Is down payment assistance actually free money?

Some of it is, and some of it is not, which is exactly why I walk through the specific structure with you rather than let the word 'grant' do the explaining. A true grant is never repaid. A deferred second lien is a real loan, just an interest-free one that gets forgiven if you stay long enough. Both are legitimate, they just behave differently if your plans change.

Do I have to be a first-time buyer to qualify?

Depends on the program. TSAHC's Home Sweet Texas and Homes for Texas Heroes programs, and SETH's 5 Star program, do not require you to be a first-time buyer. TDHCA's My First Texas Home and the MCC tax credit generally do, with exceptions for veterans and buyers in certain targeted areas.

Can I use down payment assistance if I'm buying in South Austin?

Yes, but not every program applies. SETH's 5 Star program excludes Travis County entirely, so for South Austin buyers the real options are TSAHC's programs, TDHCA, and the City of Austin's own down payment assistance program, which is specifically worth a look there.

Will taking down payment assistance make my offer less competitive?

It should not change your purchase contract at all, the assistance shows up in your financing, not in the offer terms a seller sees. Where it can matter is timeline: homebuyer education and second-lien underwriting can add a few days, which I build into your contract timeline from day one so it never becomes a surprise close to closing.

Do current income and price limits change?

Yes, most of these programs update their limits periodically, and the exact number depends on your county and household size. Rather than publish a number here that could be stale by the time you read it, I check your specific limit against the current program tables before we go further.

Texas Grants

Down payment assistance and grants for Central Texas buyers

Texas runs several real down payment assistance programs, some are outright grants, some are second loans that get forgiven over time. I originate the main ones as an approved TSAHC participating lender through MPA Home Loans. Here is what each actually offers, who qualifies, and what the tradeoffs are, so you can decide with real numbers instead of a pitch.

Check What You Qualify For

First, the basics

What these programs actually are

Down payment assistance in Texas comes in two structures. A grant is money toward your down payment or closing costs that you never repay. A deferred second lien is a separate loan behind your main mortgage, usually at 0% interest, that gets forgiven if you stay in the home long enough, and only has to be repaid if you sell or refinance early. Every program below is one or the other. None of them are free money with no strings, and I will tell you exactly which strings apply to you before you decide.

Jennifer Ferrara

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Where I'm an approved lender

TSAHC (Texas State Affordable Housing Corporation)

TSAHC is the state's own affordable housing corporation, and I originate its programs through MPA Home Loans, an approved participating lender. These are the two programs that come up most for my buyers, plus the tax credit that can stack with either one.

Home Sweet Texas Home Loan Program

Open to any qualifying buyer, not just first-timers. You can take the assistance as a straight grant that is never repaid, or as a 0% deferred second lien that is forgiven if you stay past 3 years. The grant option typically carries a slightly higher rate on your first mortgage than the deferred-lien option, so which one nets out better depends on how long you plan to stay, real math I run for you before you pick.

Minimum 620 credit score. Household income limit in Hays County is $201,600 (150% of area median income, 2026 limit), and the purchase price limit is $598,019 (2026 limit). Both vary by county and household size, and I confirm your exact numbers before we go further.

Homes for Texas Heroes

The same grant-or-deferred-lien structure as Home Sweet Texas, with a higher income ceiling, for buyers in eligible professions: K-12 teachers, teacher aides, school librarians, nurses, and counselors, nursing and allied health faculty, veterans and active military, firefighters, EMS, police, and corrections or county jail officers.

Minimum 620 credit score. Household income limit in Hays County is $228,480 (170% of area median income, 2026 limit), higher than the standard program specifically because of the profession requirement. Same $598,019 purchase price limit (2026 limit) as Home Sweet Texas.

Mortgage Credit Certificate (MCC)

Not a down payment program, a federal tax credit: 15% of the mortgage interest you pay each year, back in your pocket at tax time, for as long as you live in the home and hold the loan. It can stack with TSAHC's own down payment assistance, subject to funds being available. First-time buyers only, with the standard federal exceptions for veterans and buyers in certain targeted areas.

Real tradeoff to know up front: if you sell or refinance within 9 years, the IRS can claw back some or all of the credit through what is called a recapture tax. I walk through whether that risk makes sense for your plans before you take it. One more number that matters if you stack the MCC with the DPA: for 1-2 person households, the income limit drops to $134,400 (2026 limit).

Other real programs

What else is out there

TSAHC is not the only source. These come up depending on where exactly you are buying.

SETH 5 Star Texas Advantage

A 5% grant, structured as a second lien that is forgivable after 3 years or deferred with no payments for 30 years. No first-time buyer requirement. Despite the regional-sounding name, it is a statewide program, with one real exception that matters here.

It does not cover Travis County. That means it is a real option for Kyle, Buda, San Marcos, Dripping Springs, and Driftwood, but not for South Austin.

TDHCA (Texas Department of Housing and Community Affairs)

A separate state agency from TSAHC, running its own programs. My First Texas Home is for first-time buyers, with the usual veteran and targeted-area exceptions. My Choice Texas Home has no first-time requirement and a higher income ceiling. Both offer up to 5% in assistance on a 30-year fixed first mortgage.

City of Austin Down Payment Assistance

Relevant specifically if you are buying in South Austin: up to $40,000 as a 0% deferred loan, forgiven after 10 years in the home. Income limit is 80% of area median income for your household size, tighter than the TSAHC programs, which is the tradeoff for a larger assistance amount.

BCL of Texas NeighborhoodLIFT

Run by BCL of Texas with Wells Fargo, up to $7,500 in forgivable down payment assistance, forgiven over 5 years. No first-time buyer requirement. It covers Travis, Hays, and Bastrop counties together, which makes it one of the few programs that applies the same way across every city I work in, Kyle, Buda, San Marcos, Dripping Springs, Driftwood, and South Austin alike.

Income limit is 80% of area median income, or 100% for veterans. Homebuyer education is required before closing.

The real tradeoffs

What these programs are good at, and where they cost you something

I bring these up with almost every first-time buyer, because most people do not know they exist. I also do not let anyone take one without seeing the actual tradeoff first.

Pros

Can eliminate or sharply cut the cash you need at closing
Grant options never require repayment, period
Deferred second liens charge 0% interest and forgive over time
Several programs are open to repeat buyers, not just first-timers
Can stack with seller concessions and, in some cases, the MCC tax credit

Cons

The grant option often means a slightly higher rate on your first mortgage than the deferred-lien option would
Income and purchase price limits are hard cutoffs, not a sliding scale, and they vary by county
Homebuyer education is required before closing, one more step on your timeline
A second lien adds complexity if you refinance before it is forgiven
The MCC's tax credit carries a recapture-tax risk if you sell or refinance within 9 years
Not every program covers every county, SETH specifically excludes Travis County

Questions people actually ask

Down payment assistance, straight answers

Some of it is, and some of it is not, which is exactly why I walk through the specific structure with you rather than let the word 'grant' do the explaining. A true grant is never repaid. A deferred second lien is a real loan, just an interest-free one that gets forgiven if you stay long enough. Both are legitimate, they just behave differently if your plans change.

Everything else on this site

Worth a look alongside this

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