Texas Down Payment Assistance Programs 2026: TDHCA, TSAHC, and Local Houston Options

Texas Down Payment Assistance Programs 2026: TDHCA, TSAHC, and Local Houston Options

How Much Down Payment Help Can Texas Buyers Actually Get in 2026?

Texas first-time home buyers in 2026 have access to one of the most layered sets of down payment assistance programs in the country. Between state-level programs from TDHCA and TSAHC, the City of Houston's Homebuyer Assistance Program (HAP), the Harris County DAP, and suburb-level options in places like Pearland and Sugar Land, a qualified buyer can sometimes stack multiple sources of help to dramatically reduce the cash needed at closing. The question is not whether programs exist. The question is which ones you actually qualify for and how to combine them legally.

TL;DR: Texas buyers in 2026 can access DPA ranging from 2% to 5% of the loan amount through TDHCA's My First Texas Home program (as a 0%-interest deferred or forgivable second lien), or a direct grant through TSAHC's Homes for Texas Heroes or Home Sweet Texas programs. The City of Houston's HAP offers up to $50,000 as a forgivable loan for buyers at or below 80% of Area Median Income. Harris County's DAP has increased its maximum award to $40,000 as of November 2025. A Mortgage Credit Certificate (MCC) can layer on top of most programs, giving eligible buyers a 15% dollar-for-dollar federal tax credit on annual mortgage interest paid, capped at $2,000 per year. Worked example below shows a Spring TX buyer pulling $20,000 in DPA on a $325,000 purchase.

TDHCA My First Texas Home (MFTH): The State's Primary DPA Program

The Texas Department of Housing and Community Affairs runs three core programs that make up the foundation of the state's down payment assistance framework. My First Texas Home (MFTH) is the flagship and the one most buyers in the Houston metro will encounter first.

How MFTH Works

MFTH pairs a 30-year, below-market fixed-rate first mortgage with a second lien providing between 2% and 5% of the total loan amount for down payment and closing costs. The second lien carries 0% interest. Borrowers choose between two repayment structures:

• 30-Year Deferred Repayable: No monthly payments on the second lien. The balance becomes due when the home is sold, refinanced, or paid off.
• 3-Year Deferred Forgivable: The second lien is forgiven entirely if the borrower remains in the home and meets program requirements for three years.

Neither structure requires monthly payments during the life of the loan under normal circumstances. The forgivable option is the more aggressive choice for buyers who are confident they will stay put.

MFTH Eligibility: Who Qualifies

• First-time home buyer (no ownership in the past three years); veterans are exempt from this requirement
• Credit score of 620 or higher for FHA, VA, and USDA loans
• Completion of an approved homebuyer education course before closing
• Income must fall within TDHCA program limits updated May 27, 2025

Income Limits for Major Houston-Area Counties (MFTH, 2025/2026):

The Houston-The Woodlands-Sugar Land HMFA covers Harris, Fort Bend, Montgomery, Galveston, Chambers, Liberty, and Waller counties. Income limits for that metro area:

For comparison, the Dallas HMFA (Collin, Dallas, Denton, Ellis, Hunt, Kaufman, Rockwall) carries limits of $117,300 for 1-2 persons and $134,895 for 3+ persons. The Austin-Round Rock MSA sets limits at $133,800 for 1-2 persons, reflecting the higher median incomes in that market.

Purchase Price Limits

MFTH imposes purchase price caps on FHA/VA/USDA loans in non-targeted areas. For the Houston metro (Harris County), the government loan non-targeted area purchase price limit runs approximately $340,000 to $350,000. Buyers using Fannie Mae HFA Preferred or Freddie HFA Advantage conventional products under MFTH can access higher purchase price limits of up to $171,870 at 170% AMFI. Confirm current limits with a participating TDHCA lender, as they update periodically.

TDHCA My Choice Texas Home (MCTH): For Repeat Buyers

My Choice Texas Home from TDHCA uses the same framework as MFTH but removes the first-time buyer requirement. Repeat buyers who meet income limits can access the same 2%-5% DPA on a 30-year or 3-year forgivable second lien structure.

