MCC is discontinued indefinitely. The TSAHC MCC is not interchangeable with the TDHCA MCC — they are issued by different agencies with different pairing rules.
- • Tax liability matters. The TSAHC MCC provides a tax credit of up to $2,000/year, but the full value is only available if the buyer has sufficient federal tax liability. If your tax bill is lower than the credit, the unused portion can roll forward, but buyers with very low federal liability may not capture the full benefit.
- • Primary residence requirement. You must continue to occupy the home as your primary residence. If you convert it to a rental or second home, you may forfeit the credit and face recapture.
- • Income and purchase price rules apply. The TSAHC MCC has its own eligibility thresholds, which may differ slightly from the base DPA program.
- • Possible recapture tax. If you sell or stop using the home as your primary residence before a certain period, a recapture tax may apply. TSAHC's own recapture explanation notes this can occur under specific conditions and is limited by statutory formulas — but it belongs in your decision-making from day one.
- • The credit rate is set by the agency and may change — verify the current rate with TSAHC or your lender.
- • While TSAHC DPA programs are open to repeat buyers, the TSAHC MCC may have separate first-time buyer eligibility requirements. Check current terms.
The Mortgage Credit Certificate: An Ongoing Tax Credit
While a forgivable second lien is a one-time boost at closing, the Mortgage Credit Certificate (MCC) can provide value year after year while you owe on the mortgage, occupy the home as your primary residence, remain eligible, and have sufficient federal tax liability. This is not a deduction that slightly lowers your taxable income. This is a dollar-for-dollar federal tax credit that directly reduces the taxes you owe. It is one of the most underused tools in Texas homebuying.
How it works in plain English: Your MCC allows a $2,000 annual tax credit. You owe $3,000 in federal taxes this year. You now only owe $1,000. The MCC saved you $2,000 — and it can do the same in subsequent years, as long as you continue to qualify. Over 10 years at the maximum credit, that is $20,000 back in your pocket. Over 30 years, that could total $60,000 — though the actual benefit depends on your federal tax liability each year, continued occupancy, and eligibility. Unused MCC credit may generally be carried forward for up to three tax years, subject to IRS rules. For full details on carryforward provisions, recapture, and eligibility, see the IRS instructions for Form 8396 (Mortgage Credit Certificate).
But here is what makes the MCC worth considering beyond the annual savings: it can increase how much home you qualify for. Hypothetical illustration: if the lender can count the MCC benefit as additional qualifying income, a buyer who otherwise qualifies around $250,000 may qualify for a higher amount. The exact increase depends on tax liability, rate, DTI, loan type, and lender underwriting.
The bottom line: A TSAHC MCC stacks with TSAHC DPA grants and forgivable second liens — but the MCC must come from the same agency providing the DPA. A savvy first-time buyer can combine a forgivable second lien for closing costs, an MCC for decades of tax savings, and a competitive mortgage rate — all at the same time. This is not theory. These programs exist, they are funded, and they are available to buyers moving to Texas from any state. Just remember: the TDHCA MCC pairs with TDHCA programs, and the TSAHC MCC pairs with TSAHC programs — they are not interchangeable.
Last verified: June 20, 2026. Source — Texas State Affordable Housing Corporation, tsahc.org
SETH — 5 Star Texas Advantage Program
Southeast Texas Housing Finance Corporation
The Southeast Texas Housing Finance Corporation (SETH) offers the 5 Star Texas Advantage Program, which provides down payment assistance of up to 5 percent of the loan amount as a second lien.
Important geographic restriction: This program is not available statewide. It is available throughout Texas except in Travis County, the city limits of El Paso, the city limits of Grand Prairie, and the city limits of McKinney.
- • What makes SETH different: Not limited to first-time homebuyers. Any qualified buyer can use it, regardless of prior homeownership.
- • Credit score: Minimum 640 — slightly higher than the other state programs.
- • Income limits: Similar structure to TDHCA and TSAHC, tied to county-level AMI.
- • Assistance type: 0% interest second lien with two options: a 3-year forgivable second lien (forgiven if the buyer remains in the home for 3 years) or a 30-year deferred repayable second lien (repaid upon sale, refinance, or at the end of the 30-year term).
- • Loan types: FHA, VA, USDA, and conventional.
- • Homebuyer education: SETH requires completion of the SETH-approved online Homebuyer Education Course — a third-party course will not satisfy this requirement. The course costs $100 unless waived under Charter income limits, and the certificate is valid for 12 months.
- • How to apply: Through a SETH-approved lender. You do not apply directly to SETH. For program details, income limits, and participating lender information, visit the SETH 5 Star Texas Advantage program page.
Quirks and gotchas:
- • The 640 credit score minimum is the highest among the major Texas DPA programs. If your score is between 620 and 639, TDHCA or TSAHC may be a better fit.
- • SETH's geographic exclusion zones (Travis County, El Paso, Grand Prairie, McKinney) are not always intuitive. Verify eligibility by exact property address before committing.
- • Confirm that your lender is SETH-approved and has recent closing experience with the program.
Last verified: June 20, 2026. Source — Southeast Texas Housing Finance Corporation, sethfc.com
HUD Good Neighbor Next Door Program
U.S. Department of Housing and Urban Development
This is one of the most generous programs available, but it is limited to specific professions and specific properties. The Good Neighbor Next Door (GNND) program offers a 50 percent discount on the list price of HUD-owned homes in designated revitalization areas.
- • Who qualifies: Full-time law enforcement officers, pre-K through 12th-grade teachers, firefighters, and emergency medical technicians (EMTs).
- • Down payment: Only $100 is required.
- • The catch: The 50% discount is structured as a 0% interest, no-payment second mortgage that is fully forgiven after you live in the home as your primary residence for 36 months. You cannot have owned any residential property within the year prior to purchase.
- • Properties: HUD-owned homes listed on the HUD Home Store. Availability is unpredictable — check regularly for listings in your target area.
- • Process: Properties are listed for a 7-day bid period. All bids must be submitted through a licensed real estate agent. If multiple bids are received, a lottery determines the winner.
Quirks and gotchas: The limited property selection is the biggest constraint. HUD homes in revitalization areas may not be in the exact neighborhood you want. Properties are sold "as is" — budget for repairs. And the 3-year commitment is firm — if you leave before then, you repay the discounted amount.
VA Home Loans
U.S. Department of Veterans Affairs
VA loans are available to eligible veterans, active-duty service members, and surviving spouses. They are one of the strongest mortgage products available to any buyer, regardless of program.
- • Key benefit: Zero down payment. No private mortgage insurance (PMI). Competitive interest rates. These three features alone can save tens of thousands of dollars.
- • Credit score: The VA does not set a minimum, but most lenders require at least 620.
- • Funding fee: Ranges from 1.25% to 3.3% of the loan amount, depending on down payment and whether this is your first VA loan. The fee can be financed into the loan. Veterans with service-connected disabilities may be exempt.
- • Stacking with DPA: VA loans can be combined with TSAHC or TDHCA down payment assistance. Since VA already requires zero down, the DPA can cover closing costs, prepaid items, and other permitted mortgage-related expenses, subject to program and cash-back rules.
- • Moving to Texas: VA eligibility is federal and portable. If you have a Certificate of Eligibility (COE), you can use it to buy anywhere in Texas.
USDA Rural Development Loans
U.S. Department of Agriculture
USDA Rural Development guarantees home loans for properties in eligible rural and suburban areas. In the Hill Country, USDA eligibility is property-specific — Bandera County, Medina County, and rural portions of Comal and Kendall may produce USDA opportunities, but Boerne, Fair Oaks Ranch, and suburban growth corridors are mixed. USDA's own materials state that the eligibility map is used to determine whether a property is in an eligible rural area, and that final determination is made by Rural Development after a complete application. Always verify the exact property address before assuming eligibility.
Do not assume. Verify by exact address.
USDA eligibility is determined by property-specific census tract boundaries — not county lines, not zip codes, and not general neighborhood descriptions. Two homes on the same road can have different eligibility status. The only reliable way to confirm eligibility is to check the official tool for the exact property address.
Check Any Address on the USDA Eligibility ToolOpens in a new tab — eligibility.sc.egov.usda.gov
- • Key benefit: Zero down payment. No maximum purchase price (though the loan amount is limited by qualifying income). Interest rates are capped by the USDA, typically competitive with or below conventional rates.
- • Income limits: Household income generally cannot exceed 115 percent of the area median income. For 2025, this was approximately $119,850 for a 1–4 person household and $158,250 for 5–8 persons in many Texas areas.
- • Property eligibility: The property must be in a USDA-eligible area. Use the USDA eligibility mapping tool to verify any specific address. Some areas that appear "rural" may not qualify, and some suburban areas may.
- • Credit score: No official USDA minimum, but most participating lenders require 640.
- • Upfront guarantee fee: Approximately 1 percent of the loan amount, plus an annual fee of about 0.35 percent. Both can be financed into the loan.
- • Stacking with DPA: USDA loans can be combined with TSAHC or TDHCA down payment assistance to cover closing costs and prepaids.
Why this matters for Hill Country buyers: Bandera County, Medina County, and rural portions of Comal and Kendall may produce USDA opportunities, but Boerne, Fair Oaks Ranch, and suburban growth corridors are mixed. There is no shortcut — the USDA eligibility map must be used for each specific address. Our guide to land and water realities covers well depths, septic systems, and rural infrastructure.
Last verified: June 20, 2026. Source — USDA Rural Development, rd.usda.gov
FHA Loans
Federal Housing Administration
FHA loans are government-insured mortgages widely available through most lenders. They are not a down payment assistance program themselves, but they are the most common vehicle used in conjunction with DPA programs.
- • Down payment: 3.5% with a credit score of 580 or higher. 10% with a credit score between 500 and 579.
- • Loan limits: Published annually by HUD and vary by county. The 2026 FHA national floor for a one-unit property is $541,287, but FHA limits vary by county and property type. Verify the exact county limit using HUD's official lookup tool before writing an offer.
- • Mortgage insurance: Upfront premium of 1.75% of the loan amount (can be financed) plus annual MIP of typically 0.55% per year. Required for the life of the loan in most cases.
- • Why it matters: FHA is most commonly paired with TDHCA and TSAHC DPA. The low credit score requirement (580 for the base loan, though DPA typically requires 620) makes it accessible to buyers with less-than-perfect credit.
Conventional 97, HomeReady & Home Possible
These three programs all allow a 3 percent down payment on conventional mortgages, but they have different eligibility requirements.
Conventional 97
- • 3 percent down for first-time homebuyers. No income limit.
- • At least one borrower must be a first-time homebuyer.
- • Credit score minimum: typically 620. Property must be a single-unit primary residence.
- • Useful for buyers who want a conventional loan but do not meet HomeReady/Home Possible income limits.
Fannie Mae HomeReady
- • 3 percent down with income limits set at 80 percent of the Area Median Income (AMI).
- • Minimum credit score: 620. Homeownership education may be required, especially when all occupying borrowers are first-time homebuyers; confirm with the lender and current Fannie Mae guidance.
