Texas Down Payment Assistance Programs 2026: Who Qualifies and How Much You Get

Texas Down Payment Assistance Programs 2026: Who Qualifies and How Much You Get

Can a Texas Buyer Really Get a Home with Little to No Out-of-Pocket Down Payment?

The answer is yes, and more buyers qualify than they think. Texas has one of the strongest networks of down payment assistance (DPA) programs in the country, and in 2026 several of those programs have expanded income limits, increased award caps, and simplified qualification requirements. Whether you are a teacher, a veteran, a healthcare worker, or simply a working Texan who has never owned a home (or has not owned one in the past three years), there is almost certainly a program designed for your situation.

TL;DR: In 2026, Texas buyers in Harris County can access up to 5% of their loan amount as a non-repayable grant through TSAHC or SETH programs, with income limits up to $122,100 for any household size. The City of Houston's Homebuyer Assistance Program now offers up to $50,000, and Harris County's Down Payment Assistance Program increased its maximum award to $40,000 effective November 2025. Stack a grant with an MCC tax credit and a $300,000 purchase in Spring TX can yield $15,000 upfront plus roughly $900 per year in federal tax savings.

TSAHC: Homes for Texas Heroes and Home Sweet Texas (The Statewide Workhorses)

The Texas State Affordable Housing Corporation (TSAHC) runs two programs that together cover virtually every Texan who meets basic income and credit benchmarks.

Homes for Texas Heroes is restricted to specific professions: public school teachers and teacher aides (pre-K through grade 12), police officers and peace officers, firefighters and EMS personnel, corrections officers, county jailers, veterans of any military branch, and nursing faculty. If your household includes any of these professions, the Heroes program unlocks DPA plus a free Mortgage Credit Certificate (MCC) that can further reduce your federal tax bill by 15% of annual mortgage interest paid.

Home Sweet Texas opens the same pool of assistance to any Texas buyer who meets income and credit requirements, regardless of profession.

Both programs share these 2026 parameters:

• Assistance amount: 2%, 3%, 4%, or 5% of the total first mortgage loan amount (borrower chooses the level)
• Grant option: Non-repayable after six months from closing; available with FHA, VA, and USDA loans
• Forgivable second lien option: 0% interest, no monthly payments, fully forgiven after the third anniversary of closing; available with all loan types including conventional
• Credit score minimum: 620 for FHA/VA/USDA; 640 for HFA conventional
• Income limit (Harris County, 2026): $122,100 for any household size
• Purchase price limit: Approximately $472,030 in Harris County for 2026 (FHA conforming loan limit)

One of the most persistent myths in Texas real estate is that DPA is only for low-income buyers. TSAHC's income ceiling reflects up to 125% of the Area Median Family Income (AMFI). A dual-income household with two mid-career professionals, a teacher married to an engineer, can both qualify without issue. Check the TSAHC eligibility quiz at tsahc.org before assuming you earn too much.

TDHCA My First Texas Home: The Deferred-Loan Path

The Texas Department of Housing and Community Affairs (TDHCA) administers My First Texas Home, the state's flagship mortgage-plus-DPA program for first-time buyers and buyers who have not owned a primary residence in the past three years.

Key program parameters for 2026:

• Loan type: 30-year fixed-rate mortgage (no adjustable-rate product)
• Assistance structure: 0% interest deferred second lien; repayment triggered only upon sale, transfer, refinance, or loss of primary-residence status
• Assistance amount: Up to 5% of the total loan amount
• Minimum FICO score: 620 (manual underwriting available for VA and USDA loans with a 45% max DTI; no manual underwriting on FHA under this program)
• Maximum DTI: 45% for VA and USDA; standard agency guidelines for FHA and conventional
• Fees: $319 compliance review fee; $225 for the lender to TDHCA; $400 MCC issuance fee (if applicable)

TDHCA also offers My Choice Texas Home, which eliminates the first-time-buyer requirement. Income limits and purchase price limits apply to both programs and vary by county. The TDHCA assistance is a deferred loan rather than an outright grant, which is the core distinction from TSAHC or SETH. You will eventually repay it when you sell or refinance, but since there is no interest accruing, the real cost is negligible compared to the years of equity growth the program enables.

Harris County Housing Finance Corporation (HCHFC) offers supplemental "bonus money" on top of TDHCA products for buyers in qualifying areas of Harris County, provided you combine it with a TDHCA mortgage product. Contact harriscountyhfc.org to check current funding availability, as these bonus pools are first-come, first-served.

SETH 5 Star Texas Advantage: No First-Time Buyer Requirement, $3,500 MCC Add-On

The Southeast Texas Housing Finance Corporation (SETH) operates the 5 Star Texas Advantage program, which covers Harris, Fort Bend, Montgomery, Galveston, Brazoria, Waller, Chambers, Liberty, and surrounding counties.

