A Guide to Down Payment Assistance Programs
For many homebuyers, the biggest hurdle to homeownership is coming up with the down payment. Fortunately, there are several down payment assistance programs available to help make buying a home more accessible. Whether you’re a first-time homebuyer or looking for additional financial support, programs from organizations like TDHCA (Texas Department of Housing & Community Affairs), SETH (Southeast Texas Housing), TSAHC (Texas State Affordable Housing Corporation), and other private assistance programs can provide the help you need. Here’s an overview of how these programs work and how they can benefit you.
Types of Down Payment Assistance Programs
1. Mortgage Credit Certificates (MCCs)
A Mortgage Credit Certificate (MCC) allows eligible homebuyers to claim a dollar-for-dollar tax credit on a portion of their mortgage interest. This can provide significant savings over the life of the loan by reducing federal tax liability.
- Helps reduce tax burden, making homeownership more affordable.
- Can be used in conjunction with other assistance programs.
- Available through TDHCA and TSAHC for first-time homebuyers and qualified individuals.
2. Grants for Down Payment Assistance
Some programs offer grants that provide homebuyers with funds that do not need to be repaid.
- TDHCA’s My First Texas Home Program offers grants to eligible first-time buyers.
- TSAHC’s Home Sweet Texas Home Loan Program provides grants to moderate-income buyers.
- SETH 5 Star Program offers grants that cover down payment and closing costs.
- Private Grants – Some banks and nonprofits provide grant-based assistance to help buyers achieve homeownership.
3. Forgivable Second Mortgages
A forgivable second mortgage provides down payment assistance in the form of a loan that does not need to be repaid if certain conditions are met, such as living in the home for a set number of years.
- TSAHC’s DPA Program offers forgivable second liens that gradually dissolve after 3-5 years.
- TDHCA’s My First Texas Home Program provides second lien loans that are forgivable after a designated period.
- Ideal for buyers planning to stay in their homes long-term.
4. Second Mortgages with Payment Plans
Some assistance programs provide down payment aid through a repayable second mortgage, which must be paid back over time, usually at low or no interest.
- SETH GoldStar Program offers second lien loans that require repayment but at favorable terms.
- TDHCA and TSAHC offer structured second liens that assist buyers without requiring a large upfront investment.
- These options allow buyers to access funds while maintaining manageable payments.
Who Qualifies for Down Payment Assistance?
Each program has different eligibility requirements, but common factors include:
- First-time homebuyer status (some exceptions apply).
- Income limits based on household size and location.
- Credit score requirements (typically 620+).
- Home purchase must be a primary residence.
How to Apply for Down Payment Assistance
1. Check eligibility requirements – Review income limits and credit score criteria.
2. Work with an approved lender – Many assistance programs require homebuyers to work with participating lenders.
3. Complete homebuyer education – Some programs require buyers to complete an educational course.
4. Apply for assistance – Work with your lender to submit the required documentation and secure funding.
Final Thoughts
Down payment assistance programs can make homeownership more accessible by providing grants, forgivable loans, and structured second mortgages. If you're interested in exploring these options, I can help you determine which program best fits your needs and guide you through the application process. Let’s connect and find the right path to homeownership for you!