For many Texas home buyers, it’s not the monthly mortgage payments that present an obstacle to homeownership. It’s the down payment and closing costs. Coming up with 5% to 10% of the purchase price, in advance, is just not feasible for some folks.
That’s where mortgage assistance programs come into the picture. These programs, some of which are limited to first-time buyers, offer grants and loans to help home buyers clear the initial hurdle of out-of-pocket expenses. Here is an update of Texas mortgage assistance programs available in 2014 and beyond.
Down-Payment Assistance Offered by Texas Department of Housing
The Texas Department of Housing and Community Affairs (TDHCA), a government agency, offers a down-payment assistance program for home buyers within the state who meet certain eligibility requirements.
The program is called “My First Texas Home.” It is available to first-time buyers as well as previous homeowners who have not owned a house within the last three years.
This mortgage assistance program for Texas residents is partially funded through the sale of tax-exempt bonds. According to the TDHCA website, it “allows qualified Texans access to competitive interest rate home loans and down payment and closing cost assistance.” So it offers several forms of mortgage help to first-time buyers in Texas.
But not just anyone can qualify for the program. As mentioned above, the applicant must not have owned a home as a primary residence within the last three years. Additionally, there are specific requirements for borrowers’ credit scores and debt ratios. According to TDHCA:
- The borrower must have a credit score of 640 or higher.
- The borrower’s total debt-to-income (DTI) ratio cannot exceed 45%.
- There are income and purchase-price limits as well, and these vary by county (see website below).
To learn more about this Texas mortgage assistance program, and other housing-related programs offered by this government agency, visit:
Home Buyer Grants and Tax Credits
The Texas State Affordable Housing Corporation (TSAHC), a self-sustaining nonprofit organization, offers grants and down-payment assistance to first-time home buyers in Texas.
This is another example of a mortgage assistance program designed to help buyers clear the initial hurdle of upfront, out-of-pocket expenses.
This program is open to public service workers (police and fire), teachers, military veterans, and low- to moderate-income home buyers within the state of Texas. According to the TSAHC website, it offers “fixed-rate mortgage financing, down payment assistance grants, and mortgage credit certificates” to help qualified individuals become homeowners.
For financing, TSAHC leverages a network of participating mortgage lenders across the state of Texas. The program offers down payment and closing cost assistance up to 5% of the amount being borrowed, and is not limited to first-time buyers.
The one potential downside is that the interest rates offered to borrowers seem to be higher than average. At the time this article was published, borrowers using the TSAHC home buyer assistance program could qualify for an interest rate of 4.75%, when putting at least 5% down on a 30-year loan. During the same week, the average rate reported in Freddie Mac’s nationwide survey was 4.14%.
Of course, many of the people who turn to these programs in the first place cannot qualify for a mortgage loan otherwise. So they might not be in a position to “shop around” for the best rate.
To learn more about the Texas State Affordable Housing Corporation, and the various forms of mortgage assistance they offer, visit:
Mortgage Assistance Programs at the City Level
In addition to the statewide Texas programs mentioned above, many Texas cities offer mortgage and home buyer assistance programs.
For instance, the city of Houston offers help to first-time buyers in the form of direct financial assistance from the city. Qualifying borrowers can use this financial aid to “offset portions of the down payment, closing costs, prepaid items and principal” required during the home purchase, according to the City of Houston’s website.
This is just one example of a mortgage assistance program offered at the city level. There are many more across the state of Texas.
There are two ways to find local home buyer programs. You can Google it, or you can use the Department of Housing and Urban Development (HUD) website. To go the Google route, just do a search for “home buyer help” or “mortgage assistance,” followed by your city. To use the HUD website to find local programs in Texas, visit this page:
These are certainly not the only mortgage assistance programs for Texas home buyers. This is merely an update on some of the most popular programs that are available in 2014. We encourage consumers to conduct extensive research into this topic, if they feel they might need (and qualify for) some form of government help. Research the TDHCA and TSAHC programs mentioned above, as a starting point.