- • Income from boarders and non-borrower household members can be considered for qualification.
- • Offers reduced mortgage insurance costs compared to standard conventional loans.
Freddie Mac Home Possible
- • Similar to HomeReady — 3 percent down, 80% AMI income limit, 620 minimum credit score.
- • Also allows rent from accessory dwelling units and boarders as qualifying income.
- • Both HomeReady and Home Possible offer reduced mortgage insurance rates.
Stacking with DPA: Low-down-payment conventional options may be available through program-specific HFA conventional products, such as Fannie Mae HFA Preferred or Freddie Mac HFA Advantage, depending on the DPA provider. Do not assume a standard Conventional 97, HomeReady, or Home Possible loan can be layered with any DPA product. Confirm the exact conventional product, DPA provider, lien structure, and grant eligibility before writing an offer.
Conventional DPA Is Not the Same as Standard Conventional
DPA programs that use conventional financing rely on HFA Preferred (Fannie Mae) or HFA Advantage (Freddie Mac) structures — not standard Conventional 97, HomeReady, or Home Possible. These HFA products carry their own underwriting and eligibility rules. The lender must confirm which conventional product is paired with which DPA program before you write an offer.
Local Programs: San Antonio, Bexar County & Kendall County
In addition to the statewide programs, there are local down payment assistance options in the San Antonio metro area and across the Hill Country communities we serve that may benefit buyers in Bexar County and surrounding areas.
An important caveat: County-level and city-level programs operate under their own rules about eligible property types, acceptable contract timelines, and seller concession limits. These rules do not always align with what state programs allow. A San Antonio HIP program may have property-type restrictions that conflict with what you are under contract on. A Bexar County program may have income calculation methods that differ from TDHCA's. And when you stack a local program on top of a state program, each one adds its own conditions — conditions that can collide in ways that are not obvious until you are deep in the transaction. This is one of the areas where local execution knowledge matters more than general program awareness.
Local + State Program Conflict Example
A buyer wants to use a San Antonio local DPA program that requires a 45-day approval timeline. The state DPA program has a rate lock that expires in 30 days. The seller demands a 30-day close. Now the buyer is stuck: the local program cannot clear in time, the state lock is ticking, and the seller will not extend. The buyer has to choose between rushing the local program and hoping it clears, losing the rate lock, or walking away from the deal.
Bottom line: ask both programs about their timelines early, coordinate with the lender, and make sure the seller's contract timeline is realistic for the specific DPA stack you are using.
City of San Antonio — Homeownership Incentive Program (HIP)
Current Funding Status — As of June 2026
HIP 80 and HIP 120 are not currently accepting new applications for Fiscal Year 2026. The City of San Antonio indicates that renewed funding may become available October 1, 2026, pending City Council approval. If you are interested in local down payment assistance, check the City of San Antonio's housing programs page for the latest status. In the meantime, ask your lender about currently available alternatives such as TDHCA, TSAHC, and SETH (SETH has listed geographic exclusions) — these programs remain active and can provide comparable assistance.
The City of San Antonio offers the Homeownership Incentive Program, which includes two tiers — HIP 80 and HIP 120. Both are structured as 0 percent interest second liens for down payment and closing cost assistance, but the forgiveness terms differ materially between the two. The table below shows the exact structure of each program.
| Program | Assistance Range | Structure | Forgiveness Terms |
|---|---|---|---|
| HIP 80 | $1,000–$30,000 | 0% second lien | $1,000–$15,000 forgiven over 5 years $15,001–$30,000 forgiven over 10 years |
| HIP 120 | $1,000–$15,000 | 0% second lien | 75% forgiven over 10 years 25% perpetual lien |
Key distinction: HIP 80 is fully forgivable if you remain in the home for the required period. HIP 120 is not — 25 percent of the assistance amount remains as a perpetual lien, meaning it must be repaid when the home is sold, refinanced, or otherwise transferred. Both programs have purchase price limits that apply. HIP 80 targets buyers at 80 percent AMI, while HIP 120 extends eligibility to 120 percent AMI.
Eligibility: Buyers purchasing within San Antonio city limits. Income limits apply based on the HIP tier. You generally must complete a homebuyer education course.
Last verified: June 20, 2026. Not currently funded for FY 2026. Source — City of San Antonio, sanantonio.gov
Local Down Payment Assistance Programs
| Program | Key Details |
|---|---|
| NHSSA (Neighborhood Housing Services of San Antonio) | Up to $12,000 in down payment and closing-cost assistance for eligible first-time buyers in Bexar County and surrounding areas. Income and purchase-price limits apply; verify current eligibility and funding availability. |
| Opportunity Home San Antonio | Homeownership program for first-time buyers; Bexar County residency required; approved homebuyer education required; 80% AMI income limits; 10-year appreciation recapture provision applies. Verify current program terms before committing. |
Important note for Kendall County buyers: Most of the local San Antonio programs are limited to properties within Bexar County or San Antonio city limits. If you are buying in Boerne, Fair Oaks Ranch, or elsewhere in Kendall County, you will primarily use the broader programs (TDHCA, TSAHC, and SETH — SETH has listed geographic exclusions but covers these counties) rather than the San Antonio-specific local options. USDA eligibility in Kendall County is property-specific — Boerne, Fair Oaks Ranch, and suburban growth corridors are mixed, while rural portions may produce opportunities. Verify any property address using the official USDA eligibility tool.
Typical Closing Costs in Texas
What to know: Texas closing costs typically run 2 to 5 percent of the purchase price. For a $350,000 home, roughly $7,000 to $17,500.
Closing Cost Breakdown on a $350,000 Home
How DPA Offsets These Costs
When you use a VA or USDA loan (zero down payment) combined with a DPA grant or forgivable loan, DPA may cover much or all of the allowable closing costs, subject to program and investor rules. This can result in the buyer bringing little to no cash to closing.
Key Takeaway
- •Texas closing costs run 2–5% of the purchase price — roughly $7,000–$17,500 on a $350K home.
- •5% DPA on an FHA loan yields ~$16,890 — enough to cover all closing costs.
- •With a zero-down VA or USDA loan, DPA may cover closing costs entirely.
Cash-to-Close Comparison
What to look for: Three scenarios, each showing three loan types side by side. Green bars are zero-down programs (USDA/VA), blue bars are FHA with DPA, and gold bars are conventional with DPA. Notice how dramatically the cash requirement drops as you move from no assistance to 5% DPA — and how zero-down programs with DPA can bring cash to close near zero.
Cash to Close on a $350,000 Home
Three scenarios, three loan types — all side by side
DPA calculated from the final loan amount, not the purchase price.
Breakdown by Component
| Component | No Assistance | FHA + 5% DPA | Zero-Down + 5% DPA |
|---|---|---|---|
| Down Payment | $12,250 | $12,250 | $0 |
| Closing Costs | ~$12,500 | ~$12,500 | ~$12,500 |
| DPA Credit (5%) | — | –$16,890 | –$17,500 |
| Net Cash to Close | $24,750 | ~$7,860 | ~$0 |
Cash You Bring to Closing
| Scenario | Zero-Down | FHA | Conventional |
|---|---|---|---|
| No Assistance | $12.5K | $24.8K | $23K |
| With 3% DPA | $2K | $14.6K | $12.8K |
| With 5% DPA | ~$0 | $7.9K | $6K |
* Illustrative only. DPA amounts are calculated from the final loan amount — not the purchase price. Zero-down: loan = $350,000 (3% = $10,500; 5% = $17,500). FHA 3.5% down: loan ≈ $337,750 (3% ≈ $10,130; 5% ≈ $16,890). Conventional 3% down: loan ≈ $339,500 (3% ≈ $10,185; 5% ≈ $16,975). Estimated closing costs ≈ $12,500 (~3.6%). DPA is shown reducing the buyer's required cash to close. Actual allocation among down payment, closing costs, prepaid items, and other permitted expenses depends on the DPA provider, investor, lender, and cash-back rules. Actual amounts vary by lender, loan type, and program.
Near-zero cash to close does not mean zero cash needed during the process; earnest money, option fee, inspections, appraisal, insurance setup, moving costs, and reserves still matter.
Your Cash Flow Timeline
Even with near-zero cash to close, money moves at several points throughout the homebuying process. Here is when you need it and what it covers.
Before Offer
- •Get pre-approval
- •Complete homebuyer education course (required for some DPA programs)
At Offer
- •Earnest money deposit
- •Option fee (Texas-specific — buyer's right to terminate)
During Option Period
- •Home inspection
- •Specialty inspections (foundation, septic, well, pool)
Before Closing
- •Appraisal
- •Homeowner's insurance — quote & bind
- •Final lender conditions & clear-to-close
At Closing
- •Remaining cash to close (down payment, closing costs, prepaids)
- •Reduced or nearly zero with DPA
After Closing
- •Moving expenses
- •Utility setup
- •Immediate repairs or maintenance
- •Emergency reserves
Key Takeaway
DPA can bring your closing-day check close to zero — but you still need cash on hand for earnest money, option fee, inspections, appraisal, and post-closing costs. Budget for the full timeline, not just the closing table.
What cash do you still need?
Down payment assistance programs can dramatically reduce the cash you need to close — but DPA does not erase every out-of-pocket cost. Knowing about these expenses now is the difference between being prepared and being blindsided.
This is a reason to plan. Here is what to expect.
Earnest Money Deposit
Typically 1 to 2 percent of the purchase price. Submitted with your offer, held in escrow, and credited toward your closing costs. On a $350,000 home, expect $3,500 to $7,000.
Option Fee
A Texas-specific fee that buys the unrestricted right to terminate during the option period. Under current TREC forms, the fee is delivered to the escrow agent and credited to the sales price at closing. If you terminate during the option period, the seller keeps it.
Home Inspection
$300 to $500+ depending on home size and scope. Additional specialized inspections (foundation, septic, well) may cost extra. Do not skip this.
Appraisal Fee
$400 to $600+. Required by your lender to confirm the property's market value.
Homebuyer Education Course
Required by most DPA programs. Typically $50 to $150, completed online in 4 to 8 hours. Some programs (SETH, TSAHC) require their own approved provider. Complete it early so the certificate does not expire before closing.
Homeowner's Insurance Setup
First year premium may be due at closing or rolled into escrow. Texas Hill Country premiums are above national averages due to hail, wind, and wildfire risk. Shop early and compare carriers.
Moving Costs
Easy to underestimate, especially for long-distance relocations. A California-to-Texas move can run $3,000 to $10,000+. Get quotes early.
Cash Reserves After Closing
Some loan types or lender overlays may require reserves. Ask the lender whether your approval requires them.
Possible Immediate Repair Costs
Especially for older homes. Budget a small buffer for post-close repairs ($1,000 to $3,000).
Option Fee and Earnest Money Mechanics — For California Relocators
If you are coming from California, the Texas system works differently. Earnest money is escrowed with the title company and credited at closing — not an extra cost, but the cash must be available when you go under contract. The option fee is a Texas-specific payment that buys the unrestricted right to terminate during the option period. Both deadlines are time-sensitive — missing one can forfeit your rights. See the California Relocators section for details.
