First-Time Home Buyer Texas Assistance Tips

Being a first-time home buyer in Texas is an exciting time. The beginning of a new chapter as huge as establishing yourself as a homeowner is sure to be filled with a barrage of emotions. Among them can be the feeling of being overwhelmed as you navigate a complex process with many options.

Especially as interest rates have shown us in recent years, you never know what may come your way. It’s important to maximize your money regardless, but when it comes to closing on a home, every penny counts. This is why it’s important to understand the many first-time homeowner buyer programs in Texas.

If you’re a Texas first-time home buyer, plenty of options are available to help you receive assistance in purchasing your home. Many different programs exist and while you may not qualify for all of them, there is surely at least one option that could help you secure the funding for your future home.

Along with paying your mortgage, you’ll also need to cover other expenses throughout the process of purchasing your home, including home insurance, property taxes, closing costs, and more. Learn more on how to help mitigate many of these costs and ensure you secure the necessary funding to purchase and protect your home.

 

Does Texas Have First-Time Home Buyer Programs?

Yes, there are many different first-time home buyer programs in Texas. But it’s worth noting that each program or grant available to a first-time buyer in Texas has its own regulations to follow. This means that you’ll need to qualify within the specific parameters of the organization offering the assistance to qualify.

Down payment assistance in Texas can be provided for certain groups of people, such as Veterans, or extended to anyone that fits their definition of a first-time home buyer. Your best bet is to do the research and work with a licensed real estate agent to compare the benefits offered your qualifications, and your needs.

Taking advantage of Texas downpayment assistance is important for many, as home affordability in The Lone Star State continues to be a hindrance for Texans far and wide. Below, we’ll explore many of the top options available for assistance in buying a home for the first time.

 

Texas Department of Housing and Community Affairs Program for First-Time Home Buyers

My First Texas Home is a popular option for any Texas first-time home buyer. Veterans can also take advantage of the program. You’ll receive a 30-year, low-interest rate mortgage with up to 5% of the 1st Lien Mortgage amount able to be used for your down payment and closing costs.

The My First Texas Home Program is available no matter where you are in Texas and comes with a 0% interest 2nd lien, a 3-Year forgivable 2nd lien is available, you’ll enjoy a flexible down payment, and assistance towards your closing costs. You can even combine the program with a mortgage credit certificate (MCC) option.

It is available through the Texas Department of Housing and Community Affairs (TDHCA), the state’s top agency for ensuring a variety of housing avenues are fulfilled, including a responsible path to homeownership.

 

Texas State Affordable Housing Corporation (TSAHC)

The Texas State Affordable Housing Corporation (TSAHC) provides housing grants in Texas for first-time home buyers. TSAHC was created by the Texas Legislature as a nonprofit organization to help more Texans find a viable path to homeownership. This is a particularly attractive option for those that have never purchased a home before.

Over the years, the words “first-time home buyer in Texas” have had many different definitions, but for the sake of TSAHC, the organization defines it as follows:

“Any person or family who has not owned, or had an ownership interest in, a home within the past three (3) years.”

This is an important distinction as being a first-time home buyer also allows you to be eligible for TSAHC’s MCC program. If you are not a first-time home buyer in Texas but still wish to apply, additional programs within the TSAHC are available.

If you qualify for a program within the TSAHC, you’ll receive a mortgage loan and funding for your down payment. Alternatively, your assistance can come in the form of a grant, which doesn’t have to be paid back, or a deferred forgivable second lien loan. If you do sell or refinance your home within three years, you’ll need to pay back the second lien loan.

To qualify for free money toward the purchase of your home, a credit score of 620 is necessary, among other income requirements, meaning you’ll need to provide such information when applying.

 

Habitat for Humanity Texas

Habitat for Humanity Texas is known for its opportunities to help first-time home buyers. The organization requires a lot of hard work in the form of physical labor, but it’s a great cause and can help you achieve homeownership through your labor, rather than just your bank account.

How it works is that low-income families in need of housing or repairs can receive it in a much more affordable manner. You’ll need to invest hundreds of hours into helping build these homes, but afterward, the families will receive a no-profit mortgage. A down payment is involved, but the affordability of the program makes it a great option for first-time home buyers in Texas.