Key differences from MFTH: - No first-time buyer status required - No purchase price caps (follow agency guidelines) - Income limits follow FNMA 80% AMI thresholds for the county - Can still be paired with an MCC if the buyer is a veteran or first-time buyer

MCTH is particularly useful for move-up buyers who sold a prior home within the past three years and do not meet the first-time buyer definition but still fall within income limits.

TDHCA Home Sweet Texas Loan: Stand-Alone MCC Option

TDHCA also issues stand-alone Mortgage Credit Certificates (MCCs) as a companion to MFTH and MCTH. The TDHCA MCC Fact Sheet confirms that Texas MCCs provide an annual 15% federal tax credit based on the amount of mortgage interest paid each year. The credit reduces federal income tax liability dollar for dollar, up to $2,000 per year (the IRS cap that applies when the credit rate exceeds 20%).

MCC Math on a $325,000 Purchase in Spring TX:

On a $308,750 loan (after 5% down on $325,000) at a 6.75% first-year rate, annual interest would be approximately $20,840. Fifteen percent of that equals $3,126. Because the Texas MCC rate is 15%, the credit falls below the $2,000 IRS annual cap only when annual interest drops below $13,333. In early loan years, the effective tax credit is $2,000 per year. Over a 5-year hold, that is $10,000 in direct tax savings in addition to any DPA received.

MCC eligibility mirrors MFTH: first-time buyer status (with veteran exception), same income limits, and must be obtained through a TDHCA-participating lender before closing. The MCC cannot be applied retroactively.

TSAHC Homes for Texas Heroes: DPA for Public Service Workers

The Texas State Affordable Housing Corporation (TSAHC) operates two programs: Homes for Texas Heroes for qualifying public servants and Home Sweet Texas for all other eligible buyers.

Who Qualifies as a Texas Hero

TSAHC defines eligible professions broadly. Teachers and full-time public school staff (classroom teachers, teacher aides, librarians, counselors, school nurses) qualify. So do police officers, public security officers, correctional officers, juvenile corrections officers, firefighters, EMS personnel, veterans, active military, and nursing faculty and allied health faculty at accredited Texas schools.

The program is NOT limited to first-time buyers. Any hero-eligible buyer who meets income and purchase price limits can use it even after prior homeownership.

TSAHC DPA Amounts and Structures

TSAHC currently offers DPA in two forms, at the buyer's election: - Grant: Does not require repayment under any circumstances. Available at 2%, 3%, or 4% of the loan amount depending on loan type and income tier. - Deferred Forgivable Second Lien: 0% interest, forgiven after three years of owner occupancy.

As of the current TSAHC rate sheet, DPA assistance up to 5% of the loan amount is available in some structures. Minimum FICO of 620 for FHA/VA/USDA loans, 640 for conventional products. The grant option carries a slightly higher note rate than the second-lien option, reflecting the lender's cost of the unsecured grant funding.

Income Limits

TSAHC uses 125% of Area Median Family Income (AMFI) as the income threshold for both Heroes and Home Sweet Texas programs. For the Houston area in 2026, that runs approximately $99,000-$110,000 for most household sizes (based on HUD AMFI data), though buyers should verify against the current TSAHC eligibility quiz at tsahc.org. MCC income limits for TSAHC remain at 115% AMFI per federal guidelines.

Home Sweet Texas Home Loan Program

For buyers who are not in a hero profession, TSAHC's Home Sweet Texas program offers identical DPA structures and income limits. The only requirement difference is the absence of the profession-based eligibility check. This program functions as the income-based catch-all for buyers who do not qualify for TDHCA MFTH (because they are repeat buyers, for instance) and are not in a hero profession.

Both TSAHC programs pair with FHA, VA, USDA, and conventional loan products and are compatible with MCCs for first-time buyers.

City of Houston Homebuyer Assistance Program (HAP): Up to $50,000

The City of Houston's Homebuyer Assistance Program, administered by the Houston Housing and Community Development Department (HCD), is the single largest local DPA source available to buyers purchasing within Houston city limits.