2026 highlights:

• Assistance: Up to 5% of the loan amount, delivered as a grant or forgivable second lien
• No first-time buyer requirement (unlike TDHCA's primary product)
• Minimum FICO: 640
• Income limit (Harris County 2026): $122,100 for all household sizes
• No maximum sales price cap under this program (buyers must still qualify for the underlying mortgage)
• MCC add-on: SETH offers an additional $3,500 grant when you combine the 5 Star program with the SETH MCC Program; note that the SETH MCC is only available in Austin, Brazoria, Chambers, Liberty, Matagorda, Walker, Waller, Wharton counties, and certain cities (Baytown, Deer Park, Dickinson, La Marque, La Porte, Pasadena, Santa Fe, Texas City, and Tomball)
• Homebuyer education: Required; must complete the online SETH Homebuyer Education Class

SETH is particularly valuable for repeat buyers, move-up buyers, or anyone who previously owned a home more recently than three years ago (and thus might not qualify for first-time-buyer-restricted programs like TDHCA My First Texas Home or the City of Houston HAP). The grant option makes SETH functionally identical to TSAHC for FHA and VA borrowers, while the $3,500 MCC add-on available in certain counties gives it a leg up in those specific markets.

More information is available directly at sethfc.com.

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

For buyers purchasing inside Houston city limits, the City of Houston's Homebuyer Assistance Program offers one of the most generous awards in the metro.

2026 parameters:

• Maximum award: Up to $50,000, structured as a no-interest forgivable loan secured by a lien on the property
• Forgiveness period: 5 years of primary residency forgives the full amount
• Income limit: 80% of Area Median Income. For a family of four in Houston, approximately $72,650; for a single person, approximately $50,850
• Credit score: Not required by the City program (unusually, the City of Houston does not pull credit scores for HAP eligibility); buyer must still qualify through a participating lender
• First-time buyer requirement: Yes (must not have owned a home in the last 3 years)
• Liquid assets cap: Must have less than $30,000 in liquid assets at the time of eligibility determination and at closing
• Minimum buyer contribution: $350 toward the transaction (inspection, appraisal, or down payment)
• Property location: Home must be inside Houston city limits and pay Houston city taxes

The City also runs Houston HOPE, which targets specific revitalization neighborhoods. Houston HOPE provides up to $30,000 in assistance, requires the buyer to remain in the home for 10 years before the loan is fully forgiven, and restricts properties to Houston HOPE designated areas or other mayor-designated revitalization zones. Sales price caps are lower under HOPE ($200,000 for Houston HOPE program homes).

For Harvey survivors still in the city, the Homebuyer Assistance Program 2.0 (HbAP 2.0) offers up to $125,000 to buyers who were living inside Houston city limits on August 25, 2017. This program accepts income up to 120% of AMI. Visit houstontx.gov/hcdrecovery/dr17/hbap/ for eligibility details.

Harris County Down Payment Assistance Program: Up to $40,000

For buyers purchasing in unincorporated Harris County (outside Houston city limits, outside Baytown, Deer Park, Friendswood, League City, Missouri City, and other incorporated cities), the Harris County Housing and Community Development Down Payment Assistance Program underwent a significant expansion in November 2025.

Updated PY26 parameters effective November 18, 2025:

• Maximum award: Increased from $23,800 to $40,000
• Liquid assets cap: Increased from $15,000 to $30,000
• Base DPA (after deducting eligible incentive amounts): Up to $27,100 for down payment, prepaid items, and closing costs
• Additional incentives included in the total award:
• Home warranty (3 years): up to $1,800
• Flood insurance (1 year): up to $3,000
• Homeowner's insurance including wind and hail coverage (1 year): up to $5,700
• Elevation Certificate (if applicable): up to $500
• HOA coverage: up to $1,500
• Harris County title policy: $125 to $400
• Affordability period: 5 years for awards under $25,000; 10 years for awards of $25,000 to $40,000
• Credit score minimum: 580
• Income limit: 80% AMI for unincorporated Harris County
• First-time buyer requirement: Yes (no home ownership in the past 3 years)
• Maximum purchase price: $285,000 for existing homes; $296,000 for newly constructed homes
• Minimum buyer contribution: $1,000

The Harris County program acts as a "silent second mortgage" with no monthly payments during the affordability period. Contact Harris County HCD at 832-927-4955 or email [email protected] for the participating lender list.

How Loan Type Affects Which Grant You Can Access

Not all assistance forms work with every loan type. Understanding the interaction saves you from surprises at closing.

