Buying your first home in Houston, but the down payment feels out of reach? You’re not alone, and you have real options. Houston and Harris County buyers can layer affordable mortgages with state and local assistance to reduce cash needed at closing and improve monthly affordability. In this guide, you’ll learn what programs exist, who qualifies, how the assistance works, and the practical steps to take next. Let’s dive in.
What first-time buyer programs are in Houston?
Houston-area buyers typically combine a primary mortgage with one or more assistance tools. Here are the main sources you can use locally:
- Texas Department of Housing & Community Affairs (TDHCA). Statewide programs offer down payment and closing cost help through approved lenders, plus a Mortgage Credit Certificate (MCC) option. Explore current offerings on the TDHCA homeownership programs page at the TDHCA website.
- Texas State Affordable Housing Corporation (TSAHC). TSAHC provides down payment assistance and special options for targeted groups such as teachers, first responders, health-care workers, and veterans, paired with conventional, FHA, USDA, or VA loans. See eligibility and products at TSAHC.
- City of Houston Housing and Community Development (HCD). The city periodically funds homebuyer assistance that can help with down payment and closing costs, often with counseling requirements. Check current availability and guidelines at the City of Houston HCD.
- Harris County programs. County-level assistance can also be available depending on funding cycles and program terms. Start with the Harris County site for announcements and links.
- Federal loan programs. FHA, VA, USDA, and low-down-payment conventional loans provide the mortgage structure you can pair with state or local assistance. For federal program basics, visit HUD for FHA, VA Home Loans for VA, and USDA Rural Development for USDA.
How assistance works
Who qualifies
Many programs follow a standard definition of first-time buyer, which typically means you have not owned a primary residence in the last three years. Some programs waive the first-time rule for targeted workers or purchases in certain areas. Income limits usually apply and are tied to the Houston-area Area Median Income (AMI), which is updated annually and varies by household size. Always confirm current income and purchase price limits before you apply.
Types of assistance
Assistance can come as a grant, a forgivable second lien, a deferred or forgivable 0 percent interest second mortgage, or a low- or zero-interest repayable second. A separate tool, the Mortgage Credit Certificate (MCC), provides a federal income tax credit for a portion of your annual mortgage interest, which can help your monthly budget and underwriting. Some programs also use funds to buy down your interest rate. The structure you choose affects both your monthly payment and what happens when you sell or refinance.
Loan type compatibility
Not every down payment assistance product pairs with every mortgage type. For example, a second-lien product might allow conventional but not VA, or it may have special rules when paired with FHA. MCCs are typically compatible with conventional and FHA financing, but program rules apply. Your lender and the program administrator will confirm which combinations are allowed.
Repayment and occupancy
Most assistance is for primary residences only. Forgivable loans typically require that you live in the home for a set period to earn forgiveness. Some assistance becomes due if you sell, transfer, or refinance before the required timeframe. Be sure you understand repayment triggers before you commit.
Education and counseling
Many state and local programs require HUD-approved homebuyer education or counseling before closing. You can find guidance and resources through HUD. Certificates are often time-sensitive, so plan your course timing to match your shopping and closing window.
Eligibility basics in Houston
Income and purchase price
Programs commonly use HUD-defined AMI for Houston to set income caps, and many set purchase price caps by county or metro. These limits change periodically and can vary by funding source. Always check the current-year limits posted by TDHCA, TSAHC, the City of Houston, or Harris County before you make an offer.
Credit, DTI, and employment
Minimum credit scores depend on your mortgage type and the lender’s guidelines. Debt-to-income (DTI) ratios are underwritten by the primary loan program, and assistance does not typically change the DTI calculation. Some programs follow lender standards, while others add their own minimums or documentation rules.
Property and occupancy
Eligible properties usually include primary residences such as single-family homes, certain condos, and townhomes, subject to program and loan guidelines. Investment properties and many short-term rentals are not eligible. Owner-occupancy is generally required for the life of the assistance or until forgiveness is earned.
