Texas Down Payment Assistance Programs 2026: TSAHC, TDHCA, City Programs Complete Guide

Texas Down Payment Assistance Programs 2026: TSAHC, TDHCA, City Programs Complete Guide

How Much Free Money Can a Texas Homebuyer Actually Get in 2026?

The answer surprises most buyers: thousands of dollars in grants and forgivable loans are sitting unclaimed every month across Harris, Fort Bend, Montgomery, and Brazoria counties. Six overlapping programs exist at the state and city level right now, and some can be combined. A qualified buyer purchasing a $300,000 home in Houston could walk away with $15,000 or more in down payment and closing cost assistance without repaying a dollar, provided they meet the residency requirement and avoid the common refinance pitfall.

TL;DR: Texas offers down payment assistance through TSAHC (up to 5% grant for Heroes or low-to-moderate income buyers), TDHCA (My First Texas Home with 2-5% second lien, and My Choice Texas Home for repeat buyers), the City of Houston HAP (up to $50,000 forgivable), Harris County DPA (up to $40,000), and the NACA program (zero down, below-market rate). Income limits for Harris County top out around $101,100 under TDHCA's My First Texas Home for 2026. FICO minimums run 620-640 depending on program and loan type. Grant programs do not require repayment; forgivable liens do require repayment if you sell or refinance before the program's recapture window closes.

Program 1: TSAHC Homes for Texas Heroes

The Texas State Affordable Housing Corporation runs the Homes for Texas Heroes program specifically for public servants. Eligible professions include pre-K through 12th grade teachers, teacher aides, school librarians, school nurses, and school counselors; police officers and correctional officers; firefighters and EMS personnel; and veterans and active-duty military members. The inclusion of corrections officers is frequently overlooked, and it matters for buyers at units like the Harris County Jail or the Texas Department of Criminal Justice facilities in the greater Houston region.

What Heroes get:

TSAHC offers down payment assistance equal to 5% of the loan amount. The buyer chooses between two structures at application:

• Grant: The full 5% is a true gift. No lien is recorded and no repayment is ever required regardless of when you sell or refinance.
• Deferred forgivable second lien: The 5% is placed as a second mortgage at 0% interest, forgiven entirely if you remain in the home (or at least do not sell or refinance) for three years from closing.

The grant option carries a slightly higher first-mortgage interest rate than the forgivable lien option, because the lender absorbs the grant cost through the rate. For buyers who expect to hold the home for more than three years, the forgivable lien path almost always produces a lower total cost of ownership.

MCC stacked on top: Teachers, firefighters, EMS, police, corrections officers, and veterans who qualify for Heroes also receive a Mortgage Credit Certificate at no additional charge. The TSAHC MCC page shows the current credit rate at 15% of annual mortgage interest paid, returned as a dollar-for-dollar federal tax credit each year for the life of the loan. On a 30-year mortgage at $300,000, that credit typically runs $1,200 to $1,800 per year in the early high-interest years. TSAHC's stand-alone MCC was discontinued in 2024; the MCC is now only available bundled with DPA.

FICO and income: Minimum FICO is 620 for FHA, VA, and USDA loans. Conventional loans (Freddie HFA Advantage or Fannie HFA Preferred) require a 640. Borrowers with FICOs between 620 and 639 on government loans pay an additional origination fee of 0.25% on top of the standard 1% origination fee. Income limits follow TSAHC's county-by-county tables, set at 125% of the area median family income (AMFI) for Heroes and Home Sweet Texas, with MCC limits staying at 115% AMFI per federal rules. For 2026 Harris County, that means roughly $115,000 to $125,000 depending on household size and targeted-area status.

Purchase price: TSAHC's Heroes and Home Sweet Texas programs carry no hard purchase price cap on non-bond products. The income limit indirectly limits buying power by capping what the qualifying income can support at today's rates.

