A Guide to First Time Home Buyers Programs in Texas: North Texas Edition

Looking for first time home buyers programs in Texas?

You must be excited (and maybe a bit nervous) about buying your first home?

Don’t worry. If you’re like any of our first time home buyer clients, you’ve dreamed of the day you own a home.

And for good reasons. Owning a home for the first time is a great accomplishment.

It’s key to learn about helpful resources available to you.

Did you know that several first time home buyer assistance programs in Texas are available? These programs can help you with your downpayment and/or closing costs. Below are a few first-time homebuyer assistance programs in North Texas you may want to know about.

First Time Home Buyers Programs in Texas (DFW Area)

Arlington Homebuyers’ Assistance Program

The Arlington Homebuyers’ Assistance Program provides down payment and closing cost assistance. Assistance for down payment and/or closing costs is available to lower-income homebuyers for up to $20,000 throughout the City of Arlington dependent upon availability.

Criteria for Eligibility

• Borrower(s) must meet HUD’s definition of a First-Time Homebuyer or be from a federally declared disaster area in order to qualify for AHAP down payment and closing cost assistance. 
• Employees of the City of Arlington must complete a ‘City Employee Request to Use HUD Funds’ attachment to the program application. Additional information regarding the conflict of interest policy and procedures and the definition of ‘family’ as defined in the City of Arlington Personnel Policies will be provided.
• Borrower’s liquid assets may not exceed $15,000 at time of closing. Part 5 Annual Income Net Family Asset Inclusions and Exclusions list is provided on Exhibit 16.
• Borrower’s are required to have a minimum of the equivalent of two months of mortgage payments which include principal, interest, taxes , and insurance in cash reserves following the purchase of the home.
• Borrower(s) must be able to demonstrate a responsible attitude toward credit. Borrower must be credit approved by a participating mortgage lender. 
• Borrower(s) must have continuous employment history for the past six months with verifiable employment for a minimum of one (1) year.
• Borrower(s) must successfully complete the HUD-approved Homebuyer Education Course conducted by Housing Channel or other HUD-approved housing counseling agency. Housing Channel Counselors providing the education must possess applicable NeighborWorks Center for Homeownership Education and Counseling Certification, or be actively pursuing certification and under the supervision of a certified counselor. Certificates of completion of homebuyer education are acceptable for 1 year from the date of issue. If greater than one year has passed, the borrower will be required to meet with Housing Channel counselors for a minimum 2-hour refresher course. Documentation of this will be provided in the form of a letter from the counselor providing the counseling. If  borrowers have obtained a certificate of completion from another HUD-approved homebuyer education course, they will not be required to retake the course, but they may be required to meet with Housing Channel counseling staff for individual pre-closing review. All Housing Channel housing counseling will be offered to applicants at no cost in the form of group classes, workshops, and individual appointments. A self-paced online class is available for a small fee at the link below and will require a 1 hour follow up meeting with a Housing Channel advisor. 
  https://housingchannel.frameworkhomeownership.org/Default.aspx

To qualify, applicants must be able to acquire a market rate mortgage loan. Additionally, the applicant’s annual gross household income can not exceed 80% of the area’s median income. Below are the income limits for the program adjusted for family size:

• 1 person:   $45,300
• 2 persons: $51,750
• 3 persons: $58,200
• 4 persons: $64,650
• 5 persons:$69,850
• 6 persons: $75,000
• 7 persons: $80,200
• 8 persons: $85,350

Website: https://www.arlingtontx.gov/city_hall/departments/housing_authority/homebuyer_assistance

 

My First Texas Home

My First Texas Home is a Taxable Mortgage Program offering mortgage loans at more competitive, fixed, low-interest annual percentage rates with down payment assistance for first-time homebuyers. Down payment and closing cost assistance is available for up to 5 percent of the mortgage loan. This program is also through the Texas Department of Housing and Community Affairs. This program can be used along with the department’s Mortgage Credit Certificate Program. Information on the program’s income limits can be found via this link.

Website: https://thetexashomebuyerprogram.com/products/my-first-texas-home

Texas State Affordable Housing Corporation

Texas State Affordable Housing Corporation (TSAHC) provides mortgage loans and down payment assistance grants to eligible home buyers through the following programs:

• Homes for Texas Heroes Home Loan Program: for teachers, firefighters and EMS personnel, police and correctional officers, and veterans.
• Homes Sweet Texas Home Loan Program: for Texas home buyers with low and moderate incomes.