Roof Age and Insurance Bindability
Homeowner's insurance is not optional — it is a lender requirement and part of your monthly escrow payment and debt-to-income calculation. In Hill Country and San Antonio, whether you can actually bind coverage at an acceptable premium depends on several property-specific factors that are not always obvious before you go under contract.
Roofs over 10 to 15 years old are a common trigger. Many Texas carriers will not write a new policy on a home with an aging roof, or they will exclude wind/hail coverage — the exact coverage you need most in this market. High wind exposure and prior hail claims can further restrict carriers or push premiums above what was estimated in your loan approval.
If the buyer cannot bind coverage, or if the premium is significantly higher than the estimate used in underwriting, it can affect your debt-to-income ratio or derail the loan entirely. This is not a DPA rule — it is a real transaction issue in Hill Country and San Antonio.
- •Ask the listing agent about roof age, recent claims, and insurance history before making an offer.
- •Get an insurance quote during the option period — do not wait until the last minute.
A roof that looks fine from the ground can still be uninsurable.
What can be negotiated or offset
Some closing costs can be negotiated with the seller (seller concessions) or covered by lender credits. Some DPA programs have their own limits on seller concessions — if stacking programs, the most restrictive rule wins.
Seller credits and DPA are not a way to walk away from closing with extra cash. Credits must be used for allowable costs under the loan, investor, and program rules.
Down payment assistance is one of the most powerful tools available to Texas first-time buyers. But it works best when paired with a clear understanding of what else the process requires. Plan for these costs, and you will walk into your closing confident and prepared. For a broader walkthrough, see our Hill Country Buyer's Guide.
Key Takeaway
- •DPA covers your down payment and can offset closing costs — but not every out-of-pocket expense.
- •Earnest money ($3,500–$7,000 on a $350K home), option fee, and inspection are paid before closing.
- •Budget for moving costs, blinds, appliances, and lawn equipment — especially if relocating from out of state.
- •A $10,000–$15,000 cash cushion after closing is not a luxury — it is the difference between settling in and stressing out.
DPA Is Not Free Money
Down payment assistance is a powerful tool — but every program comes with trade-offs. A serious advisor does not just tell you what is available. They explain what it costs, what it constrains, and when it may not serve your goals.
DPA programs may carry a slightly higher rate on your first mortgage compared to a standard loan without assistance.
Most DPA is structured as a second lien — a legal claim on your home alongside the first mortgage.
Sell or refinance before the forgiveness period ends, and you may owe the full DPA amount back.
Some DPA second liens cannot be subordinated during a refinance — potentially blocking or complicating that move.
Some sellers view DPA offers as higher-risk or slower to close, which can affect competitiveness in multiple-offer situations.
DPA reservations and second-lien documentation add processing time — plan for a 40 to 45 day close, not 30.
The right answer depends on your timeline, financial picture, and how long you plan to stay in the home.
Higher first-mortgage rate
Some DPA programs pair with slightly higher rates on the first mortgage. The lender or program may offer a below-market rate on the assistance itself, but the first mortgage rate may carry a small premium compared to a standard conventional loan without DPA.
Over time, even a fraction of a percent adds up. On a $300,000 loan, a 0.25 percent higher rate costs roughly $750 more per year — or about $3,750 over five years. Buyers should compare the total cost of the loan over 5 to 7 years, not just the day-one cash savings.
- • A lender who works with these programs can run the numbers side by side: DPA with a slightly higher rate versus no DPA with a standard rate.
- • The comparison often reveals that DPA still wins for buyers who are cash-constrained at closing.
- • For buyers who have some savings and plan to stay long-term, the math may tell a different story.
Second-lien restrictions
DPA most commonly takes the form of a second lien — either deferred or forgivable — that sits on the property alongside your first mortgage. This lien is a legal encumbrance that affects your property's title, your equity position, and your options when you want to refinance, sell, or tap into your home's value.
- • Deferred second lien: The full DPA amount is owed when you sell, refinance, or transfer the property.
- • Forgivable lien: The amount is forgiven after a set period — but only if you meet all conditions (primary residence occupancy, no sale, no refinance during the forgiveness window).
- • Both structures create a legal claim on your property that is subordinate to the first mortgage but senior to your equity.
For buyers who plan to stay long-term and never refinance, this may be a non-issue. For buyers who anticipate refinancing, selling within a few years, or using home equity, the second lien is a real constraint that deserves honest evaluation.
Refinance limitations
This is where the second lien issue becomes most tangible. Some DPA second liens cannot be subordinated during a refinance. Subordination means the second lien holder agrees to remain in the second-lien position after the new first mortgage is created.
If the DPA program does not allow subordination, a refinance may be blocked entirely — or may require you to pay off the DPA lien before the refinance can proceed.
- • If you are planning to refinance in 2 to 3 years — to drop mortgage insurance, capture a lower rate, or pull cash out — a DPA lien that cannot be subordinated may complicate or prevent that move.
- • This is one of the most common frustrations buyers encounter after closing, and it is rarely discussed during the DPA sales process.
Before committing to any DPA program, ask the lender specifically: "Can this second lien be subordinated if I refinance?" Get the answer in writing. If the answer is no or uncertain, factor that into your decision.
Repayment risk on forgivable programs
A "forgivable" second lien sounds like free money — and in a sense, it is. But forgiveness is conditional. Every forgivable DPA program has a forgiveness period, typically 3 to 5 years, during which the forgiveness conditions must be maintained.
If you sell the home, refinance, stop occupying it as your primary residence, or otherwise violate the terms before the forgiveness period ends, you may owe the full DPA amount back.
- • This is not a penalty. It is a structural term of the program — designed to help people who stay in their homes, not to provide short-term cash relief.
- • Life circumstances change — a job relocation, divorce, family expansion, or career opportunity in another city can trigger repayment before the forgiveness window closes.
- • Plan to stay for the full forgiveness period, and understand what you would owe if circumstances force an early exit.
The forgivable option is excellent for buyers with stable plans. It is risky for buyers with uncertain timelines.
Program complexity
Stacking multiple DPA sources — for example, combining a TDHCA first mortgage with a TSAHC grant and a local closing cost assistance program — can create real administrative burden.
- • Not every lender participates in every program. Program rules change. Eligibility requirements overlap in ways that are not always obvious.
- • When you stack programs, each one adds documentation, processing time, and conditions to the transaction.
- • Stacking is not a bad idea — for the right buyer, combining programs can be the most effective path. But it requires a lender experienced with the specific combination you are pursuing.
- • If simplicity and speed are priorities, using a single, well-understood program may be the better choice even if it provides slightly less total assistance.
From the field: The lender's program participation is the single biggest variable in whether a DPA transaction closes on time. Ask how many transactions they have closed with that program in the past 12 months. For a summary of how Bill's practice handles these programs, see our services page.
None of this means you should avoid DPA. For the majority of first-time buyers — especially those who are cash-constrained at closing, plan to stay in the home for several years, and work with an experienced lender — down payment assistance is one of the most effective tools available.
The gap between knowing what exists and knowing how it performs in a live deal is where most problems originate. Working with experienced people is the most practical thing you can do before your first offer.
The rate trade-off:
DPA vs. lower rate
Most first-time buyers focus on one question: Can I get down payment assistance? The deeper question is: what is the trade-off between getting DPA now and paying a slightly higher interest rate?
In many DPA programs, the result can be a slightly higher rate on the primary mortgage. That rate difference compounds over years. Here is a side-by-side comparison using realistic numbers.
- Lower interest rate means lower monthly payment — roughly $35–$50/mo less than Scenario B
- Less total interest paid over the life of the loan if you hold it 10+ years without refinancing
- No second lien on the property — simpler title, no repayment obligation at sale or refinance
- Requires $18,000+ cash upfront — may drain savings or delay purchase
- Less financial cushion for emergencies, repairs, or life events after closing
- If you refinance within 3–5 years, the rate advantage disappears
- Keeps $15,000+ in cash reserve for emergencies, repairs, furnishing, or life
- Enables purchase years earlier than saving for full closing costs
- If you refinance in 3–5 years, the DPA lien is repaid and the rate difference becomes moot
- Higher monthly payment (~$35–$50/mo more than Scenario A)
- Deferred second lien must be repaid at sale, refinance, or end of term
- More total interest paid if you hold the loan 10+ years without refinancing
The Numbers at a Glance — $300,000 Home, 30-Year Fixed
| Metric | Scenario A: No DPA | Scenario B: 5% DPA |
|---|---|---|
| Rate | 6.50% | 6.75% |
| Cash to Close | ~$18,000 | ~$3,000 |
| Monthly Payment | ~$2,210 | ~$2,255 |
| Monthly Difference | ~$45/mo higher with DPA | |
| Cash Kept in Reserve | Minimal | ~$15,000 |
| Total Interest (30 yrs) | ~$383,000 | ~$397,000 |
| DPA Repayment | None | $6,000 at sale/refi |
*Estimates based on a $300,000 purchase price, 3% down payment, conventional loan, ~1.1% effective property tax rate, $150/mo homeowners insurance, and typical PMI. Actual rates, fees, taxes, and insurance will vary. The DPA amount shown assumes a deferred second lien with a remaining balance after covering the down payment. These figures are illustrative — your actual numbers will depend on your credit, lender, program, and property.
The honest answer: over a full 30-year term without refinancing, Scenario A costs less in total interest — roughly $14,000 less. But most buyers do not hold a loan for three decades. The national average tenure is roughly 8–10 years, and many first-time buyers refinance within 3–5 years.
If you refinance in year 4, the DPA lien is repaid and both scenarios reset. The real difference is: Scenario B let you keep $15,000 in reserve during the years you needed it most — the early years of homeownership.
Neither path is universally better. The right choice depends on your cash position, your timeline, and your monthly payment comfort level.
Want to see how these numbers apply to your specific situation? Every buyer's financial picture is different — credit score, income, debt, savings, and goals all affect which path makes the most sense. Bill Ross and his trusted lending partners can run these scenarios with real numbers tailored to your purchase price, your credit profile, and your long-term plans.
There is no cost and no obligation — just a clear-eyed look at your options so you can make a strategic decision, not an emotional one.
How DPA Affects Your Monthly Payment
What to understand: Down payment assistance does not directly lower your monthly mortgage payment (since the DPA is a separate second lien or grant). However, it eliminates or reduces the cash you need to bring to closing, which means you can buy a home sooner without draining your savings. Here is a comparison of what monthly payments look like at different price points using common loan scenarios.
Side-by-Side: $350,000 Home · FHA Loan
Est. Effective After-Tax Monthly Cost
Illustrative comparison using a $350,000 FHA purchase with 3.5% down (loan ~$337,750), 5% TSAHC forgivable DPA (~$16,890), and TSAHC Mortgage Credit Certificate. MCC credit estimated at ~$2,000/year (max). The MCC must be paired with TSAHC DPA. Actual savings depend on loan type, rate, income, MCC eligibility, and program terms.