Program Details

• Assistance amount: Up to $50,000 based on household financial need
• Loan structure: No-interest, forgivable loan secured by a lien
• Forgiveness: Fully forgiven after five years of owner occupancy
• Eligible uses: Down payment, closing costs, prepaid items (insurance, taxes), interest rate buydown, principal reduction
• Cannot be used for: Realtor commissions

Income Limits (80% of AMI for Houston)

HAP is income-restricted to households at or below 80% of Area Median Income. Using 2025 HUD AMI data for the Houston metro (Harris County):

Other HAP Requirements

• First-time home buyer (no ownership in past three years)
• Property must pay City of Houston taxes (within city jurisdiction, not just metro area)
• Household liquid assets must be under $30,000 at eligibility determination and at closing
• Buyer must contribute minimum $350 of personal funds
• 8-hour HUD-approved homebuyer education course required
• No credit score minimum (HCD does not review credit; the first lender does)
• DTI ratios: 33% front-end, 45% back-end

HAP 2.0 for Harvey-Affected Households

Separately, the City also operates HAP 2.0, which offers up to $125,000 for households that resided within Houston's jurisdiction on August 25, 2017 (during Hurricane Harvey). HAP 2.0 uses a higher income cap of 120% AMI and has longer affordability periods (up to 10 years depending on award size). This program is still active and accepting applications.

Harris County Down Payment Assistance Program (DAP)

For buyers purchasing in the unincorporated areas of Harris County (outside Houston city limits), the Harris County Housing and Community Development Department operates its own DAP with a recent funding increase.

PY26 Harris County DAP Details (Effective November 18, 2025)

• Maximum award: Increased from $23,800 to $40,000 as of November 2025
• Actual base award for DPA: Up to $27,100 (after deducting eligible incentives)
• Additional incentives: Home warranty up to $1,800, flood insurance $3,000, homeowner/wind/hail insurance up to $5,700, elevation certificate up to $500, HOA coverage up to $1,500
• Structure: "Silent" second mortgage; functions as gap financing
• Affordability period: Under $25,000 = 5 years; $25,000-$40,000 = 10 years
• Credit score minimum: 580
• Purchase price limits: Pre-existing home $285,000; new construction $296,000
• Income limits: Household income must qualify in a census tract at or below 200% of median income
• Location restriction: Unincorporated Harris County only (not within incorporated cities or Houston city limits)
• Liquid assets cap: $30,000

The geographic distinction matters. Harris County DAP specifically covers areas outside city limits, such as portions of Spring, Humble, Cypress, and Kingwood that are technically unincorporated. City of Houston HAP covers buyers inside Houston proper. These two programs do not overlap; a buyer qualifies for one or the other based on the property's jurisdiction.

Pearland HOPE Program and Sugar Land Homebuyer Assistance

Several Houston suburbs have historically operated independent homebuyer assistance programs, though availability and funding levels fluctuate year to year.

Pearland: The City of Pearland has administered homebuyer assistance through the HOPE (Housing Opportunities Providing Equity) framework. Buyers interested in Pearland's programs should contact the city's Community Development department directly for current funding status and application windows, as these programs often open and close based on federal HOME and CDBG allocations.

Sugar Land: Fort Bend County and the city of Sugar Land occasionally offer DPA through county-level community development programs, particularly in targeted census tracts. The Southeast Texas Housing Finance Corporation (SETH) offers its 5-Star program throughout most of the Greater Houston area (including Fort Bend County) with up to 5% of the loan amount as a forgivable community second loan, forgiven after 3 years, with a minimum FICO of 640 and a maximum purchase price of $484,350.

For buyers targeting suburbs in Fort Bend, Brazoria, or Galveston counties, TSAHC and TDHCA programs remain available, and the SETH 5-Star program is an additional option not available in Travis County or certain other excluded cities.

How to Stack DPA Programs: FHA, Conventional, and VA Combinations

The most powerful move in Texas homebuyer assistance is layering programs correctly. Not every combination is permitted, but many are.

FHA + TDHCA MFTH + MCC

FHA loans are the most common pairing with TDHCA DPA. FHA requires 3.5% down with a 580+ FICO or 10% down with a 500-579 FICO. TDHCA DPA of up to 5% can cover the 3.5% down payment and some closing costs, meaning a qualified buyer can close with minimal cash out of pocket. Stacking an MCC on top provides the $2,000/year annual tax credit for first-time buyers.

