Houston Down Payment Assistance Programs

What Is Down Payment Assistance?

Down payment assistance (DPA) programs provide funds to help buyers cover their down payment and closing costs. These come in three forms: grants (free money that doesn't have to be repaid), forgivable second liens (loans that are forgiven after a set period if you stay in the home), and repayable second liens (loans that are repaid when you sell or refinance).

Houston has access to multiple DPA programs at the state and city level. Most buyers we work with qualify for at least one. The catch: not all lenders participate in every program. You need a lender who's approved to originate DPA loans.

Program 1: TSAHC (Texas State Affordable Housing Corporation)

TSAHC is the most popular DPA program in Houston — and for good reason. It offers the most flexibility and works for buyers who might not qualify for other programs.

How It Works

• Grant option: Up to 5% of the total loan amount. Free. No repayment, no second lien, no strings. If you're borrowing $340,000, that's up to $17,000 in grant funds.
• Second lien option: Up to 5% as a forgivable second lien. Forgiven after you remain in the home for a set period. Slightly better first mortgage rate than the grant option.

Who Qualifies

• Not limited to first-time buyers. This is the biggest misconception. If you meet income limits, you qualify — even if you currently own a home.
• Income limits vary by county and household size. For Harris County, the limits are adjusted annually by TSAHC.
• Works with FHA, VA, and conventional loans.
• Must complete homebuyer education course (free, available online).
• Property must be your primary residence.

TSAHC + FHA: The Power Combination

The most common setup we see for Houston first-time buyers:

• FHA loan with 3.5% down payment requirement
• TSAHC 5% grant covers the entire down payment
• Remaining 1.5% of TSAHC grant goes toward closing costs
• Result: You may be able to buy with minimal out-of-pocket cost

Program 2: City of Houston Homebuyer Assistance Program (HAP)

The City of Houston's HAP is one of the largest municipal DPA programs in Texas. The funding is generous, but the requirements are more specific than TSAHC.

What You Get

• Up to $30,000 in down payment and closing cost assistance
• Provided as a forgivable loan
• Forgiven over a set period if you remain in the home

Requirements

• First-time buyer only (no homeownership in past 3 years)
• Must buy within Houston city limits (not just Harris County — the actual city boundaries)
• Income limits apply based on household size and AMI
• Must complete HUD-approved homebuyer education course
• Must contribute at least 1% of purchase price from your own funds

Funding Availability

HAP funding runs in cycles and can be depleted. When funds are available, it's one of the best DPA programs in the country. We track fund availability and alert clients when new cycles open.

Program 3: TDHCA My First Texas Home

The Texas Department of Housing and Community Affairs offers the My First Texas Home program — a 30-year fixed rate mortgage with built-in DPA.

What You Get

• Up to 5% of the mortgage amount as a deferred forgivable second lien
• 30-year fixed rate first mortgage at competitive rates
• Second lien is forgiven after you remain in the home for a set period

Requirements

• First-time buyer (or haven't owned in 3 years). Exception: veterans and buyers in targeted areas.
• Income limits based on family size and county
• Purchase price limits apply
• Must be a Texas resident or buying a home in Texas

Grant vs. Loan: What's the Difference?

• Grant (TSAHC option): Free money. No repayment required. No second lien on your property. The cleanest option.
• Forgivable second lien (TSAHC, HAP, TDHCA): A loan that is forgiven after you stay in the home for a set period (typically 3-5 years). If you sell or refinance before the forgiveness period, you repay all or a portion.
• Repayable second lien: A loan that must be repaid when you sell, refinance, or pay it off. Zero interest in many cases, but it's still debt.

Real Example: Buying a $350K Home with DPA

Here's what a $350,000 purchase looks like with TSAHC + FHA:

• Purchase price: $350,000
• FHA loan amount: $337,750 (96.5% of purchase price)
• Down payment required (3.5%): $12,250
• TSAHC 5% grant: $16,887 (5% of loan amount)
• Grant covers: Full down payment ($12,250) + $4,637 toward closing costs
• Estimated closing costs: $8,000-$12,000
• Your estimated out-of-pocket: $3,363-$7,363

Add seller concessions (up to 6% on FHA) and your out-of-pocket could be even lower. Use our mortgage calculator to see your specific numbers.

How to Apply for DPA in Houston

1. Get pre-approved with a participating lender. Not all lenders offer every DPA program. We're approved for TSAHC, TDHCA, and City of Houston HAP.
2. We check your eligibility for all available programs based on your income, household size, and location.
3. Choose the best program for your situation. Sometimes TSAHC is better; sometimes HAP is better. We show you both options.
4. Complete homebuyer education. Required for most programs. Free courses available online.
5. Apply as part of your mortgage. DPA is processed alongside your loan — no separate application.

Common DPA Myths

• "I make too much money." Income limits are higher than you'd think. TSAHC limits for Houston often cover households earning $80,000-$100,000+.
• "I've owned a home before." TSAHC doesn't require first-time buyer status. HAP and TDHCA do.
• "It'll take too long." DPA adds zero time to the mortgage process. It's processed simultaneously.
• "There's a catch." Grants are grants — no repayment. Forgivable loans are forgiven if you stay in the home. The only real restriction is you must live in the home as your primary residence.

Check Your Eligibility

We check every buyer's DPA eligibility as part of our pre-approval process. It takes minutes and could save you thousands. Whether you're a first-time buyer or a repeat buyer, there may be programs you qualify for that you don't know about.

Ben Helstein | NMLS# 2544498 | InSync Homes & Loans