Important: The MCC does not reduce the mortgage payment due to the lender; it may reduce federal tax liability. The figure shown above is an estimated effective after-tax monthly cost — not a revised mortgage statement amount.
| Metric | $250,000 Home | $350,000 Home | $450,000 Home |
|---|---|---|---|
| Est. Monthly Payment | $2,252/mo | $3,118/mo | $3,979/mo |
| Loan Amount | $241,250 | $337,750 | $434,250 |
| Down Payment Needed | $8,750 | $12,250 | $15,750 |
| Principal & Interest | $1,565/mo | $2,191/mo | $2,816/mo |
| FHA Mortgage Insurance | $111/mo | $155/mo | $198/mo |
| Est. Property Tax (1.6%) | $333/mo | $467/mo | $600/mo |
| Est. Homeowner's Insurance | $243/mo | $305/mo | $365/mo |
The Anatomy of a Monthly Payment
Most buyers focus on the mortgage rate — but principal and interest is only one piece of the total. On a typical $350,000 FHA purchase, P&I is about 70% of your payment. Property taxes, insurance, and mortgage insurance make up the rest.
Monthly Payment by Loan Type
How the total monthly payment breaks down across loan types. Property taxes and insurance are consistent; the differences are in mortgage insurance and loan structure.
| P&I | $2,191 |
|---|---|
| Property Tax | $467 |
| Insurance | $305 |
| MIP | $155 |
| P&I | $2,112 |
|---|---|
| Property Tax | $467 |
| Insurance | $280 |
| PMI | $158 |
| P&I | $2,100 |
|---|---|
| Property Tax | $467 |
| Insurance | $270 |
| PMI | None |
| P&I | $2,108 |
|---|---|
| Property Tax | $467 |
| Insurance | $275 |
| Guarantee Fee | $98 |
* Estimates based on a $350,000 purchase, June 2026 approximate rates, ~1.6% effective property tax rate, $270–$305/mo homeowner's insurance (varies by loan type and coverage), and standard MI/MIP/PMI rates. VA funding fee excluded from monthly payment (typically financed). USDA annual guarantee fee at 0.35%. Actual rates, taxes, and insurance will vary. These figures are illustrative — your actual numbers depend on credit, lender, program, and property.
What Your Budget Looks Like
Without Help vs. With Help
For a $350,000 home using an FHA loan with 3.5% down, here is how DPA and a TSAHC Mortgage Credit Certificate change the picture.
Illustrative comparison using a $350,000 FHA purchase with 3.5% down (loan amount ~$337,750), 5% TSAHC forgivable DPA (~$16,890 based on the loan amount, not the purchase price), and TSAHC Mortgage Credit Certificate. MCC credit is estimated at $2,000/year (maximum). The TSAHC MCC must be paired with TSAHC DPA — it cannot be used with TDHCA DPA. Actual savings depend on loan type, interest rate, income, MCC eligibility, and program terms. Consult a licensed lender for your specific scenario.
When DPA Makes Sense — and When It Does Not
DPA makes sense when:
- ✓You have stable, verifiable income and the monthly payment fits your budget — including taxes, insurance, and HOA.
- ✓You have limited liquid cash and the down payment is the primary barrier to buying.
- ✓You plan to stay long enough to satisfy the forgiveness period (typically 3 years) — or you understand the repayment terms.
- ✓You can tolerate a slightly higher first-mortgage rate in exchange for reduced cash to close.
DPA may not make sense when:
- ✗You have enough savings to cover the down payment and closing costs without assistance.
- ✗You expect to refinance or sell quickly — a forgivable lien becomes a repayment obligation if you leave before the forgiveness period.
- ✗You are buying in a competitive multiple-offer situation where a non-DPA offer may be more attractive to the seller.
- ✗You can get a better builder or lender credit without a second lien — sometimes a lender or builder incentive beats a state DPA product on total cost.
The Three Numbers That Matter More Than the Advertised Assistance Amount
Every DPA program leads with "up to 5%." That number is the marketing line, not the decision-making line. The three numbers that actually determine whether DPA works for you are:
Cash to close
Cash to close is the amount due at closing. Total cash needed also includes earnest money, option fee, inspections, and reserves. DPA may cover some, but not all. The question is: what is the actual check you need to write?
Monthly payment
Principal, interest, taxes, insurance, HOA, MUD/PID — all of it. DPA reduces upfront cost but does not reduce the monthly obligation. Can you comfortably make this payment every month?
Exit cost if you sell or refinance early
A forgivable second lien becomes a repayment obligation if you sell or refinance before the forgiveness period ends. If your plans change in year two, what do you owe? Know the answer before you sign.
Which Program Path Fits You?
Five branches, five buyer profiles. Match your situation to the programs worth pursuing — then run your specific numbers with a lender.
Key takeaway: Your buyer profile determines your starting menu of programs. Most buyers land on two to three viable options. The final choice depends on credit score, income level, property location, and timeline. Run your specific numbers with a lender before committing.
Which Programs Apply by Location
What this section covers: Not every program is available everywhere. Eligibility depends on the specific property address, county jurisdiction, and whether the property falls within a USDA-eligible zone. This section maps the major programs to the areas we serve most — Boerne, Fair Oaks Ranch, San Antonio, and the surrounding Hill Country — so you can quickly identify which options are worth pursuing for your target location.
Buyers purchasing within San Antonio city limits have access to the widest range of programs in the region — both statewide options and city-specific local assistance.
- TDHCA — Up to 5% DPA through participating lenders; use a lender experienced with TDHCA.
- TSAHC — Grant or forgivable DPA depending on loan type.
- SETH — 5 Star Texas Advantage. Available in Bexar County (not excluded like Travis County or El Paso city limits). Requires 640 credit score.
- HIP (City of San Antonio) — Homeownership Incentive Program (HIP 80 / HIP 120) is currently unfunded for FY 2026. May reopen October 1, 2026 pending City Council approval. Check status before relying on this program.
Bexar County Outside City Limits
Outside San Antonio city limits but still within Bexar County, the city-specific programs (HIP) do not apply. Statewide programs are your primary tools. USDA eligibility is limited — most of Bexar County is classified as urban.
- TDHCA — Up to 5% DPA through participating lenders; use a lender experienced with TDHCA.
- TSAHC — Grant or forgivable DPA depending on loan type.
- SETH — Subject to program rules and income limits. Check eligibility based on exact property location and household income.
- USDA — Only where the specific property qualifies. Most of Bexar County is considered urban and does not qualify, but isolated pockets near the county edges may. Verify with the USDA eligibility map for each property address.
Kendall County is a mixed picture for USDA eligibility. Boerne, Fair Oaks Ranch, and suburban growth corridors are mixed, while rural portions of Kendall may produce USDA opportunities. Always verify the exact property address before assuming eligibility.
- TDHCA — Up to 5% DPA through participating lenders; use a lender experienced with TDHCA.
- TSAHC — Grant or forgivable DPA depending on loan type.
- USDA — Eligibility varies by parcel. Rural portions of Kendall County may qualify, but Boerne and surrounding subdivisions are mixed. Verify by exact address using the USDA eligibility map before assuming eligibility.
- SETH — Subject to program rules. Available in Kendall County. Requires 640 minimum credit score.
Fair Oaks Ranch spans Bexar, Comal, and Kendall counties. Which county the property is physically located in affects appraisal district, tax assumptions, income-limit calculations, and some program analysis.
- TDHCA — Up to 5% DPA through participating lenders; use a lender experienced with TDHCA.
- TSAHC — Grant or forgivable DPA depending on loan type.
- USDA — Depends on exact property location and which side of the county line the property sits on. Some Fair Oaks Ranch addresses qualify; others do not. Check early — do not assume eligibility based on neighborhood reputation alone.
- SETH — Available, but confirm eligibility based on county assignment and income limits. The 640 credit minimum still applies.
Bandera, Comal & Rural Hill Country
The rural Hill Country — including parts of Bandera County, Medina County, and rural portions of Comal and Kendall — may produce USDA opportunities. However, Boerne, Fair Oaks Ranch, and suburban growth corridors are mixed. USDA eligibility is determined parcel by parcel and must be verified using the official USDA eligibility tool. For a full overview of the communities in these counties, see our areas served page.
- TDHCA — Up to 5% DPA through participating lenders; use a lender experienced with TDHCA.
- TSAHC — Grant or forgivable DPA depending on loan type.
- USDA — Check this first. Bandera County and rural portions of Comal may produce USDA opportunities, but eligibility varies by parcel. Verify the exact property address before assuming eligibility. Zero-down financing if the property qualifies.
- SETH — Subject to program rules. Requires 640 credit score. Available throughout these counties.
USDA Eligibility — Boerne & Kendall County
USDA-eligible areas in this region are not defined by city limits or county lines. They follow census tract data, so eligibility can change from one parcel to the next — even on the same street.
In practical terms: Bandera County, Medina County, and rural portions of Comal and Kendall may produce USDA opportunities, but Boerne, Fair Oaks Ranch, and suburban growth corridors are mixed. There is no shortcut — always verify the exact property address using the official USDA eligibility tool.
Check any address on the official USDA eligibility map:
eligibility.sc.egov.usda.govEnter the specific property address. The tool will return whether the parcel is in an eligible or ineligible area. If you are working with a lender, they will verify this during pre-qualification — but checking early saves time and prevents you from pursuing a property that does not qualify for zero-down financing.
Do not rely on county boundaries or general maps to determine USDA eligibility. USDA eligibility boundaries follow census tract data and are updated periodically. The only reliable method is to enter the exact property address into the official USDA eligibility tool above.
County-by-County Comparison
Quick reference for the five counties we serve most. Bexar, Comal, and Bandera share San Antonio-New Braunfels MSA limits. Kendall County has its own, typically higher HMFA limits. My Choice Texas Home has no purchase price limit. For the most current limits, see TDHCA's published limits.
| County | TDHCA My First / MCC Reference Limits | Purchase Price Limits | USDA Eligibility | Local Program Availability | San Antonio HIP Applies? |
|---|---|---|---|---|---|
| Bexar | SA-New Braunfels MSA 100% AMFI: $104,227 for 1–2 pers.; 115% AMFI: $119,861 for 3+ pers. | $579,037 (My First/MCC non-targeted) My Choice Texas Home: no purchase price limit | Limited Most areas urban · Verify by exact address | Statewide + SA HIP (when funded) + NHSSA + Opportunity Home | Yes |
| Kendall | Separate Kendall HMFA 115% HMFA: $143,900 (1–2 pers.) / $165,485 (3+ pers.) — higher than MSA | $579,037 (My First/MCC non-targeted, one-unit) My Choice Texas Home: no purchase price limit | Mixed Boerne/FOR are mixed · Rural portions may qualify · Verify by address | Statewide programs only No local DPA programs | No |
| Comal | SA-New Braunfels MSA 100% AMFI: $104,227 for 1–2 pers.; 115% AMFI: $119,861 for 3+ pers. | $579,037 (My First/MCC non-targeted) My Choice Texas Home: no purchase price limit | Mixed Rural portions may qualify · Verify by exact address | Statewide programs only No local DPA programs | No |
| Bandera | SA-New Braunfels MSA 100% AMFI: $104,227 for 1–2 pers.; 115% AMFI: $119,861 for 3+ pers. | $579,037 (My First/MCC non-targeted) My Choice Texas Home: no purchase price limit | May produce opportunities Rural portions may qualify · Verify by exact address | Statewide programs only No local DPA programs | No |
| Medina | Outside SA-New Braunfels MSA Own TDHCA income limits — verify with lender | Verify with TDHCA My Choice Texas Home: no purchase price limit | May produce opportunities Rural portions may qualify · Verify by exact address | Statewide programs only No local DPA programs | No |
My Choice, TSAHC, and SETH use separate income-limit calculations. Verify with the participating lender and program administrator.