FHA loans are the most commonly paired product because the 3.5% minimum down payment can be covered entirely by a 5% grant, leaving the buyer with money left over to cover closing costs. VA loans pair especially well because eligible veterans can combine a zero-down VA loan with a TSAHC Heroes grant and walk away from closing with essentially nothing out of pocket while also receiving the MCC.

USDA loans work within Rural Development-eligible areas, which in the greater Houston market includes portions of Montgomery County, Brazoria County, and Liberty County beyond city limits. FHA.com maintains a useful overview of how these programs layer together.

Mortgage Credit Certificate (MCC): The Annual Tax Benefit You Keep for 30 Years

The TSAHC Mortgage Credit Certificate is no longer available as a stand-alone product but remains available combined with TSAHC's DPA program. The 2026 MCC credit rate is 15% of annual mortgage interest paid, as a direct dollar-for-dollar reduction in federal income tax liability.

Key MCC rules in 2026:

• The MCC must be applied for at or before closing; it cannot be applied retroactively
• Texas Heroes receive the MCC at no additional cost; other buyers pay a $400 issuance fee and $225 compliance review fee at closing
• Annual tax savings are capped at $2,000 per year under federal rules
• Use IRS Form 8396 each year to claim the credit
• MCC is limited to first-time buyers, qualified veterans, or buyers in federally designated targeted areas
• If you sell the home within 9 years of closing, a federal recapture tax may apply, but it applies only if you have a gain on the sale and your income at the time of sale exceeds certain thresholds

On a $300,000 home with a $285,000 FHA loan at 6.25%, first-year mortgage interest is approximately $17,700. At a 15% MCC rate, the annual credit is $2,000 (capped). Over 10 years, that is $20,000 in federal tax savings stacked on top of any grant received at closing.

Worked Example: $300,000 Home in Spring, TX Using TSAHC 5% Grant + MCC

This is a realistic scenario for a first-time buyer purchasing in the 77379 ZIP code (Spring, TX), where the Harbert Real Estate Group at Realty Right is based.

Property: $300,000 single-family home in Spring, TX 77379
Loan type: FHA at 6.25% (30-year fixed)
Loan amount: $289,500 (after 3.5% FHA minimum down = $10,500; however, see grant coverage below)
Program: TSAHC Homes for Texas Heroes (teacher profession) or Home Sweet Texas (any buyer)

Step 1: Grant calculation
TSAHC grant at 5% of loan: 5% x $289,500 = $14,475

The grant covers: - FHA minimum down payment (3.5%): $10,500 - Remaining $3,975 applied to closing costs (origination, title, prepaid taxes and insurance)

Step 2: Remaining out-of-pocket
Typical closing costs on a $300K purchase: $6,000 to $8,000. After the grant absorbs $3,975, remaining buyer costs: approximately $2,025 to $4,025, which many sellers in the current market will negotiate as a seller concession.

Step 3: MCC annual savings (first-time buyer or Hero)
- Year 1 mortgage interest: ~$17,800 (approximate at 6.25% on $289,500) - MCC credit at 15%: $2,670 (capped at $2,000 for federal purposes) - Annual tax credit: $2,000 - 5-year cumulative tax saving: $10,000 - 10-year cumulative tax saving: $20,000

Step 4: Total assistance value
$14,475 grant + $20,000 in MCC savings over 10 years = $34,475 in total assistance value on a $300,000 home.

This example uses conservative numbers. Buyers who pair the grant with a lower purchase price, a VA loan (no down payment required at all), or a USDA loan in an eligible area would see even stronger outcomes. For a personalized calculation, reach out to Erick Harbert at the contact information below.

Income Limits by County and Family Size: What You Actually Need to Know

TSAHC and SETH use a single income limit for any household size in Harris County: $122,100 (2026). The figure is based on 125% of the Area Median Family Income.

For buyers using TDHCA My First Texas Home or the City of Houston HAP, limits vary by household size:

Numbers are approximate for the Houston metro area and may be updated mid-year. Always verify current limits directly with tdhca.state.tx.us or your lender before applying.

For counties outside the Houston metro, income limits are generally lower. A buyer in, say, Anderson County would face a TSAHC income cap closer to $86,000 rather than $122,100. The Texas Comptroller's resources and individual county appraisal district pages provide additional context on regional affordability thresholds.