Furthermore, it’s worth noting that the mortgage payments made into the program are used to help invest in homes for the next families to receive housing. Here’s how Habitat for Humanity chooses its recipients:

• Although they have national reach, there are local Habitat for Humanity organizations operating throughout Texas and the U.S. as a whole. They each have an application process and schedule to follow for building homes. Ultimately, they choose who receives the next home to be built.
• Additionally, it’s important to note that Habitat for Humanity is a Christian organization that does not discriminate. It doesn’t matter who you are, your religion, race, etc., the organization is there to help everyone equally.

 

Homeownership Across Texas Program

The Homeownership Across Texas (HAT) Program provides grants to home buyers that qualify, in order to reduce the out-of-pocket costs Texans would otherwise face when purchasing a home. While you do not need to be a first-time home buyer to apply, it’s a great option for those just starting out.

Housing grants in Texas from HAT can fall between 1% and 5% of your mortgage loan. You can apply the HAT Grant towards either your down payment or closing costs. Because it is a grant, you will not need to repay it in the future, but you’ll still want to do your part in having good credit and saving funds for closing costs that you may still incur.

In order to qualify for the Homeownership Across Texas Grant Program, you’ll need to meet the following guidelines:

• A credit score of 620 or higher.
• An annual income that is below limits in the county you are purchasing the home. This figure will vary depending on the county.
• You’ll need to complete an eligible homebuyer education course online or in person.
• You’ll need to gain approval for either a 30-year FHA, VA, USDA, or conventional mortgage by a participating HAT lender.

The process is simple. You’ll need a participating lender to pre-qualify you for a HAT Grant and your mortgage loan at the same time. From there, you’ll receive your financing and grant options to determine which best suit your needs. You don’t need to go in person as participating lenders can provide loans anywhere in Texas and applications can be accepted online.

Homes that are single-family will qualify for the HAT Grant, though they can be new or existing structures. You must occupy the home as your primary residence and it must be within Texas, with the exception of the following areas that are not a part of the HAT Program:

• El Paso
• Grand Prairie
• McKinney
• Travis County (Austin)

Your purchase has limits depending on the county in which the home is located and the type of loan you pursue. For conventional, VA, and USDA loans with the HAT Grant Program, you’ll have a maximum purchase point of $492,500.

 

Texas Veterans Land Board Housing Assistance Program

Although not strictly for anyone who is a first-time home buyer in Texas, if you are a Veteran, the program can be of interest to you. The VLB Veterans Housing Assistance Program (VHAP) is part of the Texas Veterans Land Board Housing Assistance Program that can help our nation’s heroes purchase their first homes.

If you’re eligible, you can receive a loan with low interest for up to $726,200 on a fixed rate between 15 and 30-year terms in five-year increments. You may be required to put down a low payment, but VHAP is also available with no down payment, depending on the applicant. Here are the requirements to qualify:

• You must be either a Veteran or a member of the military with your prime residency within the state of Texas.
• Homes that are single-family attached, detached, townhomes, or condos are eligible for purchase. Duplexes or other multi-family units may also apply, but they must be at least five years passed their construction date before your loan’s closing date.
• New homes are required to have an ENERGY STAR certification, a HERS Index score of 75 or less, or an Energy Rating Index of 75 or less.
• When you purchase the home, it must be your primary residence for a minimum of three years. You must also occult the home within 60 days after closing on your loan.
• Refinancing is not available. The VHAP is also not available for use on a down payment for your home.

If you have a disability rating of 30% or higher, you may also qualify for a discounted interest rate, however, VLB interest rates and discounts are always subject to change at any time. Additional terms and conditions can apply, and there are personal qualifications you’ll need to also fit in order to be eligible. These include:

• Being at least 18 years of age.
• A legal resident of Texas that is also either on active duty, a part of the Texas National Guard, in the Reserves with 20 qualifying years for retirement, a Veteran who served a minimum of 90 active duty days unless discharged sooner due to a service-connected disability, or a surviving spouse of a Veteran that went missing in action or died serving the country.

 

Mortgage Credit Certificate Texas

The Mortgage Tax Credit Certificate (MCC) program came about because of the Deficit Reduction Act of 1984. There were also updates provided to the MCC program through the Tax Reform Act of 1986.