PROGRAM BENEFITS

• A 30-year fixed interest rate mortgage loan, several rates and loan options available
• Down payment assistance (DPA) provided as a grant (never needs to be repaid) or repayable second lien loan
• You do not have to be a first-time homebuyer
• DPA available for up to 6% of the loan amount
• Available statewide through a network of participating lenders
• Income limits vary by county. Expanded income and purchase price limits available in targeted areas.
• First-time buyers can also apply for a Mortgage Credit Certificate.

Website: http://www.tsahc.org/homebuyers-renters/loans-down-payment-assistance

Fannie Mae’s HomePath

Fannie Mae’s HomePath consists of an education course to prepare home buyers for the responsibilities of homeownership. After completing the course, if you attach the course completion certificate to an initial offer and successfully negotiate a purchase of a HomePath property, you can request up to 3% closing cost assistance toward your purchase.

Website: https://www.homepath.fanniemae.com/cfl/homebuyers/terms-and-conditions

Southeast Texas Housing Finance Corporation

Southeast Texas Housing Finance Corporation has a mortgage loan program that provides assistance for homebuyers in the form of a gift. The assistance provided by the program can be used for the borrower’s down payment and closing costs. There are several options for assistance available.
Borrowers will select the amount of assistance that best meets their needs and loan product. The actual amount of assistance is based on the final loan amount. The maximum amount of assistance provided is the 5% Grant, which is 5% of the total loan amount.

Borrowers using the program’s Freddie Mac/Conventional mortgage Option meeting the Affordable Income Subsidy Limits may be eligible for an additional Grant up to $2,500 of the loan amount.

The government loans have up to 5% Assistance in the form of a Forgivable 2nd lien. The Assistance will be forgiven in equal amounts each month and will be completely forgiven in 3 years. During the 3 year forgiven period, should the Homebuyer sell or refinance, they will repay the portion of the 2nd lien that has not been satisfied.

This Program does not have a First Time Homebuyer requirement. Buyers must be income eligible and purchasing a home in one of the program areas. All buyers on the mortgage loan will need to complete the on-line SETH homebuyers Education Class.

This program is available in Texas but outside of Travis County and the city limits of El Paso, McKinney and Grand Prairie.

Eligibility Requirements:

• Mortgage Approval with a Program Lender
• Meet Program Income Limits
• Minimum FICO Score of 640
• Complete SETH HBE Course
• Maximum Purchase Price $492,500

Website: https://seth5star.com

City of Dallas Mortgage Assistance Program

The City of Dallas offers a mortgage assistance program. Funds are available to eligible homebuyers purchasing an existing or new property as a primary residence. The maximum sales price for existing properties is $271,000 while new construction property price limit is $271,000. The home must pass a review to ensure it meets Minimum Housing Standards.

Criteria for Eligibility

• Homebuyer(s) must be a U.S. citizen, permanent resident or eligible immigration status, with a valid Social Security Card. 
• Employed homebuyers must have continuous, satisfactory employment history for the past six months. 
• Homebuyer must invest at least $1,000 toward the purchase of the property and have at least 2 months of monthly mortgage payments in savings after closing. 
• Homebuyers may have up to $10,000 available in liquid assets. Assets in excess must be used toward the purchase of the property. Funds in IRS-recognized retirement accounts are excluded. 
• Homebuyer’s Housing Expense to Income ratio may not exceed 32%, while the Homebuyer’s Total Debt to Income ratio may not exceed 45%.
• Homebuyer’s must receive homebuyer education by a DHAP and HUD certified counseling agency.
• Homebuyer requirements are subject to change. 
• Mortgage Credit Certificate Program (MCC) may also be combined with DHAP. Contact your mortgage lender for further details. 

Income Limits per household size

• 1 person:   $54,550 
• 2 persons: $62,350
• 3 persons: $70,150
• 4 persons: $77,900
• 5 persons: $84,150
• 6 persons: $90,400
• 7 persons: $96,000
• 8 persons: $102,850

Website: https://dallascityhall.com/departments/housing-neighborhood-revitalization/Pages/Dallas-Homebuyer-Assistance-Program-DHAP.aspx

City of Denton First-Time Homebuyers Assistance Program

The Homebuyers Assistance Program helps low- and moderate-income families with the down payment assistance and closing costs to buy a first home. Assistance is in the form of a forgivable loan at zero percent interest for five years.

