Texas first-time home buyers have plenty of options that can seem overwhelming all throughout the process. There are challenges along the way that includes limited supply of homes and rising home prices. As a Texas mortgage loan officer, Alex Boeger can help you with the best loan program that fits your needs and budget.
The Texas Department of Housing and Community Affairs (TDHCA) offers Texas mortgage programs for first-time home buyers. It is a nonprofit organization created by the Texas legislature to assist qualified mortgage borrowers in the Lone Star State.
TDHCA and other organizations like the state’s housing authority and other government programs work with approved Texas mortgage lenders like AlexDoesLoans to support Texas first-time home buyers in negotiating the costs.
Who are the First-time Home Buyers in Texas?
First-time home buyers in Texas are those who have not owned or had an ownership interest in a home within the past three years. If you bought and owned a house before but haven’t done it in the last three years, you are considered a first-time home buyer in Texas; even if it’s not your first time owning a home.
“Ownership interest” refers to any person living in the home as his/her primary residence and who is listed on the Deed of Trust. For the married couples, even if only one is listed on the Deed of Trust, both spouses still hold an ownership interest.
What are the Qualifications for Texas First-time Home Buyers?
The programs include a 30-year fixed rate mortgage loans. These programs offer assistance for down payments and closing costs up to 5% of the loan amount.
- You must be a first-time home buyer, a veteran, or someone who has not owned a home for the past three years.
- A minimum credit score of 620 must be met.
- The property must be in Texas and meets the purchase price restrictions.
- TDHCA’s income limits and loan requirements must be met.
For instance, income limits range from $74,500 to $101,600 for one or two people. Then, $85,675 to $115,920 for three or more people. There are also purchase price limits that range from $294,600 to $359,460 in most areas.
- The type of property must be a single-family home or single-unit condominium. Some multi-plexes and manufactured housing are also allowed.
Have a question? Let's chat!
Texas First-time Home Buyer Grants
Once Texas State Affordable Housing Corporation (TSAHC) approves you for a home loan, you can receive a mortgage credit certificate worth up to $2,000 a year off your taxes. The program offers a 30-year, low, fixed rate interest mortgage for first-time home buyers.
Furthermore, you could receive a down payment assistance of up to 5% of the mortgage value – without interest and monthly payment second lien. Some of the down payment assistance programs are statewide like TSAHC. However, some are for specific cities, towns, and countries. Check your local options prior to application.
Each of the down payment assistance can have its own rules and benefits to offer. Make sure that you also compare the programs you’re eligible for and see which one offers the best deal. You might find that one program serves your area better or worse than TSAHC’s.
A conventional loan is likely your best option if you are able to put 20% down payment and have a good credit. In this case, a home buyer assistance might no longer be needed.
Texas Mortgage Loan Options for First-time Home Buyers
Houston’s Homebuyer Assistance Program (HAP) is serviced by Houston’s Housing and Community Development Department (HCDD) for eligible low to moderate income families. The funds then will be used in assisting approved applicant in paying their down payment, closing costs, and principal buydown.
Several home buyer loan mortgage options are available for first-time home buyers in Texas. Depending on your preferred options and terms like fixed rate or adjustable-rate mortgage, years to repay the loan, AlexDoesLoans will help you decide which loan option best fits your needs.
FHA Loans
Considered by many consumers as the best first-time home buyer loan, FHA loan suits those with low credit score and low down payment.
When it comes to qualification requirements, FHA loan is lenient with only a 600 FICO credit score and 3.5% down payment requirement. As compared to conventional loan, it has flexible qualifications related to employment and income.
Another attractive feature of Texas FHA loan is its down payment assistance. Your down payment may also come as a gift from a relative, employer, an approved charitable group, or a government homebuyer program.
Texas Premier Mortgage offers no closing costs for these types of loans. In fact, your money can be credited back to cover the remaining closing costs. Thus, saving you a lot of dollars in upfront costs.
Currently, FHA loan limit in Texas has increased which applies to all home purchase and refinance Texas FHA loans. It has up to $420,680 for a single-family home and can still vary depending on the county.
VA Loans
This type of loan only applies for veterans and service members with zero down payment required. The minimum credit score is often 620 but may vary depending on your lender. It is arguable the best mortgages available since it has no private mortgage insurance (PMI) after closing.
Conventional Loans
If you can commit to a larger down payment and have an excellent credit score, then conventional mortgages are for you. As compared to FHA, these come with better loan terms with no mortgage insurance to pay to the lender.
The minimum down payment required ranges from 3% to 5% although you can settle a higher if able. Once the buyer settled 80% of the purchase price, PMI will be removed.
USDA Loans
100% financing is offered, and it also works for those on low to moderate incomes from designated rural areas. The minimum credit score is often 640 but may vary depending on your lender. Also, down payment is not required when supplying for USDA loan.
Jumbo Loans
Effective January 1,2022, any loan that doesn’t meet the conforming or FHA loan limits belongs to jumbo loan. Generally, the FHA loan limits in Texas is $420,680, but may still vary by county.
Texas First-time Home Buyer Programs
TSAHC is a good place to start with when seeking help for home buying. It operates statewide to help you set up a loan, give advice, and educate through first-time home buying courses.