TDHCA, TSAHC, and SETH income limits follow MSA and HMFA designations. Bexar, Comal, and Bandera counties share the same San Antonio-New Braunfels MSA limits (100% AMFI: $104,227 for 1–2 persons; 115% AMFI: $119,861 for 3+ persons; 120% targeted area: $125,072 for 1–2 persons, $145,918 for 3+ persons; non-targeted one-unit purchase price limit: $579,037). Kendall County is designated as a separate HMFA with higher income limits (115% HMFA: $143,900 for 1–2 persons; $165,485 for 3+ persons) and a purchase price limit of $579,037 for one-unit non-targeted properties. Medina County is outside the SA-New Braunfels MSA and has its own limits. My Choice Texas Home has no purchase price limit — only My First Texas Home and the MCC are subject to purchase price limits. San Antonio HIP (Homeownership Incentive Program) is limited to properties within San Antonio city limits in Bexar County. All three DPA programs (TDHCA, TSAHC, and SETH) are available in all five counties. SETH has listed geographic exclusions elsewhere in Texas but covers the Hill Country. USDA eligibility must be verified by specific property address — do not assume based on county alone. Bandera County, Medina County, and rural portions of Comal and Kendall may produce USDA opportunities, but Boerne, Fair Oaks Ranch, and suburban growth corridors are mixed. Information current as of June 2026.
Key takeaway: TDHCA, TSAHC, and SETH work in all five counties (SETH has listed geographic exclusions elsewhere in Texas but covers the Hill Country), but income and purchase price limits vary by MSA/HMFA designation. Bexar, Comal, and Bandera share the same San Antonio-New Braunfels MSA limits. Kendall County has its own, higher HMFA limits. USDA eligibility is property-specific — Bandera County, Medina County, and rural portions of Comal and Kendall may produce USDA opportunities, but Boerne, Fair Oaks Ranch, and suburban growth corridors are mixed. San Antonio city limits offer additional local DPA when funded. Always verify USDA eligibility by exact property address, not by county alone.
Talk to a Local Lender Before You Shop
Eligibility often depends on the exact property address, county jurisdiction, and USDA zone. A generic online pre-qualification will not account for these details. Work with a lender who knows these programs and their intersection with Hill Country property locations.
Can You Combine Programs?
Yes. Many Texas first-time buyer programs can be stacked together. The key is understanding which combinations are allowed and which are not.
Common valid combinations:
- 1. VA or USDA loan + TSAHC/TDHCA DPA: With a zero-down VA or USDA loan, DPA may be available for allowable closing costs, prepaid items, and other permitted mortgage-related expenses, subject to the specific DPA provider, investor, and cash-back rules. This is one of the most powerful combinations for eligible buyers.
- 2. FHA loan + TDHCA DPA + TDHCA MCC tax credit: The standard Texas first-time buyer stack. You get the low-down-payment FHA loan, the 5 percent DPA, and the ongoing annual tax savings from TDHCA's Mortgage Credit Certificate. Note: the TDHCA MCC must be paired with a TDHCA first mortgage — it cannot be combined with TSAHC DPA or other non-TDHCA assistance.
- 3. HFA Conventional + TSAHC 3-year forgivable second lien: TSAHC's HFA Conventional loan pairs with the 3-year deferred forgivable second lien — not the grant. The grant option generally applies to government loans (FHA, VA, USDA). With HFA Conventional, you get a conventional mortgage and a forgivable second lien for up to 5 percent of the loan amount that is forgiven after three years of primary residency.
What you generally cannot combine: TDHCA and TSAHC down payment assistance — they are separate programs administered by different agencies, and most lenders will allow you to use only one DPA source per transaction. You can, however, use one agency's DPA with a different loan type.
Important: Lender credits, seller concessions, and DPA can sometimes interact in unexpected ways. Lender credits may reduce the amount of DPA you are eligible for, and seller concessions are capped at certain percentages of the purchase price depending on the loan type. An experienced lender can model these interactions for you.
Key Takeaway
- •The most powerful stack: VA or USDA zero-down loan + 5% DPA — with a zero-down VA or USDA loan, DPA may be available for allowable closing costs, prepaid items, and other permitted mortgage-related expenses, subject to the specific DPA provider, investor, and cash-back rules.
- •FHA + TDHCA DPA + TDHCA MCC tax credit is the standard Texas first-time buyer stack. (TSAHC DPA pairs with TSAHC MCC — not TDHCA MCC.)
- •You generally cannot combine TDHCA and TSAHC DPA — most lenders allow only one DPA source per transaction.
- •Lender credits, seller concessions, and DPA interact in ways that require an experienced lender to model correctly.
Common Mistakes First-Time Buyers Make
What to watch out for: These are the most frequent pitfalls we see. Each one is avoidable with the right preparation and guidance.
Assuming You Need 20 Percent Down
The 20 percent down payment myth is the single biggest barrier to homeownership for first-time buyers. In reality, most Texas DPA programs cover the entire down payment, and loan programs like FHA (3.5%), VA (0%), and USDA (0%) require far less. A buyer with $5,000 in savings can potentially buy a home in Texas.
Potentially does not mean comfortably. Inspections, option fee, earnest money, appraisal, insurance, moving costs, utility deposits, and emergency reserves still matter. A buyer who stretches every dollar to close has no margin for the first repair, the first insurance renewal, or the first unexpected bill. A $10,000–$15,000 post-closing cushion is a strong target, especially for relocators or buyers purchasing older homes. The exact number depends on the property, income stability, family support, and repair risk.
Not Getting Pre-Approved Before Shopping
Pre-approval tells you exactly how much you can borrow and which programs you qualify for. Without it, you are guessing. Get pre-approved by a lender who is experienced with Texas DPA programs — not all lenders handle these programs well. A pre-approval from a lender unfamiliar with DPA may not accurately reflect your buying power.
Waiting Until You Have Perfect Credit
A 620 credit score qualifies you for most Texas DPA programs — with the exception of TSAHC HFA Conventional, which requires 640. A 640 opens up the SETH 5 Star program and all TSAHC loan types. You do not need a 760 to buy a home. If your score is between 580 and 620, an FHA loan may still be available, and working with a loan officer on credit improvement strategies for a few months can make a meaningful difference.
Ignoring the Required Approved Education Course
Most DPA programs require a program-accepted homebuyer education course before closing — and each program may accept different providers. SETH requires its own approved course; TSAHC has its own list. A course that satisfies one program may not satisfy another. Complete the course early in the process, verify it is accepted by your specific program, and confirm the certificate will remain valid through your closing date. Certificates expire — SETH certificates are valid for 12 months. Leaving this until the final days before closing creates a preventable delay.
Not Checking USDA Eligibility for Hill Country Properties
Some Hill Country properties may qualify for USDA zero-down financing, but eligibility varies parcel by parcel. Buyers who assume they need a conventional or FHA loan may not realize they could purchase with no down payment at all. Always check the USDA eligibility map for any property you are considering — the map determines whether a property is in an eligible rural area, but final determination is made by Rural Development after a complete application.
Letting the DPA Forgiveness Period Expire Incorrectly
If your DPA is a forgivable second lien (not a grant), selling or refinancing before the forgiveness period ends means you repay the remaining balance. Know the terms. If you get a 3-year forgivable loan, plan to stay in the home for at least 3 years or budget for repayment.
Going It Alone Without Professional Guidance
The programs described in this guide are genuinely helpful, but they have specific rules, deadlines, and lender requirements. A knowledgeable real estate agent and an experienced DPA lender can save you time, prevent costly mistakes, and ensure you maximize the assistance available to you. This is not a process where guesswork serves you well. If you are evaluating your options, see our services page for how our practice handles DPA transactions from pre-approval through closing.
Key Takeaway
- •You do not need 20% down or perfect credit — most programs accept 620 scores and cover the entire down payment.
- •Get pre-approved by a DPA-experienced lender before you start shopping — not after.
- •Complete the required homebuyer education early. TDHCA, TSAHC, SETH, HIP, and other programs may have different course requirements, and SETH requires its own approved online course.
- •Check USDA eligibility by exact address before assuming a property does not qualify for zero-down financing.
The Actual Process of Buying
a Home with Down Payment Assistance
What to expect: From credit check to closing day, here is the real timeline and what each step involves. Most buyers complete the full process in 2 to 4 months.
Check Your Credit and Get Pre-Approved
Pull your credit report and check your score. If you are at 620 or above, you are in good shape for most programs. If below 620, talk to a lender about credit improvement strategies. Get pre-approved by a lender who works with DPA programs — a standard bank pre-approval does not tell you whether you qualify for DPA.
Complete the Required Homebuyer Education
Complete the required education course online — most are self-paced and take 4 to 8 hours. Verify with your lender that the specific course is accepted by the DPA program you are using (SETH and TSAHC each have their own approved providers). You will receive a certificate of completion that your lender will need at closing. Note that certificates have expiration windows — for example, SETH certificates are valid for 12 months.
Identify Your Target Programs
Work with your lender and agent to determine which programs you qualify for. Consider your profession (TSAHC Heroes), whether you have owned before (TDHCA vs. SETH), the property location (USDA eligibility), and your military status (VA).
Reserve Your DPA Funds
Once your lender has your pre-approval, they will reserve the DPA funds with the program administrator. This locks in your assistance amount. DPA funds are reserved once your lender submits the reservation — funding availability, rates, and assistance levels can change, so confirm current availability with your lender before making an offer.
Shop for Your Home
Now you know exactly how much you can spend and what your closing costs will look like. Work with your agent to find homes that fit your criteria and budget. If you are looking in the Hill Country, ask about well and septic infrastructure — it is standard for the area but requires understanding. Our Buyer's Guide covers the full picture.
Make an Offer and Enter the Option Period
Your agent will help you craft an offer. In Texas, if negotiated into the contract and supported by the option fee, the option period gives the buyer an unrestricted right to terminate during the agreed period. The length is negotiable; 7–14 days is common in some transactions, but market conditions and seller expectations matter. Use this time for inspections and final evaluation.
