First-time home buyer programs in Texas: assistance, loans and real costs
Start with the local reality: texas pairs no transfer tax and no state income tax with some of the highest property taxes in the nation; a first-time buyer should file the homestead exemption immediately after closing, which also caps annual assessment increases at 10%.
| State housing agency | Texas Department of Housing and Community Affairs (TDHCA) |
|---|---|
| Median home price (approx.) | $300,000 — statewide order of magnitude; metros differ |
| 3.5% / 5% / 20% down | $10,500 / $15,000 / $60,000 on the median |
| Property tax (effective) | about 1.68% — roughly $5,040 a year on the median |
| Mortgage credit certificate | Yes — mortgage credit certificate offered |
| Transfer tax | Texas has no real estate transfer tax and no mortgage tax; only recording fees apply. |
State programs for first-time buyers in Texas
The Texas Department of Housing and Community Affairs’ My First Texas Home offers FHA, VA and USDA loans with down payment assistance to first-time buyers, My Choice Texas Home serves repeat buyers, and the Texas Mortgage Credit Certificate is the state MCC; the Texas State Affordable Housing Corporation’s Homes for Texas Heroes and Home Sweet Texas programs add grants and second liens.
How the assistance money works
TDHCA assistance is up to 5% of the loan amount as a 0% deferred second due on sale or refinance; TSAHC offers up to 5% of the loan as either a grant (no repayment) or a forgivable second, with larger amounts for eligible heroes.
Read the lien type before the dollar figure: grant (no repayment), forgivable second (repaid only if you leave early), deferred second (repaid at sale or refinance), or repayable second (a monthly payment that counts in your debt-to-income ratio). See how down payment assistance programs work.
Is there a first-time buyer tax credit?
The Texas Mortgage Credit Certificate (TDHCA) and TSAHC’s MCC give first-time buyers a federal tax credit on a portion of annual mortgage interest, capped at $2,000 a year, combinable with certain first mortgages.
Eligibility limits
TDHCA and TSAHC income and purchase price limits vary by county and household size (higher in targeted areas where first-time status is waived); a 620 minimum credit score (higher for some conventional options) and homebuyer education are required.
What closing costs look like in Texas
Texas has no real estate transfer tax and no mortgage tax; only recording fees apply.
Texas closings run through title companies with state-regulated title premiums; buyer closing costs of about 2% to 3% are modest, but the property tax escrow — Texas has one of the highest effective rates in the country — is large. For the line-by-line, see closing costs explained and seller concessions limits.
Worked example: buying the median home in Texas
Worked on Texas’s rough $300,000 median (your county may be far above or below) at an illustrative 6.5%: down payment, loan amount, principal and interest, and the monthly share of property tax at the state’s approximate 1.68% effective rate, or about $5,040 a year. Exclude nothing else from your own budget — insurance, PMI, HOA dues all apply.
| Structure | Down payment | Loan amount | P&I at 6.5% (30 yr) | Property tax / mo (est.) |
|---|---|---|---|---|
| FHA, 3.5% down | $10,500 | $289,500 | $1,830 | $420 |
| Conventional, 5% down | $15,000 | $285,000 | $1,801 | $420 |
| Conventional, 20% down (no PMI) | $60,000 | $240,000 | $1,517 | $420 |
Illustrative rate and approximate state figures — not an offer or a quote. Full payment tables cover $150,000 to $800,000 at 5% to 8%; the affordability guide explains how lenders size the loan.
Frequently asked questions
Does Texas have down payment assistance for first-time buyers?
TDHCA assistance is up to 5% of the loan amount as a 0% deferred second due on sale or refinance; TSAHC offers up to 5% of the loan as either a grant (no repayment) or a forgivable second, with larger amounts for eligible heroes. Amounts and structures are updated regularly; treat the figures here as the shape of the program and verify the current numbers with the agency.
Is there a first-time home buyer tax credit in Texas?
The Texas Mortgage Credit Certificate (TDHCA) and TSAHC’s MCC give first-time buyers a federal tax credit on a portion of annual mortgage interest, capped at $2,000 a year, combinable with certain first mortgages. MCCs reduce federal income tax owed each year for as long as you keep the loan and live in the home; they are applied for through the lender at purchase.
What are typical closing costs when buying a house in Texas?
Texas closings run through title companies with state-regulated title premiums; buyer closing costs of about 2% to 3% are modest, but the property tax escrow — Texas has one of the highest effective rates in the country — is large. Texas has no real estate transfer tax and no mortgage tax; only recording fees apply.
Before you apply
- FHA vs conventional for a first-time buyer: which loan wins, and when
- 3% down conventional loans: HomeReady, Home Possible and Conventional 97
- Pre-approval vs pre-qualification: what sellers actually respect
- Closing costs explained: what is negotiable, what is not
Also for this state: hard money rules in Texas · foreclosure in Texas.