As one of the Texas first-time home buyers, TSAHC can provide you two major home buyer assistance programs:
HOMES FOR TEXAS HEROES
The program features a 30-year fixed rate mortgage with several rates and loan options. It can fund between 36% and 5% of your total loan amount and can be put straight to down payment and/or closing costs.
Furthermore, there will be no repayment terms and requirement to live in the home for a minimum time.
If you are an eligible applicant who needs help with upfront costs, then Homes for Texas Heroes Home Loan Program is for you.
Applicable to the following professions:
- Allied Health Faculty Member
- Corrections Officer
- County Jailers
- Emergency Medical Services Personnel
- Fire Fighters
- Juvenile Corrections Officers
- Military Veteran
- Nursing Faculty Member
- Peace Officer
- Professional Educator
- Public Security Officer
HOMES SWEET TEXAS (MY FIRST TEXAS HOME PROGRAM)
Perfect for low-income borrowers who are also looking into buying a home. If you haven’t been a homeowner within the last three years, you are also eligible for this home loan program.
It features a 30-year fixed-rate loan with good interest rates and forgiving credit stipulations.
More about this program:
- Requires a minimum credit score of 620.
- A loan of up to 5% worth of the home’s value can help you with the down payment and closing costs.
- Applicable to qualified home buyers from all professions through a network of participating lenders.
- A bonus option of dollar-for-dollar reduction on federal tax liability through the TDHCA’s Texas Mortgage Credit Certificate Program.
Every program has its own income limits varying per county. In fact, an eligibility test is available online to check whether your application might succeed.
Once the forms for eligibility quiz have been accomplished, you will be redirected to a list of participating lenders in Texas. You must choose one of those lenders in order to get an assistance from TSAHC.
Mortgage borrowers must have at least 620 credit score to qualify for either program. There are also home purchase price limits.
TEXAS MORTGAGE CREDIT CERTIFICATE PROGRAM
This mortgage program provides first-time home buyer an additional savings on their federal income taxes. No minimum credit score required, and it can also be combined with My First Texas Home Mortgage Loan Program.
Additionally, it’s a dollar-for-dollar reduction on federal tax liability for as long as you owe on the mortgage loan and live in your first home. A tax credit for some portion of the mortgage interest paid per year can be claimed by home buyers.
MY CHOICE TEXAS HOME PROGRAM
Homebuyers of all professions in Texas can enjoy this program along with assistance for down payments and closing costs up to 5% of the loan amount. No first-time home buyer requirement! FHA, VA, and USDA loans can be used.
TEXAS BOOTSTRAP LOAN PROGRAM
Instead of helping you purchase a home, this unique program literally lets you build the home. Thus, you will be known as an “owner builder.” You will then be supervised by Nonprofit Owner-Builder Housing Provider to ensure you are in the right track.
This program could work for low-income families with limited home buying options, although it’s labor intensive and time consuming. Your income must not be higher than 60% of the state/local median family income. Also, at least 65% of the labor associated with the building will be required from you to do.
The maximum benefit for this program is $45,000 although you can consult other lenders for help.
Procedure for First-time Home Buyer Application in Texas
Whether it is through TDHCA or other means, below could help you go towards buying your first home in Texas.
- 1.) Mortgage Loan Pre-qualification
As a Texas mortgage borrower, you are responsible for determining how much you can afford. Upon reviewing your credit report and employment information, your lender can assess and determine your price range to get pre-approved for the loan.
- 2.) Properties Checkup
Several online resources are available to search for properties in Texas such as TexasRealEstate.com. On the other hand, you may refer to local newspapers, a local building contractor, or a real estate agent.
Once you found the home that suits your budget and needs, you need to make an offer that will eventually lead to price negotiation, then contract signing. Once the preliminary agreement to purchase a home has been signed, a deposit must be made.
My First Texas Home program includes properties like single family units, single units in condominium developments, manufactured housing, and duplexes. Specific funds are set aside for targeted area loans (70% or more of the families have incomes that are 80% or less of the statewide median income).
- 3.) Important Documents Compilation
Presenting your personal financial information is a must whenever you apply for a Texas Home Loan Program. Below is the list of the documents you will need:
– Most recent bank statements for all your accounts
– Tax returns for the past three years
– Pay stubs for the past three months
– W-2 forms for the past two years
– Details about your long-term debts (creditors, account numbers, payment amounts)
– Evidence of any current income
– The executed sales contract
- 4.) Rates, Fees, and Requirements Review
- The Texas lender will present you the current interest rate and exact closing costs.
- My First Texas Home or My Choice Texas Home comes with 30-year fixed annual percentage rate mortgage loans.
- You must qualify under FHA & VA guidelines.
- The homebuyer is required to occupy the home within 60 days of closing.
- The lenders will have a list of all the associated fees for home buying such as closing cost fees. However, the TDHCA limits the fees that lenders can charge to Texas first-time home buyers.
- 5.) Qualified Lender Lookup
Alex Does Loans is a qualified loan lender in Texas and Florida offering the best loan programs suitable to your budget and needs. Not only for first-time home buyers in Texas, but also for mortgage refinance, debt consolidation, and more!