Complete Inspections and Underwriting
Your lender will process the loan, order an appraisal, and complete underwriting. You will provide documentation (pay stubs, bank statements, tax returns). The DPA program may have additional conditions that your lender coordinates.
Close on Your Home
Closing typically occurs 30 to 45 days after contract execution. Review the closing disclosure carefully, bring your ID and any remaining funds, and sign the documents. The title company handles the rest. You are now a homeowner.
Key Takeaway
- •The entire process takes 2 to 4 months from initial consultation to closing.
- •Get pre-approved by a DPA-experienced lender first — this determines everything downstream.
- •Complete the required homebuyer education early. TDHCA, TSAHC, SETH, HIP, and other programs may have different course requirements, and SETH requires its own approved online course.
- •DPA funds are reserved by your lender once submitted — confirm availability before making an offer.
- •If looking in the Hill Country, ask about well and septic infrastructure before going under contract — see our land and water realities guide for what to expect.
How Working With the Right
Agent Helps
These programs only work if the people around you — agent, lender, title company — know how to execute them. Six things matter most:
DPA-capable lenders. Bill works with lenders who actually close TDHCA, TSAHC, SETH, and USDA transactions — not lenders who say they do.
USDA eligibility checks. Bill checks USDA eligibility early so you don't overlook zero-down financing — eligibility is property-specific and must be verified by exact address.
Offer structure. Knowing how to negotiate seller-paid closing costs that work with your specific DPA program and lender requirements.
Option period protection. Making sure the contract gives you enough time for inspection, appraisal, and DPA documentation.
Tax and insurance review. DPA programs and loan types carry different implications that affect your monthly payment. Bill reviews the numbers before you sign — not after you're locked in.
Pre-offer coordination. Making sure the program, property, and contract terms all align before you're under contract.
Bill holds a Texas Affordable Housing Specialist designation and is a TSAHC Participating Realtor (2026). For clients relocating from California, his network of over 1,000 California agents enables coordinated cross-state transitions.
Bill Ross
Founder, Hill Country Homesteads Group
- Works with DPA-experienced lenders across TDHCA, TSAHC, SETH, and USDA
- Checks USDA eligibility and program alignment before writing offers
- Reviews tax, insurance, and DPA second-lien terms before commitment
- Licensed TX Agent #778434
The First 90 Days After Closing
You scraped together the closing costs. You signed the stack of papers. You got the keys. And then, within the first few weeks, the expenses start arriving — the ones nobody warned you about.
This is the part of the first-time buyer experience that rarely makes it into the marketing materials. Down payment assistance got you to the finish line, but the house itself is just getting started. Here is what typically hits in the first 90 days:
Electric, gas, water, and internet all require deposits for new accounts. Budget $200–$500 depending on providers in your area.
Even a local move in the Hill Country can run $1,000 to $3,000+ depending on distance and volume. Long-distance relocations from California or out of state are significantly more.
Most Texas homes do not come with window coverings. Covering every window in a three-bedroom house can cost $1,000 to $3,000 — and you will want them on day one.
In Texas, sellers are not required to include washers, dryers, or refrigerators. A full appliance set can run $3,000 to $6,000 if the home does not convey them.
If you are coming from an apartment or out of state, you likely need a mower, trimmer, and basic landscaping tools. Hill Country lots with live oaks and native grasses have their own maintenance realities — our land and water realities guide covers what to expect with rural Hill Country properties.
Caulking, touch-up paint, leaky faucets, weatherstripping — the small items that the inspection did not catch or that you decided to handle after closing.
A new home has new rooms. Even if you have some furniture, expect gaps — a dining table, a mattress for the spare room, outdoor seating for the Texas evenings you will want to enjoy.
Your monthly payment may change after the first year once property taxes and insurance are re-evaluated by the escrow account. Texas property taxes in particular can shift meaningfully in year two.
None of these are reasons to avoid buying. They are reasons to go in with open eyes. The buyers who struggle most after closing are not the ones who bought the wrong house — they are the ones who emptied their savings to get to closing and had nothing left for the transition.
That is the real risk of becoming house-poor: not the mortgage payment itself, but the accumulated cost of turning a purchased house into an actual home. A $10,000 to $15,000 cushion after closing is not a luxury — it is the difference between settling in comfortably and stressing through the first three months.
If you are using down payment assistance, that is exactly the right move — it keeps more cash in your pocket for the transition ahead. But plan for it. Budget the post-closing expenses the same way you budgeted for closing costs. The goal is not just to get the keys. The goal is to enjoy the first 90 days in your new home.
Key Takeaway
- •Expect $3,000–$15,000+ in post-closing expenses — utility deposits, blinds, appliances, lawn equipment, furniture.
- •Sellers in Texas are not required to include washers, dryers, or refrigerators — budget accordingly.
- •Texas property taxes can shift meaningfully in year two once escrow is re-evaluated.
- •DPA is designed to preserve your cash — use it for the transition, not just the closing.
Your Action Plan: Next Steps
The sequence that moves you from research to keys in hand.
Pull your credit.
Pull your credit reports at AnnualCreditReport.com and review for errors. Your score determines which programs you qualify for, what rate you get, and whether a lender sees you as a borrower worth working with. A 20-point difference can be the gap between program eligibility and rejection.
Gather your income documentation.
Pay stubs, W-2s, tax returns if self-employed. DPA programs have income limits — you need real numbers to know if you qualify. Lenders will use your gross income to calculate your debt-to-income ratio, which determines your maximum purchase price.
Find a DPA-lender.
Not every lender participates in these programs. Ask specifically about TSAHC, TDHCA, and SETH. You want someone who has closed DPA transactions recently and can explain the documentation timeline before you go under contract.
Questions to Ask the Lender
Questions every buyer should ask before committing to a lender. If a lender cannot answer these clearly, that tells you something.
- 1 "Are you approved to originate TDHCA, TSAHC, and SETH loans?"
- 2 "How many of these have you closed in the past 12 months?"
- 3 "What is the rate without DPA versus with DPA?"
- 4 "Is the second lien forgivable, repayable, or deferred?"
- 5 "What happens if I refinance or sell before the forgiveness period ends?"
- 6 "What will my actual cash to close be, including earnest money, option fee, inspections, appraisal, and reserves?"
Get your agent aligned.
Your agent should know which programs apply to your target area and price range, how to structure your offer to work with DPA, and how to navigate seller concessions within program rules. Reach out directly to discuss your specific situation.
Target the right homes.
Match your program's purchase price and property limits to your search. Do not fall in love with a home that exceeds your program's cap — if it does, the assistance may not apply.
Close and track your DPA terms.
At closing, confirm your DPA type. If it is a forgivable lien, mark the forgiveness date — selling or refinancing before that date means you owe the balance back.
If you want help figuring out which programs you qualify for, reach out and I will run the numbers for your specific situation. The right program depends heavily on the exact address and county.
Making a DPA contract
look as strong as possible
Sellers and listing agents sometimes view DPA-backed offers as higher-risk or slower to close. In a competitive market, that perception can cost you a home. The antidote is preparation — making your offer look as clean and certain as a conventional cash-backed offer.
Practical steps that strengthen a DPA contract:
- • Stronger pre-approval. A pre-approval from a lender who regularly closes DPA transactions carries more weight than a generic pre-approval letter. The listing agent can call the lender and confirm the file is real, not a template.
- • Lender letter naming the DPA program. A brief letter from the lender confirming the specific program (TDHCA, TSAHC, SETH), the assistance type, and the estimated timeline eliminates the seller's biggest question: "Is this going to close?"
- • Proof that education is complete. Some programs require homebuyer education before closing. Completing it before you write an offer removes a potential delay and signals to the seller that you are prepared.
- • Realistic closing timeline. DPA transactions often take 40 to 45 days, not 30. Offering a realistic timeline — and not promising a 21-day close you cannot deliver — builds trust with the seller.
- • Inspection discipline. Use the Texas option period wisely. A buyer who requests reasonable inspections and does not nickel-and-dime over minor repair items is more attractive than one who uses every inspection as a renegotiation lever.
- • Clean contract terms. Keep contingencies tight. Avoid unusual addenda. A clean offer with DPA beats a complex offer with a better price in many sellers' calculations.
New construction incentives
can compete with DPA
In the 78006 (Boerne) and 78015 (Fair Oaks Ranch / Bulverde) corridors, new construction is a significant part of the market. Builders in these areas frequently offer rate buydowns, closing-cost credits, or preferred-lender incentives that can be worth $10,000 to $25,000 or more.
The trade-off: A builder may offer a 2-1 rate buydown that reduces your monthly payment more effectively than a state DPA product with a higher rate and a second lien. Or the builder may offer a flat closing-cost credit that covers the same ground as DPA — without adding a second lien.
In some cases, the builder incentive wins. In others, the DPA grant is better. The right answer depends on the specific builder, incentive, and your loan profile.
What to do: If you are considering new construction, ask the builder for their full incentive package in writing — rate buydown terms, closing-cost credits, and any preferred-lender requirements — and have your own DPA-experienced lender run the numbers side by side. Do not assume the builder's offer is automatically better, and do not assume DPA is automatically better. Compare the total cost over the period you plan to own the home.
This is especially relevant for the Hill Country growth corridors where builders are active. A buyer who locks in DPA before exploring new construction may leave money on the table — and a buyer who defaults to the builder offer without checking DPA may add an unnecessary second lien.
Example: Seller Credit vs. DPA vs. Builder Incentive
A buyer is looking at a new-build in the 78006 corridor, $375,000 purchase price. The builder offers a $15,000 closing-cost credit and a 2-1 buydown (the note rate is 6.5%, but year 1 is 4.5% and year 2 is 5.5%). Separately, the state DPA program offers $15,000 as a forgivable second lien — but the DPA pricing grid raises the first-mortgage note rate to 6.75% and adds a second lien that stays on the property for three years.
Over the first 36 months, the builder's 2-1 buydown saves roughly $7,200 in interest costs versus the DPA's elevated rate. The DPA's second lien costs nothing if the buyer stays in the home for three years and satisfies forgiveness rules — but it restricts refinancing and complicates a sale during that window. The builder credit costs nothing ongoing and creates no lien.
This is the kind of analysis a good lender should help you work through before you choose. The headline assistance amount — $15,000 either way — tells you almost nothing about the real cost. The structure, the rate impact, the lien terms, and the timeline all matter more. A lender experienced with both DPA and new-construction incentives can run the numbers side by side for your specific scenario.
Program Expiration, Rate Lock & Funds Warning
DPA rates, assistance levels, MCC availability, and program funding can change at any time — sometimes without extended notice. This is not a theoretical risk. It is a structural feature of how these programs work.
- • TDHCA MCC supplies are limited. When the allocation runs out, the credit is unavailable until new funding is secured. TDHCA specifically notes that MCC supply is finite.
- • Program limits have different effective dates. Purchase price limits, income limits, and assistance amounts may update on different schedules depending on the program type and the agency's fiscal year.
- • Rate locks have windows. A DPA rate lock is not indefinite. If your closing is delayed — for inspection issues, appraisal delays, or seller-side problems — the locked rate may expire, and the replacement rate may be higher.