Program 2: TSAHC Home Sweet Texas

Home Sweet Texas is TSAHC's income-based program open to any Texas homebuyer who is not a public servant covered under Heroes. It offers identical DPA mechanics: 5% of the loan amount as either a true grant or a three-year forgivable second lien, paired with a 30-year fixed-rate first mortgage. The FICO floor is the same: 620 for government loans, 640 for conventional. Income limits sit at 125% AMFI and vary by county.

Home Sweet Texas does not require first-time homebuyer status unless the borrower wants to stack the MCC. The MCC is available to first-time buyers only (or veterans and buyers in federally designated targeted census tracts, who are exempt from the FTHB test). Buyers who previously owned a home and sold more than three years ago generally qualify; buyers who sold within three years cannot access the FTHB programs but can still use Home Sweet Texas for the DPA itself.

For a household in non-targeted Harris County at median income, the current eligible range runs from approximately $71,000 to $97,000 depending on family size, with expanded limits in targeted census tracts. The TSAHC eligibility quiz routes buyers to the applicable program in minutes based on their county, profession, income, and FICO.

Program 3: TDHCA My First Texas Home

The Texas Department of Housing and Community Affairs runs My First Texas Home (MFTH), a bond-funded program aimed exclusively at first-time homebuyers. The program provides a 30-year fixed-rate first mortgage paired with a second lien for down payment and closing cost assistance. Key mechanics for 2026:

Assistance range: 2% to 5% of the total loan amount as a second lien. That second lien is either a 30-year deferred repayable loan (0% interest, no required payments until you sell, refinance, or the 30-year term ends) or a 3-year deferred forgivable loan (fully forgiven at the 36-month anniversary if you remain current on the first mortgage and the property is still your primary residence).

Income limits (2026, effective February 12, 2026):

The 115% AMFI limit for one-to-two person households in the Houston metro reaches $116,265. The 120% AMFI limit for three-or-more-person households reaches $121,320. Targeted area purchases can use a 140% AMFI cap of $141,540.

Purchase price caps: The non-targeted purchase price limit for a 1-unit property in the Houston-The Woodlands-Sugar Land HMFA (including Harris, Fort Bend, Montgomery, and Waller counties) is $544,232 for 2026. Targeted-area purchases can go up to $665,173. These are meaningful caps for the Houston metro: they cover nearly the entire active MLS inventory.

First-time homebuyer rule: MFTH requires that no borrower on the loan has owned and occupied a primary residence in the last three years. Veterans are fully exempt from this rule, which is the same exemption structure TSAHC uses.

Compatible loan types: FHA, VA, USDA, and conventional (Freddie HFA Advantage, Fannie HFA Preferred). The bond product cannot be combined with TDHCA's MCC (they are funded by the same bond allocation). Buyers who want an MCC must use the TSAHC programs or a separate MCC allocation.

TDHCA MCC: TDHCA issues its own Mortgage Credit Certificate at a 20% credit rate on annual mortgage interest paid, per the TDHCA MCC trifold. This differs from TSAHC's 15% rate. TDHCA's MCC is available as a stand-alone option for first-time buyers who source their own first mortgage outside the bond program. A buyer with a $280,000 loan paying roughly $16,000 in interest in year one would receive a $3,200 tax credit under a 20% MCC, capped at $2,000 per year under IRS rules.

Program 4: TDHCA My Choice Texas Home

My Choice Texas Home opens TDHCA's DPA to repeat buyers who do not meet the first-time homebuyer test. The DPA structure is identical: 2% to 5% assistance on the total loan amount, available as a 30-year deferred repayable second lien or a 3-year forgivable lien. The critical difference is income: MCTH uses standard lender income calculation (the 1003 qualifying income) rather than AMFI-based limits, so higher-income move-up buyers can access the program as long as they qualify for the mortgage. No purchase price caps apply; buyers follow agency guidelines for the first-mortgage product.

MCTH cannot be combined with an MCC and does not work with Harris County HFC layering or certain combo loan structures. A participating TDHCA lender can confirm eligible stacking options before application.