Though not available in all states, it is available in Texas. The MCC program allows states to use some of the federal allocations they set aside for private activity bonds (PABs) in order to issue MCCs that can help first-time home buyers, along with lower-income borrowers.

There are limits to how states can use the program, as it provides a federal tax credit for reducing mortgage payments, but MCCs aren’t loans, but rather certificates providing a dollar-for-dollar tax credit for home buyers from state and local government agencies.

The MCC program is also not a tax deduction, but a tax credit that is directly issued to eligible homebuyers. This credit can be taken as a non-refundable federal tax credit when filing taxes or through an adjustment of the borrower’s W-4 tax withholding forms to receive the benefit on a monthly basis.

In Texas, this means 20% of your mortgage interest paid, with the remaining interest obligation potentially deductible as a standard home mortgage interest deduction. However, the maximum tax credit that can be claimed in a given year is $2,000 per MCC recipient, regardless of the percentage issued.

Your MCC tax credit lasts for the life of the mortgage, as long as the home remains your primary residence. While MCCs can be beneficial, it’s important to note that they may have limitations for homebuyers with minimal tax obligations, and they do not necessarily require using an HFA first-lien mortgage.

The first mortgages originated in connection with MCCs but not under an HFA first-lien mortgage program are retained by the lender, who can hold or sell them at their discretion. Therefore, while using an MCC can help make homeownership more affordable for you, there are multiple considerations you should discuss with your real estate agent before committing.

 

Saving on Home Insurance Is Important for First-time Home Buyers in Texas

The right grants and programs can help you save tremendously, but if you aren’t maximizing your savings on your homeowners insurance, then you’re going to leave a sizable amount of money on the table.

In Texas, you are not required to have home insurance. However, if you qualify for a first-time homeowner program, you’ll be purchasing your home through some sort of mortgage. The law doesn’t require coverage but lenders want to protect their investment and make it a term and condition of your loan.

Failing to pick the right home insurance can do a few things when it’s your first home purchase:

• If you enroll in the wrong company, you could simply overpay for your coverage.
• Conversely, you might also purchase a policy that won’t be there to protect you in the ways that matter following a loss, leaving you exposed to expensive repairs.
• Finally, if you don’t choose any home insurance at all, your lender will. This may feel convenient but don’t expect them to pick out the best deal for your pockets. Their obligation is finding coverage to protect their investment, not save you money.

The bottom line is that not only do you have to have coverage, but you’ll want to protect yourself and your home from major financial losses. You’ll also need to take things into your own hands, but you don’t have to do it alone.

Working with a licensed home insurance agent helps you sort through the many options available, pinpoint your needs, and enroll in the right coverage. The goal should be to protect yourself from realistic, potential perils, with affordable premiums provided by top-rated insurance carriers.

Here at Freedom Insurance Group, we’ve been helping homeowners do this since 2005. Our partnerships with more than 25 to-rated homeowner insurance companies mean you have options to compare and find the lowest rate for the coverage you deserve.

Many different factors go into calculating your home insurance premium but each company is going to weigh them differently. The result? Varying costs for you as a homeowner even for the same level of coverage. Don’t overpay, instead, compare your options and enroll in the right coverage by working with a licensed insurance agent.

 

How to Apply for First-Time Home Buyer Grant in Texas

If you’re going to apply for any first-time home buyer grant or program in Texas, your best bet is to do so with a licensed real estate agent. We may be the experts in saving Texans on home and auto insurance, but your real estate professional will be able to better assess your needs and guide you to the right choice.

Nevertheless, as you can see, there are plenty of options, and this frankly only scratches the surface. Individual cities and counties are also likely to have opportunities for first-time home buyers in Texas that vary depending on the time of year, economic factors, and so on.

After determining which programs work best for your needs, you’ll want to get started by applying to the appropriate entities within their guidelines. Once accepted, you’ll be well on your way to purchasing your first home and saving important funding in the process.

If you’re a first-time home buyer in Texas, get a free homeowners insurance quote with no obligation, or contact one of our agents to discuss how we save our clients an average of 40% and can help you find new home discounts when purchasing your property.