TSAHC is Not FHA
This is the most common misunderstanding in Houston first-time-buyer searches. Buyers Google "TSAHC vs FHA" expecting two loan types to compare. They are not the same kind of thing.
TSAHC (Texas State Affordable Housing Corporation) is a state nonprofit that provides down payment assistance. TSAHC does not lend you money for the house itself. TSAHC gives you the down payment.
FHA (Federal Housing Administration) is a federal agency that insures mortgages issued by private lenders. FHA is a loan type. The lender lends the money, FHA insures the loan, and the buyer pays mortgage insurance premiums.
Combined. The typical Houston first-time buyer uses an FHA loan to finance the home (96.5 percent) and a TSAHC grant to cover the 3.5 percent down payment plus some closing costs. Two separate things, working together, originated by one TSAHC-approved lender.
How They Stack on a Houston Purchase
Example: $325,000 Houston home, FHA 96.5 percent loan-to-value, TSAHC 5 percent grant on the loan amount.
| Item | Amount |
|---|---|
| Purchase price | $325,000 |
| FHA loan (96.5%) | $313,625 |
| Down payment needed (3.5%) | $11,375 |
| TSAHC 5% grant on loan amount | $15,681 |
| Estimated closing costs (3%) | $9,750 |
| Total cash needed without TSAHC | $21,125 |
| Total cash needed with TSAHC | $5,444 |
TSAHC grant covers the full down payment and most of the closing costs. Final buyer cash depends on lender credits, seller concessions, and the InSync Bundle, which can drop the out-of-pocket figure further.
Add the InSync Bundle. When InSync handles both the home purchase and the mortgage, buyers get up to $7,500 back at closing. Stacked with TSAHC, many first-time Houston buyers close for under $2,500 of their own cash.
TSAHC Requirements
- Credit score: 620 minimum for FHA/VA/USDA pairings; 640 minimum for conventional HFA.
- Income limit: $122,100 for Harris and most Houston-area counties (2026). Higher in designated targeted areas.
- Home price limit: $445,470 maximum purchase price (Harris County 2026 figure).
- First-time status: Not required for Home Sweet Texas. Not required for Homes for Texas Heroes. Required for the MCC add-on (with veteran and targeted-area exceptions).
- Homebuyer education: Required HUD-approved online course, 6 to 8 hours, free.
- Approved lender: TSAHC works only through TSAHC-approved lenders. InSync is approved.
- Occupancy: Primary residence only. Investor properties do not qualify.
FHA Requirements
- Credit score: 580 minimum for 3.5 percent down. 500 to 579 requires 10 percent down.
- Down payment: 3.5 percent of the purchase price minimum.
- Maximum loan amount: Harris County 2026 limit is $524,225 for a single-family home.
- Mortgage insurance: Upfront MIP of 1.75 percent of the loan amount (financed into the loan), plus monthly MIP. Monthly MIP lasts the life of the loan in most cases. Refinancing out of FHA is the standard exit strategy when equity passes 20 percent.
- Debt-to-income ratio: Up to 43 percent standard; up to 50 percent with compensating factors.
- Property requirements: Must meet FHA minimum property standards. The appraiser flags safety, health, and habitability issues.
- Occupancy: Primary residence only.
When to Use TSAHC + Conventional Instead of TSAHC + FHA
FHA + TSAHC is the most common pairing because of FHA's lower credit floor and lower down payment. For buyers with 720-plus credit, conventional + TSAHC often wins long term. Here's why.
PMI removal. Conventional private mortgage insurance drops off automatically at 78 percent loan-to-value (and the borrower can request removal at 80 percent). FHA monthly mortgage insurance lasts the life of the loan in most cases. On a 30-year loan, that delta is $50 to $200 a month for 22 to 28 years.
Rate. For a 720-plus borrower, conventional HFA rates are often equal to or better than FHA rates. The mortgage insurance differential makes the math obvious.
Appraisal flexibility. Conventional appraisers do not flag minor property defects the way FHA appraisers do. Useful in older Houston housing stock (Heights, Montrose, parts of Bellaire).
| Profile | Best Pairing |
|---|---|
| FICO 620 to 679 | TSAHC + FHA |
| FICO 680 to 719 | Run both, compare APR |
| FICO 720+ | TSAHC + Conventional HFA |
| VA-eligible | TSAHC + VA (zero down) |
| Rural property | TSAHC + USDA |
Frequently Asked Questions
What's the difference between TSAHC and FHA?
TSAHC is a down payment assistance program, not a loan. It provides 4 or 5 percent of the loan amount as a grant or forgivable second lien to cover down payment and closing costs. FHA is a loan type insured by the Federal Housing Administration that allows 3.5 percent down with flexible credit requirements. TSAHC and FHA are not alternatives. Most Houston first-time buyers use both together: an FHA loan with a TSAHC grant covering the down payment.
Can I use TSAHC with an FHA loan in Houston?
Yes. TSAHC was designed to stack with FHA, VA, USDA, and conventional HFA loans. The most common Houston pairing is FHA + TSAHC: the FHA loan covers 96.5 percent of the home price, and the TSAHC grant covers the 3.5 percent down payment and most of the closing costs. Result: the buyer brings minimal cash to closing.
Is TSAHC only for first-time buyers in Houston?
No. The Home Sweet Texas Home Loan Program is open to repeat buyers who meet the income limits. The Homes for Texas Heroes program is open to teachers, firefighters, EMS, peace officers, corrections officers, veterans, and nursing faculty regardless of first-time status. The Mortgage Credit Certificate add-on is restricted to first-time buyers (with veteran and targeted-area exceptions).
What credit score do I need for TSAHC?
Minimum 620 FICO for FHA, VA, or USDA loans paired with TSAHC. Minimum 640 for conventional HFA loans paired with TSAHC. Scores between 620 and 639 on government loans carry an additional 0.25 percent in lender fees. Below 620, TSAHC is not available.
What credit score do I need for an FHA loan in Houston?
FHA allows 580 minimum FICO for the 3.5 percent down option. Scores 500 to 579 require 10 percent down. Most Houston lenders set internal overlays at 620 minimum because of investor requirements on the secondary market. To combine FHA with TSAHC, the 620 floor applies.
Is TSAHC really free money or do I have to pay it back?
Two structures. The grant option is a true grant: no repayment required, no second lien on the property. The forgivable second lien option records a small second lien that is forgiven after three years of on-time payments and continued occupancy. If you sell or refinance in the first three years, a prorated amount is repaid. Most Houston buyers select the grant option.
Can I combine TSAHC with conventional instead of FHA?
Yes. TSAHC pairs with HFA Advantage or HFA Preferred conventional loans. For buyers with 720-plus credit, the conventional pairing often beats FHA long term because conventional PMI drops off automatically at 80 percent loan-to-value, while FHA mortgage insurance lasts the life of the loan in most cases.
Get the math run on your specific income, credit, and zip code. Call 713-548-7350 or email ben@insync.homes. We respond within the hour.
Ben Helstein | NMLS# 1577314 | InSync Homes & Loans | TSAHC-Approved Lender | Equal Housing Opportunity