Buying your first home is a significant milestone in your life. It is a major financial decision and marks a new chapter in your life. Being labeled as a Texas first-time homebuyer gives you a lot of benefits, including down-payment assistance, tax breaks, and many more. Using these affordable programs, you can easily own a house. But what qualifies as a first time home buyer in Texas?
We will take you through first-time buyer eligibility, common myths, first-time buyer programs, benefits of being a first-time buyer, and the process of applying for the first time buyer program to buy your first home in Texas.
So without further ado, let’s dive in!
Who is a First Time Home Buyer?
A first-time home buyer is someone who hasn’t owned a home or does not have a primary residence in the past three years. It means that if you have owned a home in the past but sold it for some reason and have been living on rent for at least three years, you may still qualify for a first-time home buyer program.
In other words, if you get back into the housing market after some years, you may still qualify to apply for homeownership as a first-time home buyer.
For instance, you have owned a home for quite some time, and then you sold your house. For the past 3.5 years, you have been living on rent. Even though you had the ownership status 3.5 years before entering the housing market, you are still considered a first-time buyer in Texas.
Common Myths About First-Time Home Buyers
Before we get into the criteria of being a first-time owner and the steps to apply for the first-time home buyer programs, let’s see what the common myths are and clarify them so that you do not get confused as a potential buyer.
Myth 1: If I Co-Signed On Someone Else’s Property, I Do Not Qualify As A First-Time Home Buyer
If the house is not your primary residence, you might still qualify as a first-time homebuyer. It doesn’t matter that you co-signed on a property if you do not live there yourself. You can still apply for grants if you haven’t purchased a home in the last three years.
Myth 2: I Inherited A House A Few Years Ago, Thus, I Am Not A First-Time Home Buyer
In Texas, inherited houses do not disqualify you from being a first-time homebuyer if that property is not your primary residence. If you do not live there, you might still qualify as a first-time home buyer.
Eligibility Criteria For First-Time Home Buyers in Texas
In order to be eligible, you must know what qualifies as a first time home buyer in Texas. To buy a home in Texas as a first-time home buyer, you must check certain boxes. Mostly, investing in best Realtors like Nitin Kumar Austin saves your time to go through the whole process, but knowing the criteria will keep you one step ahead. The eligibility criteria includes:
Residency Requirements
You must be a U.S citizen or a lawful permanent resident in the U.S. The other criterion is that you must be purchasing a property located in Texas, which will be your primary residence.
So if you are out of state of Texas or you have purchased your own home within the past three years, you are not eligible to buy a home in Texas. It is because this program allows to assist residents buying homes within Texas who want to buy a home for the first time in 3 years and have no primary residence.
Credit Score Requirements
You need to achieve a minimum credit score of 620 to be able to qualify for the first-time home buyer program in Texas. The higher the credit score, the better interest rates you get. These programs assist buyers who have average to slightly below-average credit scores.
If your score is lower than 620, you must try to improve it before you apply for a mortgage. Improving your scores will help you save thousands of dollars in the long run and have lower interest rates as a reward.
Income Limits
To qualify for the Texas homebuyers program, it is essential for you to consider your income limits. The income limits depend on the specific program and the county you buy your home. The average income for a single-family home in Texas generally ranges from $74,500 to $102,000.
Larger families have a higher household income limit due to the higher cost of living. However, if you have a moderate income limit and you’re a first-time buyer, you might still be eligible to apply for the first-time home buyer program.
Home Purchase Price Limits
In every state, each program has its own purchase price limits based on the location of your property. These limits ensure that the assistance goes to the buyers who want to purchase a home but cannot afford to pay a higher purchase price.
For instance, in some areas of Texas, home price limits cap at $300,000, while in high-cost regions, it can cap at $500,000. Before you apply for any program, go through all specific program details about price limits.
Home Buyer Education
Most state-run programs require first-time buyers to complete an educational course regarding buying their first home. The course helps you understand the whole homebuying process, responsibilities as a homeowner, and options of mortgage rates in Texas.
The home buyer’s course can be attended online or in person. It takes 5 to 8 hours to complete the course. Some programs even offer discounts on mortgage rates if you complete the course.
Texas First-Time HomeBuyer Programs
Specifically, through its state-level organizations like Texas Department of Housing and Community Affairs (TDHCA) Texas State Affordable Housing Corporation (TSAHC), and with the help of the Department of Housing and Urban Development (HUD), Texas has several first-time home buyer programs. These organizations provide a first-time buyer down payment assistance program, closing cost assistance up to 5%, and even tax credit programs.