- • Local programs can pause. San Antonio's HIP program is currently not funded for FY2026. Other local programs can pause or change eligibility without notice. Never plan around a program that has not confirmed current funding.
The practical step: Do not rely on last month's program sheet. Confirm funding availability, current rates, and lock windows with the participating lender before making an offer — and again before removing contingencies.
For buyers relocating
from California
California relocators face transaction dynamics that buyers already in Texas do not. These are the specific issues that affect your DPA strategy and closing timeline.
New to Texas? You Still Qualify.
Moving from California does not disqualify you. These programs are generally based on property location, primary-residence requirement, income, and credit — not on having lived in Texas for years.
Income verification across state lines
Your California income counts toward the Texas DPA income limits — but the documentation looks different. Lenders will want pay stubs, W-2s, and tax returns from your California employer. If you are remote-working for a California company, the lender will want a remote-work verification letter confirming your position, salary, and that you can work from Texas.
Job-offer letters for relocators
If you have not started the new job yet, a signed employment offer letter with start date, salary, and position is required. Lenders typically want the start date within 30 to 60 days of closing.
California home-sale proceeds and timing
Many California relocators are selling a home and using the proceeds for the Texas purchase:
- • Selling before buying: Cleanest for qualification. The proceeds are liquid, documented, and available for down payment and closing costs.
- • Buying before selling: Possible with a bridge loan, cash reserve, or DPA covering the Texas down payment while the California home sells. More complex — the lender will want to see the listing agreement and expected proceeds.
- • Leaseback timing: Coordinate the leaseback end date with your Texas closing to avoid gaps or overlaps.
Gift funds from family
Gift funds must come from an acceptable donor, be documented with a gift letter stating no repayment is expected, and be sourced and transferred in a way the lender can verify. Do not move money informally between accounts.
Texas option periods vs. California contingency culture
California uses contingencies (inspection, appraisal, loan) that function differently from Texas's option period. The Texas option period gives the buyer an unconditional exit right — but the window is shorter and the fee is non-refundable. Plan your inspections within the option period — once it expires, your earnest money is at risk if you terminate.
DPA and cross-state coordination
Using DPA while selling a California home requires coordination between the California listing agent, the California title company, the Texas lender, and the Texas closing. If your California sale and Texas purchase are closing on the same day, wire timing becomes critical. A misaligned wire can delay your Texas closing even if everything else is on track.
Course Requirement by Program
Which programs require which education courses — and what kind. Complete the required course early; certificates have expiration windows and different programs accept different providers.
| Program | Course Requirement |
|---|---|
| TDHCA | Pre-purchase homebuyer education required |
| TSAHC | Approved homebuyer education course required before closing |
| SETH | SETH-approved online course required (certificate valid 12 months) |
| HIP (San Antonio) | Program-approved course required |
| FHA | FHA itself: no standard federal course requirement; DPA partner or lender may require education. |
| USDA | USDA Guaranteed: Homebuyer education recommended but not federally required; lender or paired DPA program may require it. |
| VA | No federal education requirement (lender may require) |
| Conventional | No federal education requirement (lender may require) |
Frequently Asked Questions
Do I have to be a first-time buyer to use down payment assistance in Texas?
It depends on the program. TDHCA My First Texas Home is limited to first-time buyers (no homeownership in the past 3 years). However, SETH 5 Star Texas Advantage and TSAHC down payment assistance are available to both first-time and repeat buyers. The TSAHC Mortgage Credit Certificate may have separate first-time-buyer eligibility rules. Always verify current program terms with the administering agency.
I am moving to Texas from another state. Can I use these programs?
Yes. You generally do not need a long Texas residency history before applying, but the home must become your Texas primary residence, and certain programs require residency affidavits or program-specific documentation. Whether you are coming from California, New York, or anywhere else, you should verify the specific residency and documentation requirements with a participating lender before writing an offer. If you are planning a move from California, our California to Texas relocation guide covers the full moving process — from agent coordination to timeline planning. For a broader overview of relocating to the Hill Country, see our Relocation Hub.
What credit score do I actually need?
For most Texas DPA programs (TDHCA, TSAHC), the minimum is 620 for FHA, VA, and USDA loan types. TSAHC requires 640 for HFA Conventional. SETH requires 640. FHA loans allow scores as low as 580 for the 3.5% down payment option. If your score is between 580 and 619, you can use an FHA loan without DPA and work toward qualifying for DPA later.
Is the down payment assistance really free?
It depends on the type. TSAHC grant assistance is non-repayable after the required post-closing period. A forgivable second lien (available through TDHCA, TSAHC, and SETH) is technically a loan, but it is forgiven if you meet the terms — typically living in the home as your primary residence for 3 years. TDHCA also offers a 30-year deferred repayable second lien option, which must be repaid when you sell, refinance, or transfer the property. The specific DPA option available to you depends on the TDHCA rate sheet at the time of application. Know which type you are getting.
Can I use down payment assistance with a VA or USDA loan?
With a zero-down VA or USDA loan, DPA may be available for allowable closing costs, prepaid items, and other permitted mortgage-related expenses, subject to the specific DPA provider, investor, and cash-back rules.
How long does the process take from start to finish?
Once under contract, a standard Texas closing takes 30 to 45 days. The pre-approval and education steps can be completed in a week or two. Budget 2 to 4 months total from initial consultation to closing, depending on how quickly you find the right home.
What are income limits, and how are they calculated?
Income limits are maximum household income thresholds set by each program, typically based on the Area Median Income (AMI) for your county as determined by HUD. They vary by county and household size. For example, a 1–2 person household in the San Antonio metro area may have a higher limit than a 1–2 person household in a rural county. Your lender will calculate your income against the current published limits during pre-approval.
Can I buy a home in Boerne or Fair Oaks Ranch with these programs?
TDHCA and TSAHC are broadly statewide. SETH is available across most of Texas. These programs work in Boerne, Fair Oaks Ranch, and all Hill Country communities, subject to current rules. USDA eligibility is property-specific in Kendall County — always verify the exact address before assuming eligibility.
Do I need a homebuyer education course?
Most DPA programs require a program-accepted homebuyer education course before closing. This is not a suggestion — it is a program requirement that will delay or derail your transaction if left incomplete. Here is what you need to know:
Where to find an approved course. HUD maintains a list of approved housing counseling agencies at hud.gov/counseling. However, individual DPA programs may have their own approved provider lists. SETH, for example, requires its own SETH-approved Homebuyer Education Course — a course accepted by one program will not necessarily satisfy another. TSAHC maintains its own list of accepted providers as well. Always confirm with your lender or the program administrator that the specific course you are taking is accepted by the program you are using.
Format and time commitment. Many accepted courses are available as self-paced online classes, typically taking 4 to 8 hours to complete. Some can be finished in a single sitting. The cost generally ranges from $50 to $150, and some providers offer the course free of charge depending on income level or program participation.
What the course covers. Expect a practical curriculum covering personal budgeting and credit management, the mortgage process from application through underwriting, the closing process and what to expect at the title company, and post-purchase homeownership topics like maintenance responsibilities, insurance, property taxes, and avoiding default.
Certificate validity varies. Some programs accept the same course, but the certificate expiration window differs. SETH certificates, for instance, are valid for 12 months. If you complete the course early and your closing is delayed, you may need to retake it. Verify the validity window with the program you are using.
Practical advice: Complete the course as early in the process as possible — ideally during the pre-approval stage, not after you are under contract. It is an easy task that removes a potential closing delay. For more context on the overall buying process, see our Hill Country Buyer's Guide.
What happens if I sell my home before the DPA forgiveness period ends?
Most forgivable DPA second liens have a forgiveness period — typically 3 years, though some programs run up to 5. If you sell, refinance (without subordination), or transfer the property before the forgiveness period ends, you will owe the remaining unforgiven balance back. For a 3-year forgivable loan, selling after year 2 means you repay roughly one-third of the original amount. The repayment comes from the sale proceeds. This is not a penalty — it is a structural term of the program. If you also have a Mortgage Credit Certificate (MCC), be aware that recapture-tax rules may apply if you sell within the first nine years, which could affect your tax filing in the year of sale. Confirm the full financial picture — forgiveness obligations and any recapture-tax exposure — with your lender and tax professional before listing. If you plan to stay in the home for at least 3 to 5 years, the forgiveness period is typically not a concern.
Can I combine a DPA grant with a seller concession?
FHA generally caps seller concessions at 6%. Conventional limits vary by LTV, occupancy, and loan structure; for many low-down-payment conventional buyers, the cap is 3%, but the lender must confirm the exact limit.
Is the Mortgage Credit Certificate (MCC) worth it?
Both TDHCA and TSAHC offer Mortgage Credit Certificates, but they are not interchangeable. TDHCA's MCC must be paired with a TDHCA first mortgage and may not be combined with an outside DPA program from a source other than TDHCA. TSAHC's MCC can only be used with TSAHC DPA or TSAHC No-DPA 0% programs; stand-alone MCC is discontinued indefinitely. Both MCCs provide a federal tax credit of up to $2,000 per year while you owe on the mortgage, occupy the home as your primary residence, remain eligible, and have sufficient federal tax liability. The credit rate is published in the respective agency's current rate notice and may change — as of June 2026, it is 15 percent of annual mortgage interest (capped at $2,000 per year). Over 30 years, the tax savings can be substantial. An MCC only helps to the extent the buyer has federal tax liability — it is not a refund check for buyers who owe no federal income tax. If you qualify, the MCC can meaningfully reduce your federal tax burden — but confirm with your lender and tax professional, as recapture-tax rules apply if you sell within the first nine years. Always verify the current credit rate with the issuing agency.
Are USDA-eligible properties really available in the Hill Country?
USDA-eligible properties may exist in parts of the Hill Country, but eligibility is determined parcel by parcel — not by county or city name. Bandera County, Medina County, and rural portions of Comal and Kendall may produce USDA opportunities, but Boerne, Fair Oaks Ranch, and suburban growth corridors are mixed. The USDA eligibility map is used to screen whether a property is in an eligible rural area, and final determination is made by Rural Development after a complete application. Always enter the exact property address into the official USDA eligibility tool to confirm. For more on what rural Hill Country properties involve — well water, septic systems, and infrastructure — see our guide to land and water realities.
I'm moving from out of state — will my credit and income from another state count?
Yes. Your credit history, income, and employment from another state transfer to your Texas mortgage application. Lenders pull the same credit reports regardless of which state you currently live in. This is one reason people relocating to Texas often qualify for the same programs as long-time residents. However, all programs require the purchased home to become your primary residence, and some programs require specific residency affidavits or program-specific documentation — out-of-state buyers should verify these requirements with the participating lender before writing an offer. For a centralized resource on relocating to the Hill Country, visit our Relocation Hub.
What if my credit score is 610?