Conventional + TSAHC + MCC

Conventional 97 loans (Fannie Mae HomeReady or Freddie Mac Home Possible) require only 3% down. TSAHC's grant at 2%-3% of the loan amount can cover the down payment, with the MCC providing ongoing tax savings. This combination avoids FHA mortgage insurance premiums (MIP) for buyers who qualify and has no upfront MIP, which FHA charges (1.75% of the loan amount). On a $325,000 FHA loan, the upfront MIP is $5,687 financed into the loan; a conventional borrower avoids this cost entirely.

VA + TSAHC (Heroes)

Veterans using VA loans already have 0% down payment. TSAHC Homes for Texas Heroes DPA can be layered with VA loans to cover closing costs, funding fees, and prepaid items. Veterans are exempt from the first-time buyer rule on both TSAHC and TDHCA programs, making this available to repeat buyers as well.

What Cannot Be Combined

City of Houston HAP and Harris County DAP cannot be combined with each other (geographic exclusivity). TDHCA MFTH and TSAHC programs are typically not layered on the same transaction because each requires using its own first lien product. SETH 5-Star and TDHCA programs may conflict depending on the lender's participation agreements.

Always confirm stacking rules with the participating lender before submitting an application.

Worked Example: $325,000 Purchase in Spring TX With $20,000 DPA Stacked With FHA

Let's model a Spring, TX buyer (Harris County, ZIP 77379) purchasing a $325,000 home using TDHCA My First Texas Home at 5% DPA combined with FHA 3.5% down.

Purchase Details

How the DPA Works

FHA requires 3.5% down = $11,375. The TDHCA DPA is calculated on the first mortgage loan amount, not the purchase price. The FHA loan amount would be approximately $313,625 (after the 3.5% down payment). Five percent of $313,625 = $15,681 in DPA, which exceeds the required down payment and can be used to cover closing costs (typically 2%-3% in Texas, or $6,500-$9,750 on this transaction).

FHA MIP Costs (2026 rates)

FHA borrowers pay 1.75% upfront MIP ($5,487 on this loan, financed in) plus 0.55% annual MIP on a 30-year loan with greater than 10% LTV. On a $313,625 loan, that is approximately $143/month. FHA MIP now stays for the life of the loan on 30-year mortgages with less than 10% down.

Monthly Payment Estimate

MCC Benefit

In year 1 of the loan, interest paid is approximately $21,560. At 15% MCC credit rate, the credit is $3,234 but capped at $2,000 by IRS rules. That $2,000 reduces federal taxes owed directly, effectively lowering the real monthly housing cost by $167/month in the first year.

Net Cash to Close

With $15,681 in TDHCA DPA covering the $11,375 down payment and $4,306 toward closing costs, a buyer needs to bring the remaining closing costs (approximately $3,000-$4,500 depending on lender fees and prepaids) plus the minimum $350 personal contribution if using HAP. The total out-of-pocket can fall under $5,000 on a $325,000 purchase for a buyer who qualifies for the full program stack.

For context, this is available to buyers earning up to $101,100 (1-2 person household) or $116,265 (3+ person household) in Harris County per TDHCA income limits effective May 27, 2025.

How to Apply: Step-by-Step Process for Texas DPA

Down payment assistance in Texas is not applied for directly with TDHCA or TSAHC. Every program flows through participating lenders.

Step 1: Choose your program path

Determine which program fits your situation: MFTH (first-time buyer), MCTH (repeat buyer or veteran), TSAHC Heroes (public service), or TSAHC Home Sweet Texas (income-qualified, any profession). City of Houston HAP and Harris County DAP are applied for separately through the city/county and require their own eligibility review in parallel.

Step 2: Complete a homebuyer education course

Every state DPA program requires completion of an approved homebuyer education course. TDHCA accepts any HUD-approved course. TSAHC has its own approved provider list. The course must be completed before closing and typically runs 6-8 hours online. Cost is usually $50-$75 or free for certain hero professions.

Step 3: Get pre-approved with a participating lender

TDHCA and TSAHC only work with lenders in their approved network. The lender submits the DPA request alongside the mortgage application, structures the second lien, and coordinates with the title company. Find TDHCA lenders at welcomehome.tdhca.texas.gov. Find TSAHC lenders via the eligibility quiz at tsahc.org.

