Down Payment Assistance Programs Buyers Miss in Texas

Two assumptions stop most buyers from ever looking into down payment assistance. Either "that's for people who can't really afford a house," or "I probably make too much to qualify." Both are usually wrong. Some of these programs allow household income up into the six figures, several have no first-time buyer requirement at all, and one city-specific program here in Austin is worth more than four times what most people assume the maximum is. So let's go through what's actually available in Central Texas — state programs, a county program almost nobody's heard of, a city program worth checking before anything else, and a couple of geographic quirks that only apply depending on exactly where you're buying.

The two state programs, and why the difference matters

The Texas Department of Housing and Community Affairs runs two separate loan programs, and most people only ever hear about one of them. My First Texas Home is for first-time buyers, or anyone who hasn't owned a home in the last three years, and provides up to 5% of your loan amount as down payment assistance, structured as a 0% interest second lien that's deferred — no payments — until you sell, refinance, or pay off the first mortgage.

The one people miss is My Choice Texas Home. Same 5% assistance structure, same deferred 0% interest second lien, but there's no first-time buyer requirement at all. If you've owned a home before, you were never automatically excluded from Texas down payment assistance — you were just excluded from the one program that gets talked about.

Both require roughly a 620 minimum credit score, and income limits vary by county — for most Texas counties that's somewhere around $97,000 for a one or two person household and $111,550 for three or more, though high-cost metro counties can run higher. That's a lot more room than most people assume when they hear "income-restricted."

The tax credit that isn't cash, and almost nobody sets up correctly

The Mortgage Credit Certificate, or MCC, gets confused with down payment assistance constantly, and it's actually a completely different mechanism. It's not money at closing. It's a federal tax credit, worth a percentage of the mortgage interest you pay every year — commonly 15% here in the Austin area — capped at $2,000 a year, for as long as you hold the loan and live in the home. Over a 30-year loan, that can add up to tens of thousands of dollars, and it stacks with a TDHCA loan.

Here's the part that trips people up: the MCC has to be set up before closing, as part of your loan file. If you bring it up after your closing documents are already prepared, most lenders can't add it retroactively. Ask about it the same day you apply for pre-approval, not the week before you close.

TSAHC: one program most people qualify for even without a badge

The Texas State Affordable Housing Corporation runs Homes for Texas Heroes, which most people have at least heard of — it covers teachers, teacher aides, school counselors, school nurses and librarians, police officers, firefighters, EMS personnel, corrections officers, and veterans, with up to 5% of your loan amount as an outright gift. No repayment, ever.

What almost nobody knows is that TSAHC has a second program, Home Sweet Texas Home Loan Program, with the same structure and the same up-to-5% assistance — and no profession requirement whatsoever. It's purely income-based. If you don't work in one of the Heroes-eligible professions, you likely still qualify for something through TSAHC; you've just never been told about the program that doesn't require a badge or a classroom. Both TSAHC programs want a 620 minimum credit score, and if you do qualify for Homes for Texas Heroes and pair it with the MCC, TSAHC will often waive the MCC fee entirely — a benefit worth roughly $500 that most Heroes-eligible buyers never claim because nobody mentions it.

The one worth checking first if you're buying in Austin

The Austin Housing Finance Corporation runs a down payment assistance program that dwarfs every state program on this list: up to $40,000. Not 5% — $40,000, as a 0% interest, deferred second lien, repaid only when you sell, refinance, or stop using the home as your primary residence. The tradeoff is that it's income-restricted to households at or below 80% of Austin's median family income, and it's limited to first-time buyers, with an exception for buyers who've been displaced or divorced. It's also limited to homes within Austin city limits specifically — not the broader metro. If you're income-eligible and buying in Austin proper, this should be the first program you ask your lender about, before any of the statewide options.

The Travis County program almost nobody mentions

Separately from the City of Austin, Travis County itself runs the Hill Country Home Down Payment Assistance Program through the Travis County Housing Finance Corporation, and it's genuinely underused. It applies anywhere in Travis County, including inside Austin city limits, works with FHA, VA, USDA, or Freddie Mac HFA Advantage financing, and offers 4%, 5%, or 6% of your loan amount as assistance — net of a lender program fee, so the real number typically lands around 2.5% to 4.5%. It's structured as a 0% interest second mortgage that's fully forgiven after just 10 years, not 30. And there's no first-time buyer requirement.

The income limit is genuinely generous — up to 140% of area median income, which currently runs around $138,460. That's the kind of number that surprises people who assumed they'd earned their way out of eligibility for anything. The real limitation is the purchase price cap, currently $364,452, which rules out a lot of homes at today's Austin-area median. This program tends to make the most sense for condos, townhomes, or homes in the more affordable pockets of the county — worth checking specifically against whatever you're actually shopping for, rather than assuming it applies or assuming it doesn't.

If you're buying in Round Rock, Cedar Park, Georgetown, Leander, or Pflugerville

Here's a geographic quirk worth knowing: the Southeast Texas Housing Finance Corporation's 5 Star Texas Advantage Program offers up to 5% in down payment and closing cost assistance, works with FHA, VA, USDA, or conventional financing, has no first-time buyer requirement, and gives you a choice between a 3-year forgivable structure or a 30-year deferred, no-interest option. But it's explicitly not available inside Travis County. If you're buying in Austin proper, this one's off the table — but if you're buying in Williamson County, in cities like Round Rock, Cedar Park, Georgetown, Leander, or Pflugerville, it's a real option that a lot of local buyers never hear about simply because so much down payment assistance content is written Austin-first and stops there.

The zero-down option hiding in plain sight

USDA loans offer 100% financing — genuinely zero down payment — but only for properties in USDA-eligible areas, which are determined by an address-specific map, not by city name. What surprises people is how close to Austin some eligible pockets actually are — parts of Lago Vista and Jonestown, for example, fall within eligible areas, along with other more rural stretches of the cities we work in. Eligibility is drawn at the property level, so two homes a few streets apart can land on opposite sides of the line. If a USDA loan is even a possibility for where you're looking, it's worth checking the specific address on the USDA eligibility map before you rule it out — or before you assume it applies.

Putting it together

You generally can't stack multiple down payment assistance programs on the same loan — you pick one qualifying first mortgage program and go with it — but the Mortgage Credit Certificate is designed to pair with most of these, so it's worth asking about regardless of which path fits. And which programs are even on the table depends heavily on exactly where you're buying: an Austin condo buyer, a Round Rock buyer, and a Lago Vista buyer are looking at three different lists. The short version: don't assume you're priced out, don't assume you make too much, and don't assume the program you heard about from a coworker is the only one that exists. Ask your lender specifically which of these they can originate — not every lender participates in every program — and go in knowing which ones actually apply to you before you start shopping.