How to Apply: The Step-by-Step Process

Down payment assistance is not applied for independently of your mortgage; you access it through a participating lender who knows the program requirements. Here is the sequence that works in 2026:

1. Determine your program match. Use the TSAHC eligibility quiz as a starting point. If you are in an essential profession, check Heroes first. If your income falls below 80% AMI, check the City of Houston HAP or Harris County DAP.
2. Select a participating lender. TSAHC, SETH, TDHCA, and the City of Houston all publish approved lender lists. Your agent can recommend lenders experienced with stacking multiple programs. Harbert Real Estate Group works with several Spring and Houston-area lenders who specialize in DPA transactions.
3. Complete homebuyer education. Every major Texas DPA program requires a HUD-approved homebuyer education course before closing. Online options exist for most programs and can be completed in one to two days.
4. Get pre-approved with DPA included. Your lender submits a DPA reservation on your behalf. Harris County HCD, for example, issues a Conditional Reservation Letter before you proceed to contract.
5. Go under contract and disclose your DPA at the offer stage. A well-crafted offer with DPA is just as clean as a conventional offer; experienced listing agents in the Houston market regularly see and accept them.
6. Close with DPA funds wired to title. The DPA does not show as a seller contribution; it comes from the program directly.

For internal reference, see also Texas closing costs explainer and the FHA vs. conventional vs. VA loan comparison for context on which loan type pairs best with your situation.

Frequently Asked Questions

Can I use down payment assistance if I owned a home three years ago?

Yes, for most Texas DPA programs. TSAHC, SETH 5 Star, and TDHCA My Choice Texas Home do not require you to be a first-time buyer; you only need to not currently own a home. The City of Houston HAP, Harris County DAP, and TDHCA My First Texas Home do require that you have not owned a primary residence in the past three years. If you sold your last home in early 2023 or earlier, you likely qualify across all programs in mid-2026.

Does using a down payment assistance grant affect my mortgage interest rate?

Yes, modestly. TSAHC's non-bond DPA products (the most common type used in Harris County) carry rates that are typically 0.25% to 0.75% above standard market rates to cover the program's cost of funding the grant. As of May 2026, TSAHC's FHA/VA/USDA non-bond rate was listed at 6.250%. For most buyers, the immediate value of the grant and ongoing MCC savings far outweigh the slightly higher rate over the life of the loan.

Can a VA-eligible buyer combine a zero-down VA loan with a TSAHC grant?

Yes, and this is one of the strongest combinations available. A VA loan already eliminates the down payment requirement, so a TSAHC Heroes or Home Sweet Texas grant at 3% to 5% of the loan amount goes almost entirely toward covering closing costs, prepaid property taxes, and homeowner's insurance. A qualified veteran purchasing a $350,000 home in the Houston suburbs could potentially arrive at the closing table with $0 to $500 out of pocket after the grant. Heroes who are veterans also receive the MCC at no charge.

What happens if I sell the home before the forgivable second lien period ends?

If you selected the 3-year deferred forgivable second lien (instead of the outright grant for FHA/VA/USDA), and you sell, refinance, transfer ownership, or stop occupying the home as your primary residence before the third anniversary of closing, the full second lien balance becomes immediately due and payable. There is no partial forgiveness on a prorated basis under TSAHC's standard guidelines. The grant option (available only with government loan types) has no repayment requirement after six months from closing.

Is there a Texas DPA program for buyers with credit scores below 620?

The Harris County Down Payment Assistance Program allows a minimum FICO of 580, the lowest threshold of any major Houston-area DPA program. The City of Houston HAP does not consider credit scores for its own eligibility determination, though the underlying lender will still have credit requirements. Buyers with scores between 580 and 619 should contact Harris County HCD at 832-927-4955 or speak with an FHA-approved lender, since FHA's minimum is 580 for 3.5% down.

Can the MCC be combined with both a grant and a second lien on the same transaction?

Under TSAHC's 2026 guidelines, the MCC is only available in combination with TSAHC's DPA program; the stand-alone MCC has been discontinued. However, pairing a non-bond DPA grant (for FHA/VA/USDA borrowers) with an MCC is explicitly permitted. First-time buyers and qualifying Heroes can select a grant and still receive the MCC credit. The $400 MCC issuance fee and $225 compliance review fee apply, and Heroes receive the MCC at no cost. File IRS Form 8396 annually to claim the 15% credit, capped at $2,000 per year.

Claim Your Down Payment Assistance Before Funds Run Out

Texas DPA programs operate on allocated pools of funding, and popular programs like the Harris County DAP and City of Houston HAP can pause when their cycle funding is exhausted. The best time to apply is before you find the house, not after you go under contract.

Erick Harbert and the Harbert Real Estate Group at Realty Right work with buyers throughout the greater Houston metro, including Spring, The Woodlands, Cypress, Katy, Pearland, and surrounding communities. Erick is familiar with the full spectrum of 2026 DPA programs and works closely with lenders who specialize in stacking grants with MCC benefits for maximum buyer value.

Call or text (281) 305-2520, email [email protected], or stop by the office at 6605 Cypresswood Dr Ste 300, Spring TX 77379 to start your DPA eligibility review. There is no obligation and no cost to find out what you qualify for.

See also: credit score requirements for Texas homebuyers and ARM vs. fixed mortgage analysis for 2026.