Assets, gifts, and reserves
Programs specify acceptable sources for your funds, including personal savings and documented gift funds. Some may require minimum reserves or allow assistance to cover more than just the down payment, like certain closing costs. Your lender will verify sources and amounts during pre-approval.
Your step-by-step path to approval
Pre-qualification vs pre-approval vs pre-underwriting
- Pre-qualification is an early, informal estimate based on what you share with a lender. It is helpful for planning.
- Pre-approval verifies your income, assets, and credit to produce a stronger letter that sellers and programs rely on.
- Some lenders offer deeper pre-underwriting to reduce surprises later, which can be valuable in competitive Houston markets.
Documents you will need
Have these ready for a smoother process:
- Photo ID and Social Security number
- Recent pay stubs for 30 days and W-2s for the last 2 years
- Federal tax returns if self-employed
- Bank and asset statements for the last 2 months
- Proof of rent and documentation of other income where applicable
- Gift letters if funds are a gift and documentation of the source
- Authorization for a credit report
Work with participating lenders
State and local programs typically require you to use an approved or participating lender. Ask TDHCA, TSAHC, the City of Houston HCD, or Harris County for their current lender lists and choose a lender that regularly closes your target program. Experienced lenders will guide you on timing, required education, and application steps.
Timelines and funding cycles
The usual sequence is education, lender pre-approval, program and lender selection, home search and offer, DPA application submission, then underwriting and closing. Some local programs have limited funds and operate on a first-come basis. Start early to reserve funds and keep your options open if one allocation pauses or runs out.
Practical tips
- Pull your credit early and correct any errors before you apply.
- Avoid new credit accounts or major purchases before closing.
- Save for reserves and some closing costs even if you expect assistance to cover most expenses.
- Complete HUD-approved education early, and track certificate expiration dates.
Trusted Houston resources
- State programs and MCCs: TDHCA
- Targeted and workforce options: TSAHC
- City programs and updates: City of Houston HCD
- County programs and announcements: Harris County
- Income limits and counseling: HUD
- VA loans: VA Home Loans
- USDA rural housing: USDA Rural Development
Quick checklist to get started
- Confirm your first-time buyer status and find the current Houston AMI limits.
- Review your credit from all three bureaus and note your score range.
- Complete a HUD-approved homebuyer education or counseling course.
- Get a written pre-approval from a lender that participates in your target program.
- Verify that your assistance pairs with your chosen loan type.
- Gather ID, income, asset, and gift documentation.
- Follow the program’s application timing, which may require submission before or at contract.
- Ask about funding timelines, reservations, and waitlists, and consider alternatives if needed.
When to start the conversation
If you are planning to buy in Houston or nearby suburbs, early guidance can save time and stress. A clear plan for financing, assistance, and timelines helps your offer stand out and keeps your closing on track. If you want a local partner to coordinate with your lender and keep the process moving, reach out to Denise Moore to talk through your options.
FAQs
Can I use Houston down payment assistance with FHA, VA, or conventional loans?
- Often yes, but it depends on the specific assistance program. Confirm compatibility with your lender and the program administrator before you apply.
Will assistance in Houston affect my ability to sell or refinance later?
- It can. Some assistance is forgivable over time, while other assistance becomes due at sale or refinance. Review the program’s repayment and occupancy rules in detail.
What credit score do I need for first-time buyer programs in Houston?
- Minimums vary by mortgage type and lender. Many assistance programs follow the lender’s underwriting standards and may also set program minimums.
How quickly do local funds run out in Houston or Harris County?
- City and county programs can have limited allocations and often run on a first-come basis. Apply early and ask about reservation windows and waitlists.
What is a Mortgage Credit Certificate (MCC), and how does it help?
- An MCC is a federal tax credit for a portion of your mortgage interest each year, which can improve monthly affordability and help with underwriting.
Do I have to complete homebuyer education to use assistance in Houston?
- Many programs require a HUD-approved education or counseling certificate before closing, and some require it before application. Check each program’s rules and timing.