Household Requirements

• Be first-time homebuyer:
  • Have not owned a home in the past three years;
  • Displaced single parents; and/or
  •  Own a substandard mobile home.
• Be a U.S citizen or legal resident.
• Qualify for a mortgage loan from a Participating Loan Officer. The program has restrictions on interest rate, debt-to-income ratio, and type of loans. Non-occupant, co-borrowers or co-signers are not eligible.
• Contribute a minimum of 1.75% of the sales price toward the purchase of a home. 
• Have cash reserves of one month of mortgage payments in their checking, savings account, or any other assets after buyer contribution.
• Agrees to live in the home as their primary residence during the five-year term of the forgivable loan. 
• Attend a HUD-approved homebuyer education program. See page 4 for a list of agencies that offer homebuyer education classes. 

Maximum Yearly Income Limits (effective July 1, 2020):

• Family size 1: $48,300
• Family size 2: $55,200
• Family size 3: $62,100
• Family size 4: $68,950
• Family size 5: $74,500
• Family size 6: $80,000
• Family size 7: $85,500
• Family size 8: $91,050

​House Requirements

• House must be in the city limits of Denton, includes existing or newly constructed single-family residence, condominium or townhouse. Mobile homes and manufactured homes are not eligible properties. 
• House must be occupied by the owner, buyer or vacant at the time of contract signing.
• Rental property is eligible if the tenant has been notified in writing prior to contract signing that the home might be sold, or the tenant is in the process of vacating. 
• Homes built prior to 1970 may be eligible for homebuyer assistance if the major systems of the house have been upgraded. The major systems include: electrical, plumbing, including water and/or sewer lines, roof replacement, heating, ventilation, and air conditioning (HVAC) and if needed pier and beam foundation stabilization. If a pre-1970 home has not received these upgrades, the Major Systems Replacement Program may be available. 
• Any structure built before 1978 must be free of any deteriorated paint. The City of Denton will conduct a visual assessment of pre-1978 houses to determine the condition of the paint. If the visual assessment shows deteriorated paint, the paint will need to be stabilized and a clearance test conducted by trained workers in accordance with Federal lead-based paint requirements for safe treatment. 
• The property must be safe, decent, and sanitary. An independent home inspection must be completed by a State Licensed Home Inspection Company. In addition to the Home Inspection, staff will also perform an inspection of the house to ensure that the house meet the program’s property standards. A list of required repairs will be provided. Funds will not be released until all the items of concern have been addressed. Staff will complete a final inspection on the property prior to closing.
• Funds up to $10,000 are available to assist homebuyer with program required repairs. These funds are separate from the down payment and closing costs assistance.
• The Seller must agree to the terms and conditions in the “Notice to Real Property Owner.”
• The Buyer and Seller must have independent real estate representation prior to negotiating terms. The buyer’s real estate representation is required to be the list of Participating Realtors.
• It is recommended that the house contain an adequate number of bedrooms. 

Assistance Available

• Funding up to the amount of $14,900, 0% interest (0% APR), forgivable loan, second lien position with a 5-year affordability period. 
• Funding up to the amount of $50,000, 0% interest (0% APR), forgivable loan, with 15-year affordability period.
  •  For home funding option, the Homebuyer(s) with household income at or below 65% AMI may be eligible to receive up to $50,000 down payment and closing cost assistance (Subsidy).
  •  Homebuyer(s) with household income above 65% but equal to or less than 80% of AMI will be eligible to receive up tp $40,000 of Subsidy. 

Website: https://www.cityofdenton.com/177/Home-Buyer-Assistance

City of Fort Worth Homebuyer Assistance Program

The city’s Homebuyer Assistance Program (HAP) can provide up to $20,000 in mortgage assistance for income-eligible first-time homebuyers within the Fort Worth city limits. Maximum sales price for an existing unit is $239,000 and new construction is $252,000 as of June 2022

The amount of assistance will be dependent on sales price and loan amount from the lender. A financial subsidy is available in the form of closing costs and down payment assistance. Three percent of the loan amount may be used for closing costs and the remainder for down payment or all of the assistance may be used for down payment.

