The down payment is the biggest obstacle for most first-time homebuyers in Texas. With home prices across Houston, the suburbs, and the rest of the state where they are in 2026, coming up with 3.5 to 5 percent out of pocket — plus closing costs — can push homeownership back by years for buyers who are otherwise fully capable of making a monthly mortgage payment.
Texas has programs specifically designed to solve this problem. They're real, they're currently funded, and qualified buyers are using them every month. Here's how they work.
Who Administers DPA in Texas
The Texas Department of Housing and Community Affairs (TDHCA) is the primary state agency that administers down payment assistance programs in Texas. TDHCA operates several programs that are available statewide. Local programs also exist through city and county housing agencies — Houston and Harris County both have programs that can be layered on top of state assistance for buyers in those areas.
My First Texas Home
My First Texas Home is TDHCA's flagship first-time buyer program. It combines a below-market 30-year fixed-rate mortgage with down payment and closing cost assistance of up to 5 percent of the loan amount.
Key features: The assistance comes as a zero-interest, deferred second lien — it doesn't require monthly payments and is forgiven or repaid when you sell or refinance. The program is available with FHA, VA, USDA, and conventional loans. It's open to first-time buyers and qualifying veterans who have not owned a home as a primary residence in the past three years.
Income and purchase price limits apply and vary by county. In Harris County, income limits for 2026 are set to accommodate moderate-income buyers rather than only very low-income borrowers.
My Choice Texas Home
My Choice Texas Home is TDHCA's program for repeat buyers — people who have owned a home before and don't meet the first-time buyer definition. It offers the same structure: a 30-year fixed-rate first mortgage paired with up to 5 percent in down payment and closing cost assistance as a deferred second lien.
This program extends access to buyers who are often overlooked by DPA programs because they owned a home years ago. If you sold a previous home, went through a divorce, or simply haven't owned in more than three years and are looking to re-enter homeownership, My Choice Texas Home is worth examining.
Texas Mortgage Credit Certificate (MCC)
The MCC is a federal tax credit — not a direct down payment grant — but it materially affects affordability and is often stacked with other DPA programs. It converts a percentage of your annual mortgage interest (typically 20 to 40 percent) into a dollar-for-dollar tax credit each year for the life of the loan.
On a $300,000 loan at 6.5 percent, you pay roughly $19,500 in interest in year one. An MCC at 20 percent gives you a $3,900 tax credit — not a deduction, an actual reduction in your tax bill. Over 30 years the cumulative benefit is significant, and it can increase the loan amount you qualify for because lenders can count a portion of the MCC benefit as income in the DTI calculation.
MCC is subject to income and purchase price limits similar to the first mortgage programs, and must be applied for at the time of purchase — you can't add it after the fact.
City of Houston and Harris County Programs
In addition to statewide TDHCA programs, buyers purchasing within the City of Houston or Harris County boundaries may have access to locally funded DPA. The City of Houston's Housing and Community Development Department has historically offered assistance to income-qualifying buyers, with amounts that can supplement state programs.
Local program availability fluctuates with funding cycles. When funds are available and income requirements are met, layering local and state assistance can dramatically reduce cash needed at closing — in some cases bringing it close to zero for qualifying buyers.
How DPA Pairs With an FHA Loan
The most common structure is a DPA second lien paired with an FHA first mortgage. FHA requires 3.5 percent down. The DPA covers that 3.5 percent. The buyer brings primarily closing costs — and if the seller agrees to concessions, those can be covered as well.
The result: a buyer who qualifies on income and credit can purchase a home with minimal out-of-pocket cash. The monthly payment will reflect the full loan amount, and the rate may be slightly above market because the DPA program subsidizes the assistance through the rate. Buyers need to weigh the higher monthly payment against the benefit of not depleting their savings at closing.
For buyers with a specific savings goal in mind — keeping cash for an emergency fund, home improvements, or relocation costs — this tradeoff frequently makes sense.
What You Need to Qualify
Requirements vary by program but the core criteria across most Texas DPA programs include:
Credit score of 620 or higher. Income at or below the program limit for your county and household size. Purchase price below the program cap for your area. Occupancy as primary residence — DPA is not available for investment properties. Homebuyer education course completion, typically a HUD-approved online course that takes a few hours.
The Important Trade-Off to Understand
DPA programs are not free money in the way that phrase implies. The assistance comes with structure attached — a deferred second lien, a slightly above-market rate on the first mortgage, or repayment requirements if you sell or refinance within a certain window. For buyers who plan to stay in the home long-term, the terms generally work in their favor. For buyers who anticipate selling or refinancing within two to three years, the math is worth examining carefully before committing.
Get the Full Picture
The fastest way to know what you qualify for is a conversation with a lender who works with these programs regularly. We can run your income, credit, and target purchase price against current program limits and tell you exactly what assistance is available and what the monthly payment looks like with and without the DPA structure.
Call or text Brandon at 832-997-1527 or visit brandonhuynh.net. We work with TDHCA programs and local Houston and Harris County assistance regularly and can get you a clear answer quickly.
Find Out What DPA Programs You Qualify For
We can run your income, credit, and target purchase price against current program limits and tell you exactly what assistance is available and what the monthly payment looks like.
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