If you are someone who has been holding off on home ownership just because you do not have tens of thousands of dollars saved for a down payment, then you may have more options than you even realize.
Buying a house with zero down payment in Austin is now genuinely possible for many buyers through a combination of city, state as well as federal assistance programs. These programs easily cover down payment, closing costs and sometimes both.
Below is a guide on what’s available, who qualifies and how to access it.
City of Austin Down Payment Assistance Program
The city of Austin, DPA is one of the most important local resources especially for first-time homebuyers. The program can provide up to $40,000* towards payment and closing costs for buyers that are qualified for purchasing a home within the Austin TX city limits.
Details include:
- Structured as a zero percent interest deferred home loan
- Repaid when you sell, refinance or stop using the property as your main residence
- Available to qualified first-time buyers who have not owned a home in the past three years
- Home price cap of $579,025* – which excludes a significant portion of Central Austin and Downtown Austin inventory but also covers many South Austin and outer corridor properties
- Works with FHA, VA, USDA and conventional financing
- Buyers must complete homebuyer education via a HUD-approved provider before the closing starts.
- On a $400,000* FHA purchase, the 5%* grant from the state program covers the 3.5%* down payment entirely(with the remaining funds being applicable to the closing costs)
Austin’s down payment assistance program runs on an annual funding cycle. It also operates on a first-come, first-serve basis. So, when funds are exhausted mid-year, the waitlist can stretch for months and months. Therefore, starting early really matters.
TSAHC: Statewide Programs for Austin Area Buyers
The Texas State Affordable Housing Corporation is also commonly known as the TSAHC. It operates two statewide programs that Austin area buyers can easily access alongside or instead of the city’s DPA.
Homes for Texas Heroes Program
The Homes for Texas Heroes Program serves first-time buyers or veterans that are engaged in specific professions. For example, teachers, police officers, firefighters, EMS personnel, nursing faculty people, corrections officers, and active military or veterans.
The Homes for Texas Heroes grant can provide you up to 5%* of the home loan amount as a non-repayable grant. It means it never has to be repaid. This is one of the strongest payment assistance grants available in the Texas city for eligible professionals.
When a qualified buyer combines this with the city of Austin down payment program – he or she could easily approach closing with absolutely minimal out of pocket costs.
The Home Sweet Texas
The home sweet Texas home loan is TCAHC’s program for buyers who do not qualify under any of the Heroes professions. This program tends to offer the same payment options like a grant or a deferred mortgage level second lien and the same 5% assistance level on FHA, VA and USDA loans or a 3%* assistance on conventional.
Critically, Home Sweet Texas does not require first-time home buyer status & this is what makes it one of the most accessible programs in Austin, especially for repeat buyers who have sold their properties previously.
TDHCA: My First Texas Home Program
The Texas Department of Housing and Community Affairs runs the TDHCA which is My First Texas Home Program. This pairs a 30-year fixed rate home loan program with up to 5%* of the mortgage in deferred forgivable second lien assistance.
This is especially available to first-time home buyers or even veterans who are earning at or below 80%* of the Austin Area median income. The Texas Heroes Program connection is important to note here. Using VA financing can easily combine TDHCA assistance with zero-down VA loans, which can effectively help them get into a Texas home with no money down and covered closing costs.
Travis County and Multiple Programs
Travis County buyers can also layer multiple programs when their lender confirms compatibility. This means a buyer using a VA loan might combine TSAHC’s 5%* grant with a Travis County Mortgage Credit Certificate.
This can easily help provide a federal tax credit that equals up to 20%* of the annual mortgage interest paid each year of the ownership. This type of stacking approach can amp down both upfront costs as well as ongoing monthly payment exposure at the same time.
Austin buyers should ask every lender upfront which payment assistance programs in Texas they originated through. This is important, since not all lenders participate in all programs. The right lender for a standard mortgage isn’t always the right lender for home buyer programs. And buyers should always keep this in mind.
Also Read: Do First Time Home Buyers Have to Pay Closing Costs?
What Austin Buyers Still Need Upfront
Even with maximum payment assistance, buying a house with zero down payment in Austin does require some upfront cash. For example:
- Home inspection can cost typically around $350* to $550* in Austin, Texas.
- There are also appraisal fees which can cost you around $500* to $700*.
- You must also consider earnest money: usually 1%* of the home price, which is paid before the city of Austin DPA funds disburse.
- You may also need to pay for the home buyer education course which can cost you around $550* to $100* depending on your chosen provider.
- You should plan a budget of around $2000* to $4000* in liquid cash before relying on payment and closing cost assistance to handle the rest.
Beyond the down payment, these upfront costs are items that are the practical out-of-pocket floor, even for buyers who easily qualify for full DPA coverage.
Conclusion
Buying a house with zero down payment in Austin is absolutely achievable for many buyers right now – not only in theory but also in practice. This is possible by opting for real programs with real funding.
The City of Austin’s down payment program, TSAHC’s grant options & federal loan programs can help you create a complete framework where Austin buyers with qualifying income can easily & effortlessly close with minimal or zero out-of-pocket down.
However, it is no secret that everybody needs a bit of professional help and expertise when it comes to purchasing a home. And this is exactly where Nitin Austin Realtor can help you out.
We have deep knowledge of the Austin real estate market, first-time home buyer programs & can easily help buyers navigate DPA qualifications alongside the competitive offers available in the Austin market. We can guide buyers from eligibility to closing and you can find your dream home in Austin with us. Contact us today to know more.
Frequently Asked Questions
Can someone combine the city of Austin DPA with the TSAHC program?
Yes, in many cases it is possible. However, you must confirm with a participating lender first as total assistance cannot exceed your actual down payment as well as the closing cost amount.
Does one have to be a first-time buyer in order to access Austin down payment assistance?
The city of Austin DPA does require first-time homebuyer status, but the TSAHC’s Home Sweet Texas program does not, which makes it more accessible to repeat buyers who qualify on income.
How long does the Austin DPA application process actually take?
Most buyers take up to 4 to 6 weeks from first contact to funding approval. It is important to remember that the process must start with completing an HUD-approved homebuyer education course, of course, before any application is submitted.