Program 5: City of Houston Homebuyer Assistance Program (HAP)

The City of Houston's Housing and Community Development Department runs the Homebuyer Assistance Program, which provides up to $50,000 in forgivable assistance for income-qualified buyers purchasing within the city limits of Houston. As of 2026, the program is structured as a zero-interest forgivable loan secured by a lien. The loan is fully forgiven if the buyer lives in the home as a primary residence for five years. Selling, renting, or vacating before five years triggers prorated repayment.

Eligibility in 2026:

• U.S. citizen or permanent resident (applies to co-applicant and spouse)
• First-time homebuyer or no ownership of a primary residence in the prior three years
• Household income at or below 80% of the Houston Area Median Income
• Property must pay taxes to the City of Houston (not just the Houston metro)
• Minimum $350 personal contribution toward the transaction
• Debt-to-income ratios: 33% front-end, 45% back-end maximum

Income limits at 80% AMI (approximate 2026 figures):

Eligible uses: Down payment, prepaid items (homeowner's insurance, mortgage interest, property taxes), and reasonable closing costs. Realtor commissions are not eligible.

Harvey HbAP 2.0 track: For buyers who resided in Houston during Hurricane Harvey in 2017, a separate track called Harvey HbAP 2.0 offers up to $125,000 in assistance with income eligibility up to 120% AMI. Forgiveness timelines vary by award amount: 5, 8, or 10 years depending on size. This track has limited funding and goes quickly; check current availability with participating lenders.

The city HAP requires a homebuyer education course and working through a participating lender. Direct applications to the city are not accepted.

Program 6: Harris County Down Payment Assistance

Harris County operates a separate DPA program through the Harris County Housing and Community Development Department. As of November 18, 2025 (Program Year 26), the county increased its maximum award from $23,800 to $40,000. Income qualification uses 80% AMI thresholds, with an asset cap of $30,000 in liquid assets at both eligibility determination and at closing.

The $40,000 maximum is not all cash to close. It includes bundled benefits the county pays directly:

• Home warranty: up to $1,800 (3-year term)
• Flood insurance: up to $3,000 for 1 year
• Homeowner's insurance including wind and hail: up to $5,700 for 1 year
• Elevation certificate, if applicable: up to $500
• HOA coverage: up to $1,500 for 1 year
• Harris County title policy: $125 to $400

After deducting those bundled amounts, the actual base award available for down payment, prepaids, and closing costs is approximately $27,100. The period of affordability is 5 years for awards under $25,000 and 10 years for awards between $25,000 and $40,000. Harris County's program covers properties inside county jurisdiction (unincorporated Harris County and some incorporated cities) that do not receive the City of Houston HAP.

Program 7: NACA Path

The Neighborhood Assistance Corporation of America offers a fundamentally different structure compared to every program above. NACA's mortgage carries no down payment requirement, no closing costs, no mortgage insurance, no origination fees, and no minimum credit score. The underwriting model evaluates payment history and income stability rather than traditional FICO scores.

As of mid-2025, NACA's below-market rates for priority members were 5.25% (30-year), 4.75% (20-year), and 4.50% (15-year). Non-priority members pay higher: 6.25% (30-year). Priority status is assigned to low-to-moderate income buyers and to buyers purchasing in low-to-moderate income census tracts.

The trade-off is process length. NACA requires attendance at a free Homebuyer Workshop (the first step), then a financial counseling session with a NACA counselor who builds a detailed budget and assigns an action plan. Qualification can take 3 to 12 months depending on the buyer's financial situation. Bank of America funds $15 billion of NACA's mortgage pool. The NACA Houston office at 4101 Greenbriar Dr handles local closings; buyers should plan for at least 45 days to close after contract execution, often 60-90 days for properties with repair requirements.

NACA works well for buyers who are credit-challenged due to medical debt or past hardships but have stable income and a strong payment history. It does not work well for buyers who need to close quickly on a competitive offer.

Grant vs. Forgivable Lien vs. Repayable Second: Understanding the Three Structures

These three structures appear across every program above, and confusion between them is the most common source of buyer regret after closing.

