If you are planning to buy your first home in Austin, then the available list of first-time homebuyer programs in the market can become overwhelming very quickly. From city-level programs to state-level grants and much more, it’s a lot to take in. But understanding the first time home buyer programs requirements in Austin upfront is what separates buyers who access thousands in assistance from those who miss it entirely. Here is the complete picture.
Who Counts as a First-Time Homebuyer in Austin?
Most Austin first-time homebuyer programs use the HUD definition of first-time buyer status and it’s broader than most people expect it to be.
You only qualify as a first time homebuyer in Austin if you haven’t owned a home as the primary residence at least in the past three years. If you have owned a home before yet sold it more than three years ago, you can qualify again.
Divorced buyers who have transferred a title or former owners who have moved into rentals as well as veterans who have sold a prior home & then restored their entitlement can also potentially meet first-time buyer status.
The three-year timeline starts from the date title transferred out of your name. This qualification gate can alone open programs in Austin to far more buyers than people tend to realize.
Austin Down Payment Assistance: The City Program
The City of Austin Down Payment Assistance Program is administered via the Austin Housing Finance Corporation and can provide you up to $40,000* for eligible first-time homebuyers in Austin toward payment and closing costs.
The requirements to qualify include:
- First-time homebuyer status which means no ownership in the past three years
- Household income must be at or below 80 percent of Austin’s median home price area income
- Purchase of a home in Austin must be within the city limits at or below the current price cap
- You must also complete a homebuyer education course from a HUD approved provider before the time of closing
- Home as your primary residence is a must – investment properties do not qualify.
- You must finish your application through a participating lender on the Austin Housing Finance Corporation’s approved list.
Texas Homebuyer Programs: TSAHC and TDHCA
TSAHC and Homebuyer Assistance Programs
Austin first-time homebuyers also have access to two other major state programs that are stacked with or used instead of the city’s DPA.
First is the Home Sweet Texas Home Loan Program from TSAHC run by the Texas State Affordable Housing Corporation. It is open to all income eligible buyers which includes first-time and repeat buyers.
It pairs as a Texas home loan with up to 5%* of the home prices, either a non-payable grant or a deferred second lien. And the requirements include:
- A minimum credit score of 620*
- Income limits must be based on county as well as household size
- Completion of an approved homebuyer education course
- Lastly, you must purchase through a TSAHC approved lender in the Austin area
Homes for Texas Heroes Program
Next is Homes for Texas Heroes program which targets first-time home buyers and veterans in specific professions – for example teachers, police officers, fire fighters, correction officers or military. It also offers the same five percent payment and closing cost as assistance. The Homes for Texas Heroes grant never needs to be repaid when selected as a grant option.
TDHCA My First Texas Home Program
Next is the My First Texas Home program from the Texas Department of Housing and Community Affairs(TDHCA) which offers up to 5%* in homebuyer down payment assistance. It acts as a deferred forgivable second lien.
The First Texas home loan pairs with a 30-year fixed mortgage at a below-market interest rate, and the requirements align closely with that of TSAHC. You must have a minimum 620* credit score income limits, homebuyer education course completion is a must, and you must make use of a participating lender.
Programs like TSAHC or TDHCA can easily be stacked with the City of Austin DPA when your lender can confirm both programs allow it. Not every lender in the Austin area participates in all programs at the same time. So, it is important that you confirm lender eligibility first.
Also Read: Do First Time Home Buyers Have to Pay Closing Costs?
The Homebuyer Education Course Requirement
Next, it is also important to discuss the homebuyer education course requirement. Almost every first time home buyer programs requirements in Austin will need you to complete a homebuyer education course before closing and it is not optional.
This course is generally 6-8* hours long and is available online or in person via HUD-approved providers. It can typically cost you around $50*-$100*. However, it is important to note that some Austin area nonprofits offer it for free.
Completion of this program generates a certificate that must be on file before your DPA program’s application starts to move forward. So, make sure to start the course beforehand and then begin shopping for a home. Because it’s a gate that can’t be bypassed & waiting until you’re under contract can risk blowing your closing timeline.
Conclusion
First time homebuyer programs requirements in Austin are easily manageable when you actually understand them before you start your buying process.
First time buyer status is broader than most people tend to assume and payment assistance is available at city, state and federal level which gives you a lot of options. Plus, these programs can easily be stacked. But, what catches buyers in Austin, is missing the requirements like skipping the home buyer education course working with a non-participating lender or applying too late in the funding cycle.
Therefore, the first step is knowing your requirements. Navigating them in a live transaction is step two and that is where working with a local expert can help you out. We at Nitin Austin Realtor can guide first-time home buyers like yourself through every stage of the home buying process in Austin.
From understanding which home buyer program you qualify for to finding the right property for your needs and within your program’s price caps – we can assist you till the end. Contact us today to know more.
Frequently Asked Questions
Do you have to be buying a literal first home in order to qualify for Austin’s first-time homebuyer programs?
No, in most cases, you do not have to buy an actual first home in order to qualify for these programs. If you have not had a home as your permanent residence in the past 3 years, then regardless of prior home ownership or not, you are eligible.
Can you combine the City of Austin DPA with other programs?
In many cases yes, but your lender must participate in both programs.
What credit score do you need for the Austin First Time Homebuyer Program?
In general most state programs that come from TSAHC or TDAHC will require a minimum of 620* credit score. But in some cases, some FHA loans can allow as low as 580* credit score with a 3.5%* down payment.