Step 4: Verify income and asset documentation

Both programs require full income documentation: W-2s, pay stubs, 2 years of tax returns, and bank statements. Income limits are based on ALL household members who will occupy the property and sign the deed of trust, including non-purchasing spouses.

Step 5: Coordinate closing with the DPA

City of Houston HAP requires its own six-week eligibility review before closing can be scheduled. Start that process 60 days before target closing. Harris County DAP similarly requires advance application through a participating lender. Plan timelines accordingly and do not go under contract without confirming DPA funding availability.

This guide covers several programs also discussed in our Texas first-time home buyer step-by-step guide and our breakdown of credit score requirements to buy a home in Texas. Understanding your full cost picture requires reading our Texas closing costs guide and our comparison of FHA vs conventional vs VA loans. Once you know your program path, the right starting point is a full pre-approval, explained in our Texas pre-approval vs pre-qualification guide.

Frequently Asked Questions

Can I use TDHCA DPA if I am not a first-time buyer?

Yes, through My Choice Texas Home (MCTH), which has no first-time buyer requirement. You must still meet income limits and work with a TDHCA-participating lender. Veterans are also exempt from the first-time buyer requirement on My First Texas Home. If you owned a home more than three years ago, you technically qualify as a first-time buyer under both TDHCA and TSAHC definitions and can access any program in this guide.

Does the TSAHC grant have to be repaid?

No. TSAHC's grant option requires zero repayment under any circumstance, including if you sell or refinance before three years. The deferred forgivable second lien option is also not repaid if you remain in the home for three years, but it must be repaid if you sell or refinance before the three-year mark. The grant carries a slightly higher first mortgage rate to reflect the lender's cost of that guarantee; the net financial difference over time is often worth calculating with your loan officer.

What credit score do I need for TDHCA or TSAHC programs?

TDHCA and TSAHC both require a minimum 620 FICO score for FHA, VA, and USDA loan types. Conventional products under these programs require 640. The City of Houston HAP has no credit score minimum (their underwriting is based on DTI ratios rather than credit score), though your first lender will still have its own minimum, typically 580 for FHA. Harris County DAP has a 580 minimum.

Can I use down payment assistance on a new construction home in Texas?

Yes, but with conditions. TDHCA MFTH and MCTH allow new construction purchases, and TSAHC programs are also available for new builds. Harris County DAP allows new construction up to $296,000. City of Houston HAP permits new construction but the property must pay City of Houston taxes. The appraisal requirement (sales price cannot exceed appraised value) is enforced on all programs, and builder incentives like closing cost credits must be disclosed to and approved by the program lender.

What happens if I sell or refinance early after using DPA?

For TDHCA's 30-year deferred second lien, the full balance becomes due at payoff, refinance, or sale. For the 3-year forgivable, any sale or refinance before the three-year mark requires repayment of the DPA in full. City of Houston HAP has a pro-rated repayment formula for moves before five years: if you sell at year three, you repay 40% of the original assistance. After five years, the lien is fully forgiven. Harris County DAP uses similar pro-rated structures based on award size (5-year or 10-year affordability periods).

How long does the City of Houston HAP eligibility process take?

HCD states the eligibility review takes up to six weeks from the date of a complete application submission. Incomplete applications do not start the clock. A buyer who needs HAP funding at closing must begin the application process at least 60 days before the target closing date, ideally 75-90 days to allow for any documentation follow-up. The program operates on a first-come, first-served basis subject to funding availability, and HAP can run out of funds before the end of a fiscal year. Confirm availability before going under contract.

Talk to Erick Harbert About Your DPA Options in Spring and Houston

Matching the right down payment assistance program to your specific situation requires knowing the details of your income, loan type, property location, and timeline. Erick Harbert and the Harbert Real Estate Group at Realty Right work with buyers across Harris County, Fort Bend, Montgomery, and the broader Houston metro to identify which programs you qualify for and how to sequence the application process to protect your deal.

Erick Harbert
Harbert Real Estate Group at Realty Right
6605 Cypresswood Dr Ste 300, Spring TX 77379
Phone: (281) 305-2520
Email: [email protected]
Website: harbertgroup.com

Call or email today to discuss which 2026 DPA program fits your purchase and get a full pre-approval review. Funding is limited and first-come, first-served on most local programs.