The forgivable lien structure is the right choice for almost every buyer who intends to stay more than three years. The key pitfall: refinancing before the forgivable term expires (typically three years for TSAHC and TDHCA programs, five years for Houston HAP, and 5-10 years for Harris County) triggers full or prorated repayment of the assistance. Rate-and-term refinances, cash-out refinances, and assumptions all qualify as "refinancing" under most program documents. A buyer who locks in at 7%, receives a $15,000 forgivable lien, and then refinances at 5.5% in year two will owe back the full $15,000 at closing.

Stacking DPA with FHA, VA, USDA, and Conventional Loans

All of the major DPA programs above pair with government-backed first mortgages. The 2026 FHA loan limit for Harris County is $524,225. VA and USDA loans carry no hard limit (VA) or are restricted to eligible rural areas (USDA). Conventional HFA products from Freddie Mac (HFA Advantage) and Fannie Mae (HFA Preferred) work with both TSAHC and TDHCA programs at the 640 FICO floor.

Key stacking considerations:

• FHA + TSAHC Heroes: Most common combination in Houston for income-qualifying teachers and police officers. FHA allows down payment from secondary sources (the DPA). The TSAHC second lien (forgivable or grant) covers the entire 3.5% FHA minimum plus a portion of closing costs.
• VA + Heroes: Veterans can use the Heroes grant to cover VA funding fees (2.15% for first use, 3.3% for subsequent use on a non-exempt borrower), closing costs, and any impounds. VA's zero-down structure means the Heroes assistance goes entirely toward closing costs and rate buydowns.
• USDA + Home Sweet Texas: Buyers in eligible rural areas (parts of Liberty, Chambers, Waller, and rural Montgomery County) can combine USDA's zero-down structure with the TSAHC 5% grant to cover closing costs and prepaid items. USDA property eligibility maps for the Houston metro have been updated for 2025-2026; verify addresses at the USDA eligibility portal before relying on this combination.
• Conventional + MCC: Buyers above the FHA limit or those avoiding mortgage insurance can use an HFA Preferred or HFA Advantage conventional loan with TSAHC DPA plus an MCC. The conventional option requires 640 FICO and at or below 80% AMFI for the lower-rate tier.

Worked Example: $300,000 Houston Purchase, First-Time Buyer, Teacher

Buyer profile: 5th-grade teacher at a Spring Branch ISD school (HISD also qualifies). Annual income: $62,000. Household size: 2 (buyer and spouse). FICO: 648. Prior homeownership: none.

Program selected: TSAHC Homes for Texas Heroes, FHA first mortgage, forgivable second lien DPA, MCC.

At $62,000 gross income ($5,167/mo), the front-end DTI is approximately 51.7% before the MCC. With the MCC reducing the effective payment, the qualifying front-end figure drops to around 48.8%. TSAHC's participating lenders are allowed to underwrite using the MCC-adjusted qualifying income under FHA guidelines, which can make the difference between qualifying and not.

At the three-year mark (36 months from closing), the $15,000 forgivable lien is discharged automatically. If the buyer sells before that date, the full $15,000 is owed back at closing.

The Forgivable Lien Recapture Pitfall in Detail

Every year, homebuyers who accepted forgivable lien assistance receive a payoff demand they were not expecting. The most common scenarios:

Scenario 1: Rate-and-term refinance at month 28. Rates drop. The buyer's lender calls with a quote that saves $200/month. The buyer signs. At closing, the title company pulls the second lien payoff and adds $15,000 to the closing statement. The net benefit of the refi is eliminated.

Scenario 2: Cash-out refinance for home improvements. Same mechanic. The lien triggers immediate repayment whether the refinance is rate-and-term or cash-out.

Scenario 3: Divorce and property transfer. A quitclaim deed transferring ownership from two names to one is treated as a transfer under most DPA lien documents and can trigger repayment.

How to protect yourself: Read the deed of trust for the second lien before closing. Confirm the exact forgiveness date with the program servicer. If rates drop significantly in year two, calculate whether the monthly savings from the refi outweigh the lien payoff. In most cases at amounts of $10,000 to $15,000, the math favors waiting.

