Buying a house and starting a life in your dream city sounds easy; however, achieving this milestone requires you to have a clear vision about your next step. You need a lot of research, resources, and guidance. It can get overwhelming, even frustrating and confusing at times, but we have picked first time homebuyer programs in Texas that suit you best.
Let’s dive into the world of opportunities and numerous options according to your budget, eligibility, and other local requirements.
Who is a First-Time Home Buyer?
If you want to buy a home for the first time, or have not owned a home within three years, you may be considered a first-time buyer. However, it is compulsory that you live in the home and consider that home as your primary residence for some years before you rent it out, sell or refinance.
If you are buying your first Texas home, you will be eligible for multiple mortgage loan programs that can make your purchase more seamless and affordable.
Best Programs For First-Time Home Buyers In Texas
Let’s analyze some of our first-time homebuyer options to see which one meets your needs. TDHCA, or the Texas Department of Housing and Community Affairs, provides various options to help out first-time home buyers through loans and grants to secure a place of their own in Texas. Those programs are listed below:
Mortgage Credit Certificate
MCC, or mortgage credit certificate, isn’t a deduction; it is a federal tax credit and a dollar-for-dollar reduction in a tax bill. This proves to be very beneficial for first-time home buyers with mortgage interest payments. MCC enables the qualified first-time home buyers to claim a tax credit of up to 20 percent and, in some cases, even more.
Down Payment Assistance
Among other first time homebuyer programs in Texas is down payment assistance offered by the Texas State Affordable Housing Corporation (TSAHC). The TSAHC program provides a 3 to 5 percent home buyer grant and also requires first-time buyers to take a homebuyer education class to gain some understanding of homeownership.
However, the amount of down payment assistance an eligible applicant receives varies due to income, home sale price, and location. Once you qualify, you can contact your participating loan officer to get approved for a mortgage loan.
Home For Texas Heroes Program
The Home for Texas Heroes Program is designed to give opportunities to Texas heroes, such as the US military, teachers, veterans, and police officers. This program allows you to benefit in the form of down payment assistance as grants, competitive interest rates, and other additional financial homebuyer assistance programs, depending on the home prices.
Home Sweet Texas Home Loan Program
First-time home buyers in Texas may apply to the Home Sweet Texas Home program to attain a loan if they are low- and moderate-income households. It must be kept in mind that applicants with low household income are eligible and would receive financial support, down payments, and mortgage grants and loans.
FHA
The Federal Housing Authority program, offered by the Department of Housing and Urban Development, allows first-time home buyers in Texas to get a residence of their own with a minimum of 3.5% down payment. In order to be eligible for FHA, you need to have a credit score of 620. However, it is compulsory to have a private mortgage insurance (PMI) and a completion of a homebuyer education to qualify for down payment assistance programs such as FHA.
Fannie Mae
Fannie Mae, one of the government-sponsored programs, is available to buy loans from lenders, allowing more mortgages to more low to moderate-income homebuyers.
If you want to qualify for Fannie Mae, you must have a household income at or below 80 percent AMI, a credit score of 620+. It requires a down payment as low as 3% to buy your single-family home.
VA Program
Department of Veterans Affairs allows the members of the US military, apply for various loan programs with zero down payment, along with other financial assistance. To qualify for VA, your home must be your primary residence.
USDA
The United States Department of Agriculture or USDA loans enable first-time home buyers to own a residence, but the down payment and closing costs assistance might vary based on the location and your eligibility. If you want down payment assistance, you are also required to receive a home buyer education.
Am I Eligible To Apply For A Government Loan?
Before applying for any Government first time homebuyer programs in Texas or shopping for a home, it is very important to know if you qualify for buying a house in Texas, as they give you a heads up. The different eligibility criteria also help you to shortlist such programs that best meet your needs.
Some of the most important first time homebuyer eligibility criteria are as follows:
- It must be your first time that you purchase a home of your own, or even within the past three years.
- You require bank statements and tax return documents to review your income and expenditure. It is to ensure that you are qualified and in need of financial assistance from the government.
- Your annual income should be median or less than median to be an eligible applicant for a government loan program.
- Your credit score must be at least 580 to be an eligible applicant for a government loan program.
- For some programs, you need to complete an approved home buyer education course before closing the deal to further receive deductions in rates.
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Why Choose A First-Time Home Buyer Program?
Look before you leap. You must have an idea and know what you are getting into, and always plan. First time home buyer programs make homeownership more affordable and gives you a sneak peek of real estate investment and whether it is a good idea to invest in home buying. Here are the pros of applying for a government-sponsored loan as a first-time home buyer in Texas:
- Choosing a suitable grant would not only fulfill all your needs, but it would also make the home buying process a lot easier by assisting you in your finances and covering a large sum of down payments and closing costs.
- It would also cover your financial burden, lessen it, and make home buying more affordable in your dream neighborhood, with all the desirable qualities that you want in your future house.
- If you complete a homebuyer education before closing on your home, you receive the down payment assistance with even lower rates.
- It gives you a sense of stability.
- It provides wealth accumulation toward building a peaceful and independent life.
Ready To Buy Your Dream House In Texas?
These are all the loan programs provided by the government for you to choose from according to your circumstances, benefits, and preferences. No doubt that all of them make the dream of owning a house easier and more convenient for a person, but you must have a better understanding of what you want and would apply for. Make sure you do not defer in checking all the boxes of eligibility criteria for these programs before applying, including the homebuyer education course. Once prepared, you can apply and find a potential lender and continue your journey of buying your dream home.
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Frequently Asked Questions
Q: Are there any free first-time homebuyer programs available in Texas?
A: There are a lot of programs for first-time home buyers that reduce your upfront cost, like TSAHC, Texas Heroes programs, and the Sweet Home Texas loan programs. VA and USDA may also provide zero down payment for eligible first-time buyers to make home purchases much more affordable.
Q: What is the income limit for the Texas Homebuyer Program?
A: Texas first-time home buyer income limits vary depending on multiple factors and the programs that you are applying for. However, for some programs, it should be 80 percent or below the median income. Otherwise, applicants with 50 percent or below the median income are also eligible to apply.
Q: Can I buy a house in Texas with no money down?
A: Programs such as Veteran Affairs, Sweet Home Texas loan programs, and Texas Heroes programs offer zero down payment along with other financial assistance, but you must be an eligible applicant. Check out the eligibility criteria of these programs before applying.
Q: How much down payment assistance can you get through TSAHC?
A: This down payment assistance amount is granted to first time home buyers and repeat home buyers in the form of a 3 to 4 percent loan, and is offered through a network of participating lenders.