It depends on the program. FHA allows credit scores as low as 580 with a 3.5 percent down payment, or as low as 500 with a 10 percent down payment. Some DPA programs have their own minimums — typically 620, but not always. VA loans technically have no VA minimum, but most lenders set 620. A 610 score may still be workable depending on the program and lender overlay. The best move is to talk to a DPA-capable lender who can run your actual numbers, not guess. A 610 is not necessarily a dead end — it depends on the full picture of your application and which programs you pair with.
I'm self-employed — does that disqualify me?
No, but self-employed borrowers face additional documentation requirements. Lenders typically want 2 years of tax returns and may average your income across that period to arrive at a qualifying figure. One-to-two years of self-employment history can sometimes work under FHA guidance — but only where the borrower was previously employed in the same or related line of work for at least two years, with acceptable documentation. DPA programs do not disqualify self-employed buyers — the same income limits and credit requirements apply. The main difference is the paperwork: expect to provide profit-and-loss statements, possibly a CPA letter, and more detailed income documentation than a W-2 employee. It takes a bit more preparation, but it is a well-trodden path.
Can I use DPA if I'm buying a condo or townhome?
It depends on the program. Some DPA programs restrict assistance to single-family homes. FHA and conventional loans do allow condos, but the condo project must be FHA-approved or meet conventional warrantable standards. That approval requirement narrows the field significantly — not every condo project qualifies. Check with your lender about program-specific property restrictions before making an offer. This is one of those details that can derail a deal at the last minute if you have not verified it up front. For an overview of the property types common in the Hill Country, see our property types page.
What if the home I want is just barely above the purchase price limit?
Purchase price limits are hard caps — you cannot use the program if the home exceeds the limit. However, limits vary by county and by program. If one program's limit is too low, another may have a higher cap that works. Also, some programs calculate limits based on the appraised value, not the purchase price, which can matter in certain situations. This is another reason early planning with a knowledgeable lender and agent matters. Waiting until you are under contract to discover the limit does not work is a problem we help people avoid.
Do I have to pay the DPA back?
It depends on the type of DPA. Grants and forgivable second liens do not require repayment if you meet the terms — typically staying in the home for the full forgiveness period. Deferred second liens may require repayment upon sale, refinance, or after a set period. Repayable second liens require monthly payments alongside your primary mortgage. Your lender and agent should explain exactly which type you are receiving before you commit. Knowing whether your DPA is a grant, a forgivable lien, a deferred lien, or a repayable lien is fundamental to understanding your actual financial obligation — and it is the kind of detail that should never be left vague.
How these programs work together
Real anonymized examples of how buyers in the Hill Country used these programs in practice.
Case Study: A Teacher Relocating from California to San Antonio
Anonymized transaction · San Antonio, Bexar County
Sarah, a public school teacher, relocated to San Antonio for a new position. She qualified as a first-time buyer and was eligible for the TSAHC Homes for Texas Heroes program — which targets teachers and other community-serving professions.
Her agent identified a DPA-capable lender before she ever started looking at homes, so when she went under contract, the down payment assistance was already structured into the transaction. She was under contract within three weeks of arriving and closed in 38 days.
- • Total cash to close: under $3,000
- • Savings through TSAHC assistance: approximately $12,000
- • Sarah did not know this program existed until her agent walked her through it — that is common, and it is exactly why the lender identification step matters.
Case Study: A Veteran Family in Spring Branch
Anonymized transaction · Comal County area
An active-duty veteran family purchased their first home in the Hill Country using a VA loan — which requires zero down payment — combined with TSAHC down payment assistance to cover closing costs. Their property sat on a half-acre lot with a private well and aerobic septic system — infrastructure that required understanding before purchase. Our guide to land and water realities covers what buyers need to know about well depths, septic systems, and rural Hill Country infrastructure.
Before going under contract, the agent confirmed the property was not in a USDA-eligible zone, so the team focused on VA plus DPA instead of trying to stack programs that did not apply. The key was early coordination between agent and lender: the offer was structured so that seller concessions and DPA worked together without conflicting during underwriting.
- • Total out-of-pocket at closing: under $2,000
- • DPA covered closing costs entirely — VA covered the down payment.
Case Study: The California Relocator
Anonymized transaction · Kendall County area
A couple relocating from the Bay Area to the Boerne area had solid equity from selling their California home but ran into a common timing problem: they needed to buy before their house in California closed, creating a gap where their cash was tied up in both transactions.
The agent checked USDA eligibility on properties just outside the Boerne city limits before they started touring. That one step changed the entire strategy. A qualifying USDA-eligible area existed within a short drive of downtown Boerne — close enough for the commute they wanted, but rural enough to qualify for a zero-down-payment USDA Guaranteed loan. Because USDA required no down payment, the couple could preserve their available cash for the transition period instead of locking it into a new down payment while waiting for the California closing.
- • Down payment: $0 — USDA Guaranteed loan covered it entirely.
- • Cash preserved for transition: Closing costs were covered through a combination of seller concessions and available reserves, keeping the couple liquid during the cross-state move.
- • Out-of-state buyers routinely assume rural USDA areas do not exist this close to a metro. Checking eligibility by exact property address before shopping saved this couple weeks of rethinking their budget.
Case Study: The Self-Employed Buyer
Anonymized transaction · San Antonio metro
A freelance graphic designer who had been self-employed for only 18 months assumed she could not qualify for a mortgage. The common advice she had heard — that self-employed buyers need two years of tax returns — led her to put her search on hold entirely.
FHA guidance is narrower than the common rule of thumb suggests. Self-employment income may generally be considered after two years, but one-to-two years of history can work only where the borrower was previously employed in the same or related line of work for at least two years, with acceptable documentation. In this case, the buyer had five years of prior employment as an in-house graphic designer before going freelance — so the combined eight-year track record in the same field, plus her strong 18-month freelance trajectory, satisfied the guideline.
Her agent connected her with a lender experienced with self-employed borrowers, who reviewed her profit-and-loss statements, 1099s, bank deposits, and income trajectory. The lender determined she could qualify using an FHA loan. She also qualified for a small My Choice Texas Home down payment assistance (second lien, forgivable or repayable option) to help with closing costs.
- • Loan type: FHA — approved using 18 months of self-employment with strong income documentation and an upward trajectory, supported by two+ years of prior employment in the same or related field.
- • DPA: My Choice Texas Home (second lien, forgivable or repayable option) — covered a portion of closing costs.
- • She had almost self-eliminated based on a rule of thumb that does not apply universally. Getting her documentation organized early — before going under contract — was the difference between a smooth close and a missed opportunity.
Every buyer's situation is different. The best way to know what applies to you is to talk through your specific circumstances with a local advisor who has closed these deals.
What the Lender Must Verify Before You Write an Offer
This is different from the general shopping checklist below. These are transaction-specific items your lender should confirm for this specific program, on this specific property, with this specific loan structure — in writing — before you commit to a contract.
- Exact program name — not the agency, not "DPA," the specific product (e.g., "TDHCA My First Texas Home with 3-Year Forgivable DPA")
- Assistance structure — grant, forgivable lien, repayable lien, or deferred lien — and the exact dollar amount or percentage
- Income calculation method — how that specific program computes qualifying income (household gross, AMI-based, Fannie Mae limits, etc.)
- Purchase-price cap for the property — verify the cap for the county and property type, not just the statewide figure
- First-mortgage rate with DPA and without DPA — the rate impact is a real cost; compare both numbers
- Second lien terms — whether it is forgivable or repayable, and the exact forgiveness timeline or repayment schedule
- Credit impact on DPA — whether seller credits, builder credits, or lender credits reduce the DPA amount or conflict with program rules
- MCC pairing rules — whether the MCC is TDHCA or TSAHC (they have different pairing rules, different first-time-buyer eligibility, and different stacking limitations with outside DPA)
Verify Before You Shop
- Confirm income limit for your county and household size
- Confirm property location and loan type compatibility with the program
- Confirm the lender participates in the exact program you are considering
- Confirm whether DPA can be used with seller credits, builder credits, or MCC
- Confirm estimated cash to close and full monthly payment (including taxes, insurance, HOA, MUD/PID)
- Confirm repayment or forgiveness rules in writing before you sign
Ready to Run the Numbers?
If you are looking in Boerne, Fair Oaks Ranch, San Antonio, Bulverde, Spring Branch, Bandera, or Castroville, the right program depends heavily on the exact address and county. Income limits, eligibility, and program availability shift from one zip code to the next.
Reach out and I will run the numbers for your specific situation — the property, the lender, the timeline, and the programs that actually apply to your deal, not just the ones that qualify on paper.
Sources
- TDHCA — My First Texas Home Program. Texas Department of Housing and Community Affairs. Program matrix, income limits, and purchase price limits. Welcome Home program matrix (PDF) · income and purchase price limits (PDF)
- TDHCA — Texas Mortgage Credit Certificate (MCC). Tax credit details, eligibility, and application process. Welcome Home lender portal · income and purchase price limits (PDF)
- TSAHC — Homes for Texas Heroes Program. Texas State Affordable Housing Corporation. Eligible professions, DPA terms, and application process. tsahc.org
- TSAHC — Home Sweet Texas Home Program. Income-eligible DPA for all qualifying buyers. tsahc.org
- SETH 5 Star Texas Advantage Program. Southeast Texas Housing Finance Corporation. Program terms and lender directory. seth5starprogram.com
- HUD — Good Neighbor Next Door Program. U.S. Department of Housing and Urban Development. Program rules, eligible professions, and HUD Home Store. hud.gov
- VA Home Loans. U.S. Department of Veterans Affairs. Eligibility, funding fees, and Certificate of Eligibility. va.gov
- USDA Rural Development — Single Family Housing Guaranteed Loan Program. Eligibility maps, income limits, and property requirements. rd.usda.gov
- FHA Loan Limits. Federal Housing Administration forward mortgage limits, published annually by HUD. Verify county-level limits using the official HUD lookup tool. entp.hud.gov
- Fannie Mae HomeReady Mortgage. Income limits, eligibility, and program details. fanniemae.com
- Freddie Mac Home Possible. Program overview and fact sheet. freddiemac.com
- City of San Antonio — Homeownership Incentive Program (HIP). Local DPA for San Antonio buyers. HIP 80 and HIP 120 not accepting applications as of June 2026; renewed funding may be available October 2026 pending City Council approval. sanantonio.gov
- Neighborhood Housing Services of San Antonio. DPA loans for Bexar County buyers. nhsofsa.org
- USDA Property Eligibility — Kendall County, TX. Verify whether a specific property is in a USDA-eligible area. eligibility.sc.egov.usda.gov
Program details, income limits, and assistance amounts are subject to change. Verify current terms with the administering agency or an experienced lender before making decisions. Information current as of June 2026.
All program figures, income limits, purchase price limits, and assistance terms should be verified with the participating lender and official program administrator before writing an offer. This article is an informational guide — it is not a loan commitment, tax advice, or a guarantee of program availability. Information current as of June 2026.
This is general educational information only and not personalized financial, tax, or lending advice. Program terms, funding, income/purchase price limits, and eligibility change frequently. Always verify directly with the administering agency, a participating lender, and your real estate attorney/tax advisor.