Guidelines to participate in the program:

• The property must be located in Fort Worth city limits
• Applicant(s) must be a first-time homebuyer(s) or must have not owned a home within the last three years. Displaced homeowners may be eligible.
• HOME regulation 24 CFR Section 92.254 (a) (2) (iii) require that the sales price not exceed 95% of the area median sales price. As of June 15, 2022 for existing homes the sales price must not exceed $239,000 and for new construction the sales price must not exceed $252,000.
• Government owned properties are not eligible for assistance.
• Applicant must qualify for a first lien mortgage from a city-approved lender.
• The homebuyer’s minimum contribution of $1,000 or two percent of the of the purchase price, whichever is less, is required. May include out of pocket expenses such as appraisal, earnest money and credit report.
• The homebuyer agrees to live in the home as their principal residence for five years to receive up to $14,999 in assistance or ten years to receive over $14,999 in assistance.
• The home must pass a Minimum Acceptable Standards Inspection and City of Fort Worth Environmental Review
• Two months of reserves will be verified.
• Applicant(s) must be a citizen of the United States or legal permanent resident.
• Applicant(s) must attend eight hours of homeownership training provided by a HUD-certified housing counseling agency.
• The yearly income for all adults living in the home must be at or below 80% Area Median Income (AMI) based on family size.
• Reserves in the amount of 2 months (2 monthly mortgage payments.) These cannot be gift funds.
• You must pay costs associated with the home purchase such as earnest money, option fee, home inspection, appraisal and any out-of-pocket expenses required. These are costs that you are responsible for when purchasing your home.  

Income Limits per household size (Effective June 15, 2022)

• 1 person:   $50,650
• 2 persons: $57,850
• 3 persons: $65,100
• 4 persons: $72,300
• 5 persons:$78,100
• 6 persons: $83,900
• 7 persons: $89,700
• 8 persons: $95,450

Website: https://www.fortworthtexas.gov/departments/neighborhoods/services/hap#:~:text=The%20city’s%20Homebuyer%20Assistance%20Program,loan%20amount%20from%20the%20lender.

City of Grand Prairie Down Payment Assistance Program

Grand Prairie offers a down payment assistance program provides mortgage assistance for low to moderate income first-time home buyers. Program details include:

Program Design:    

• Provides a total up to $7,500.00 contingent upon available grant funding and eligibility for “up to 50 percent of required down payment for low or moderate income homebuyer; or pay reasonable closing costs (normally associated with the purchase of a home) incurred by a low or moderate income homebuyer.”
• Buyer must have a minimum investment of $500.00. This must be reflected on the HUD-1 form.
• Households who receive assistance will not be required to make monthly payments on the grant.
• If the total exceeds the $7,500.00 limit, the buyer will be responsible for the additional funds. The City will not pay any fees, cost, or reimburse charges directly to the client. The City has sole discretion as to where the funds can be used, up to but not to exceed $5,000.00.
• Property must be located within the city limits of Grand Prairie.
• Property must be the primary residence of the buyer.
• Property sales price may not exceed $300,000.00.
• Custom-built, new construction property is ineligible unless constructed under an approved affordable housing program. The property must be from existing housing stock located in Grand Prairie.
• Properties built before 1978 must have  a lead based paint visual assessment. If deteriorating lead based paint is found, it must be stabilized. The property must be “lead safe” before occupied by the buyer.
• No other federally funded sources may be used in conjunction with the program.
• Property must pass HQS inspection performed by the City of Grand Prairie and all utilities must be on.

Application Eligibility and Participation Requirements:

• Applicant must be a first-time home buyer.
• Applicant must be low-to-moderate income (see chart below).
• All applicant family members’ income will be calculated to determine gross family income. Lender qualifying criteria may be different.
• Applicant does not have to be a resident of the City of Grand Prairie to apply; however, priority will be given to Grand Prairie residents.
• No member of the applicant’s (2) household shall own any improved real estate which is or can be used for residential purposes, including mobile homes.
• Acceptable credit history required.
• Applicant must provide proof of savings available for all other i.e. down payment, prepaid, closing cost, appraisal, credit report, points, mortgage interest buy-down, etc. as applicable and as may be required.
• Applicant must have acceptable income to debt ratios i.e. no more than 42% can be contributed to Principle, Interest, Taxes and Insurance (PITI) and other debts unless otherwise approved by the Neighborhood Services Specialist.
• To be considered for participation in this program, a person must complete the Client Application and meet the aforementioned eligibility guidelines.
• Applicants using a co-signer to qualify must list them on the application, provide all their documentation and their income will be used to determine eligibility