My First Texas Home Program (TDHCA)
Offering a 30-year fixed-rate mortgage with down payment and closing cost assistance, these home buyer assistance programs are one of the most popular ones for Texas first time home buyers.
To avail this program for first-time homebuyers, you must have a 620+ credit score and be subject to a purchasing price limit. The program may offer 5% of the grants and loans for down payment and closing costs.
Homes for Texas Heroes Program (TSAHC)
It is a special initiative for certain groups like teachers, firefighters, EMS workers, police officers, and veterans. This program provides home loans and down payment assistance, and even forgivable second loans to help cover the upfront costs of buying a home. For instance, teachers receive $7,500 in down payment assistance forgivable after a certain time.
Texas Mortgage Credit Certificate (MCC)
This MCC program is available for first-time homebuyers in Texas, where you receive a tax credit up to $2000 per year on your mortgage interest payments. This program is available to first-time homebuyers, and they can use it alongside other programs and grants to maximize their savings. It is especially beneficial for many first-time home buyers who want to stay in their homes for longer periods of time, increasing their savings over time.
Home Sweet Texas Home Loan Program (TSAHC)
It offers a 30-year fixed-rate mortgage with optional down payment assistance for low to moderate-income families for first-time home buyer loans. This program is available to first-time buyers meeting specific credit score and specific income requirements.
One of the unique features of this program is that it offers homebuyer grants to families with higher incomes, making it ideal for middle-class families.
But how to know which program suits you best and what mistakes to avoid as a first time home buyer?
Benefits of Being a First-Time Buyer in Texas
Being a first-time homebuyer in Texas gives you certain advantages that make homeownership easy and affordable while avoiding certain mistakes as a first time home buyer. These benefits are:
- Down Payment Assistance: You get up to 5% of your loan amount to cover your down payment.
- Closing Cost Assistance:The programs cover the closing costs up to $10,000.
- Competitive Interest Rates: There are special rates for first-time buyers that are lower than the market rate.
- Mortgage Tax Credit:Texas offers a Mortgage Credit Certificate that can save you up to $2000 per year on mortgage interest payments.
- Homeownership Counselling:Many Texas home loan programs offer you to have free education resources to help you understand homeownership better.
How to Apply For the First-Time Buyer Program in Texas
Now that you know all about the home buyer qualifications for first-time home buying in Texas, here is how you can apply for these programs:
Step 1
Check the program website for first-time home buyer grants. Review all the eligibility criteria of what qualifies as a first time home buyer in Texas, including your income limit, credit score, and home purchase price eligibility.
Step 2
Take the home buyer’s education course. It not only educates you on homeownership and the buying process but may save you money through discounts on mortgage down payments.
Step 3
Find an approved lender who has already worked with Texas first-time home buyers. They offer help for first-time home buyers in navigating the application for home buying process and ensure that you take full advantage of the programs available to you
Step 4
Get pre-approved for a mortgage before you start shopping for homes. This will help you understand your affordability and make your buying process smoother.
Step 5
Working with your lender, submit your application if you require down payment assistance and other available programs. The lender can guide you throughout the paperwork and ensure that you meet all the requirements.
Step 6
After you pre-approve your mortgage and have down payment assistance, you can shop for your new home. After finding the perfect home, close your deal and move into your dream home!
Conclusion
You might think buying a home in Texas as a first-time buyer is overwhelming, however, it can be easier than you think. Especially if you qualify for First-time home buyer programs, you can get assistance with your down payment, interest rates, and get your hands on some great resources that can help your dream of homeownership become a reality. For further assistance regarding your program qualification and eligibility, reach out to us here and get started on the path to live in the home of your dreams today!
Frequently Asked Questions
Q. How do you qualify for a first-time home buyer in Texas?
A: To qualify as a first-time home buyer, you must either have never owned a home before or haven’t owned a primary home in the past 3 years. In addition, you must also be a U.S citizen or a legally permanent resident of the U.S. You must use your home as your primary residence, have a 620+ credit score, meet the income limit and purchase price limit based on the program and have completed the homebuyers education course (if required).
Q. What is the first step in buying a home in Texas?
A. The first step to buying a home in Texas is to get approved for a mortgage, to better understand your affordability, interest rate range, and homebuyer assistance or first-time homebuyer loan programs you qualify for.
Q. What do most first-time home buyers get approved for?
A. First-time home buyers in Texas typically get approved for a loan and down payment assistance as a grant, including conventional loans, FHA Loans (if you have low credit scores or a small down payment), and VA or USDA loans. Through these home buyer grants in Texas, you get down payment assistance, closing cost help, and mortgage credit certificates up to $2000 per year in tax credits.