TSAHC's forgivable second lien term is three years. TDHCA My First Texas Home's 3-year forgivable lien has the same structure. Houston HAP forgiveness is five years. Harris County DPA is 5-10 years depending on award size.

Frequently Asked Questions

Can I use TSAHC Heroes assistance if I am a veteran but not currently teaching or serving?

Yes. Veterans are specifically included in the Homes for Texas Heroes eligibility list regardless of current employment status. An honorably discharged veteran who now works in the private sector still qualifies for the Heroes DPA and receives the MCC at no charge. The only requirements are the FICO minimum (620 for FHA, VA, or USDA; 640 for conventional), the income limit (125% AMFI for the Heroes program), and that the property becomes the primary residence.

Do TSAHC and TDHCA programs compete, or can they be combined?

They are separate programs offered by separate agencies and generally cannot be combined on the same transaction. You choose one first-mortgage lender and one DPA source. However, TDHCA's My First Texas Home bond program can be combined with a separately issued MCC from another authority (such as a local housing finance corporation), and Harris County HFC assistance can layer onto certain TDHCA products, as specified in TDHCA's matrix. A TDHCA-approved participating lender will clarify which combinations are live for your specific transaction.

What happens to the TDHCA second lien if I refinance after seven years?

TDHCA My First Texas Home offers both a 30-year deferred repayable second lien and a 3-year forgivable second lien. If you chose the 30-year deferred repayable structure, the balance is due in full whenever you sell, refinance, or reach the 30-year maturity date. There is no forgiveness with the repayable option. If you chose the 3-year forgivable and you are past the 36-month mark, the lien has already been discharged and does not appear in your refinance title work. Confirm the discharge was recorded with TDHCA's servicer before your refi closes.

Can a self-employed buyer qualify for TSAHC or TDHCA programs?

Yes. Self-employment income is acceptable under both TSAHC and TDHCA programs using standard FHA or conventional underwriting income documentation: two years of personal and business tax returns, a year-to-date profit and loss statement, and verification that the business has been operating for at least two years. NACA is particularly accommodating of self-employed buyers and looks at 12 months of bank statements in addition to tax returns. Self-employed buyers should expect a longer underwriting timeline and prepare documentation early.

Is the Homes for Texas Heroes DPA available for new construction?

Yes, both TSAHC and TDHCA programs are available for new construction purchases. The property must meet the same occupancy and income limit requirements. Builder-offered incentives (closing cost credits, design center allowances) can generally be layered on top of DPA assistance, subject to FHA or conventional guidelines on total seller contributions. Note that some builders use preferred lenders and may not participate in TSAHC or TDHCA programs; confirm before contracting.

What credit score is required for the Houston HAP and can I use it with FHA?

Houston HAP does not specify a minimum FICO score in its published program guidelines, as eligibility is primarily income-based. The practical floor is set by the first-mortgage lender rather than the city program. An FHA-backed first mortgage requires a minimum 580 FICO for the 3.5% down payment tier (500-579 FICO requires 10% down). Houston HAP is compatible with FHA, VA, USDA, and conventional first mortgages as long as the property is within the City of Houston's tax jurisdiction and all other eligibility criteria are met.

Start Your Houston Down Payment Assistance Application with Harbert Real Estate Group

The programs above are all real, currently funded, and available for qualifying buyers in the Houston metro today. The challenge is navigating which program stacks with which loan type, which income limit applies to your household, and whether the forgivable lien term works with your expected timeline. That analysis takes 30 minutes with an experienced agent and the right participating lender.

Erick Harbert at The Harbert Real Estate Group at Realty Right has guided dozens of first-time buyers and Heroes through the TSAHC and TDHCA qualification and closing process in Harris, Fort Bend, Montgomery, and Brazoria counties. He works directly with participating lenders who have active allocations in the current program year.

Reach out before you start searching:

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

You can also read related guides on the Harbert Group blog:

• Texas Homestead Exemption and Property Tax Guide 2026
• FHA vs. Conventional Loans in Texas 2026: Which Is Right for You
• Texas VA Home Loan Benefits and Funding Fees 2026
• First-Time Buyer Checklist for Houston 2026