Income Limits per household size

Dallas County portion of Grand Prairie

      1 person:  $49,850

     2 persons: $57,000

     3 persons: $64,100

     4 persons: $671,200

     5 persons:$76,900

     6 persons: $82,600

     7 persons: $88,300

     8 persons: $94,000

Tarrant County portion of Grand Prairie

    1 person:   $45,300

    2 persons: $51,750

    3 persons: $58,200

   4 persons: $64,650

   5 persons:$69,850

   6 persons: $75,000

   7 persons: $80,200

   8 persons: $85,350

Website: https://www.gptx.org/Departments/Housing-Neighborhood-Services/Home-Buyers/Buying-Power-Program

City of Irving Homebuyer Assistance Program

The City of Irving offers financial and housing counseling to first-time homebuyers. Financial assistance is provided in the form of a zero percent interest, deferred forgivable loan. These funds can be used to help pay for down payment and closing cost for the purchase of a home in Irving.

Criteria for Eligibility

• Must watch the Homebuyer Orientation Video that is on the site, and fill out the Orientation
  Acknowledgement Form once completed.
  Visit www.cityofirving.org/567 for more information
• Must purchase a home in Irving
• Must have not owned a home in the last three years
• Must attend a Homebuyer Education Class through a HUD-approved housing counseling agency
• Must be a Permanent Legal Resident or U.S. Citizen
• Must be able to secure a mortgage approval
• Must meet the HUD family income limits shown below:
  
  Income Limits per household size
  1 person:   $49,850
  2 persons: $57,000
  3 persons: $64,100
  4 persons: $71,200
  5 persons:$76,900
  6 persons: $82,600
  7 persons: $88,300
  8 persons: $94,000

•  

Website: cityofirving.org/567/Homebuyer-Down-Payment-Assistance-Program

City of McKinney Down Payment & Closing Cost Assistance Program

The City of McKinney Homebuyer Assistance Program provides down payment and closing cost assistance to low-to-moderate-income first-time homebuyers. Assistance is provided up to $10,000 as a 0% interest five-year forgivable loan for down payment and non-recurring closing costs associated with the purchase of the new home. The loan is repayable only if you refinance, pay off the first mortgage, sell or otherwise convey title to the property within the five year period.

You may be eligible if you meet the following qualifications:

• You are a first-time homebuyer. A first-time homebuyer is an individual or household who has not owned a home in the last three years or is a displaced homemaker.
• You are able to provide proof of U.S. citizenship or permanent legal resident alien status.
• You are able to qualify for a mortgage loan with a private lender.
• The debt-to-income ratio (“back-end ratio”) may not exceed 45%.
• The housing ratio (“front-end ratio”) must be at least 20%.
• You will reside in the home as your principal residence.
• The home is located within the city limits of McKinney, Texas.
• Your income does not exceed 80% of the Area Median Income
• You complete a HUD and City of McKinney-approved homebuyer class. Some classes charge a fee. Choose from a list of classes.

     Income Limits per household size

      1 person:  $54,550

      2 persons: $62,350

      3 persons: $70,150

       4 persons: $77,900

       5 persons: $84,150

       6 persons: $90,400

       7 persons: $96,600

       8 persons: $102,850

Website: mckinneytexas.org/239/Down-Payment-Closing-Cost-Assistance

City of Plano First Time Homebuyers Program

Plano offers a first-time homebuyers program. The program is designed to assist eligible low and moderate income households to buy a home in Plano by providing down payment and closing costs assistance in the form of deferred payment loans.

The two options are:

1. Community Development Block Grant (CDBG) funding, in the amount not to exceed $10,000, 0% interest (0% APR), deferred, forgivable loan, second lien position with a 5 year affordability period.

2. HOME Investment Partnerships Program (HOME) funding,  in the amount not to exceed $55,000, 0% interest (0% APR), deferred, forgivable loan, with a 30-year shared equity agreement

Criteria for Eligibility

• You must have not owned a home in the last three years. In some cases, a First Time Homebuyer can be a displaced homemaker.

• Your total household income must be 80% or less of the area median income. Housing and Urban Development (HUD) Income Limits are listed later in this tab. A Household includes the related family members and all the unrelated people sharing a housing unit such as partners or roomers.

• Must be a United States citizen or a permanent resident alien.

• Main borrower must be employed at a minimum of one year. The applicant(s) with less than six months of employment with current employer must provide evidence that applicant has been working in the past 12 months.

• Must attend an eight-hour First Time Homebuyer class held by the City.

• Must receive housing counseling by HUD approved agency.

• Cash assets must be less than $36,000 (not including retirement accounts).

• The Homebuyer(s) and spouse(s) must have a minimum credit score of 620.

• Spouse and/or co-borrowers without a credit score maybe eligible providing that non-traditional credit history (minimum of three creditors) can be verified and no more than two 30-Day late payments in the previous 12 months.

• Any judgments must be paid off. Any bankruptcy must have been discharged for at least two years and good credit re-established.

• Must contribute a minimum of $1,000 toward the down payment or pay for closing costs. Gift funds can be used to meet this $1,000 requirement, however, the Homebuyer(s) must make a minimum of $500 contribution from their own funds.

• The debt ratios of the homebuyer with credit score between 620 to 699 and/or the homebuyer with spouse and/or co-borrower without a credit score should not exceed 31% on the front end and 43% on the back end of gross monthly income.

• Homebuyers with a credit score of 700 or higher may increase their debt ratio up to 36% on the front end, 45% on the back end of the gross monthly income, but must have a 3 month cash reserve.

• Must be approved by an in-house underwriting process. Please see the FTHB Guidelines (PDF).

   

• Income Limits by Family Size

Income Limits per household size (Effective June 15, 2022)

     1 person:  $54,550

    2 persons: $62,350

    3 persons: $70,150

    4 persons: $77,900

    5 persons: $84,150

   6 persons: $90,400

   7 persons: $96,600

   8 persons: $102,850

Website: https://www.plano.gov/903/First-Time-Homebuyers-Program

Texas Mortgage Credit Certificate Program

The Texas Department of Housing and Community Affairs created its Texas Mortgage Credit Certificate Program for the residents of Texas, to help make ownership of new and existing homes more affordable for individuals and families of low and moderate income, especially first-time buyers.

A Mortgage Credit Certificate allows a homebuyer to claim a tax credit for some portion of the mortgage interest paid per year. It is a dollar for dollar reduction against their federal tax liability.

The Mortgage Interest Credit (MCC) is a non-refundable tax credit, therefore, the Homebuyer MUST have tax liability in order to take advantage of the tax credit.

Criteria for Eligibility

The program is open to those individuals and families who:

• Meet income and home purchase requirements;
• Have not owned a home as primary residence in the past three (3) years;
• Meet the qualifying requirements of the mortgage loan;
• Will use the home as their principal/primary residence.

The MCC may not be used in connection with the refinancing of an existing loan. Targeted Areas – first-time homebuyer requirement is waived; increased income and purchase price limits.

The homebuyer must complete a pre-purchase homebuyer education course prior to loan closing. Get a list of certified homebuyer education providers in your city/county. Online homebuyer education is acceptable. Certificate of Completion is required.

The size of the annual tax credit will be 20% or $25% of the annual interest paid on the mortgage loan. However, the maximum amount of the tax credit shall not exceed $2,000 per year. The credit cannot be larger than the annual federal income tax liability after all other credits and deductions have been taken into account.

MCC credits in excess of the current year tax liability may, however, be carried forward for use in the subsequent three years.

Website: http://www.tdhca.state.tx.us/homeownership/fthb/mort_cred_certificate.htm

Questions About First Time Home Buyers Programs in Texas

Trust me, this list is just scratching the surface of first-time homebuyer programs in Texas. I’ve had several clients have great success using several of these first-time homebuyer programs.

If you would like to learn more about homebuyer programs or have questions about buying a home, contact me by clicking here. I’d be happy to help!

PS: In the clip below taken from my web show #AskKeela, I address first-time homebuyer programs in my answer to the question, “How Much Money Do I Need To Buy A House?”