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If the down payment is one of the biggest things standing between you and buying a home, the Texas State Affordable Housing Corporation, better known as TSAHC, is a resource worth knowing about.
TSAHC offers homeownership programs that can include:
30-year fixed-rate mortgage options
Down payment assistance, commonly called DPA
Assistance that may be structured as a grant or forgivable second lien
Assistance of up to 5% of the mortgage loan amount, depending on the program and loan option
A Mortgage Credit Certificate for eligible first-time buyers when used with qualifying TSAHC financing
Programs for both first-time and repeat home buyers
And one of the most important things to understand is this:
You do not apply directly to TSAHC for your mortgage or down payment assistance. You access the program through a TSAHC-approved participating mortgage lender. So, if you have been searching online trying to figure out where the actual application is, let me save you some time. Here is how the process works.
The Texas State Affordable Housing Corporation, or TSAHC, is a nonprofit housing organization created by the Texas Legislature.
For home buyers, two of its primary homeownership programs are:
This program is designed for qualifying low and moderate-income home buyers.
This program serves eligible professionals such as certain teachers and school employees, veterans and active military members, firefighters, EMS personnel, peace officers, corrections officers, county jailers and other qualifying public service professionals. Both programs can provide access to mortgage financing and down payment assistance for eligible borrowers. That means TSAHC is not simply a program for teachers, veterans or first-time home buyers. Depending on your income, credit, mortgage qualifications and other program requirements, you may have an option even if you do not fall into one of the designated Texas Hero professions.
Before touring houses or assuming you cannot afford to buy, start by checking the basic program requirements. TSAHC provides an online eligibility quiz designed to help buyers determine whether they may meet its initial requirements. The quiz is a screening tool, not a mortgage approval. Your actual qualification will be determined by an approved lender after reviewing your complete financial profile.
Your household or qualifying income
Your credit profile
Your current debts
Your employment
The county where you plan to purchase
Whether you are a first-time or repeat buyer
Whether you qualify under a Texas Hero occupation
The type of mortgage you may be eligible to use
TSAHC's published program information lists a minimum 620 credit score for its homeownership programs, along with applicable income limits. Income limits can vary, so this is one of those situations where you want your lender looking at the current guidelines rather than relying on a number you found in an old social media post.
TiTi's Tip: Do not disqualify yourself before talking to a lender. Credit score is only one piece of mortgage qualification. Let the professionals tell you what is possible and, if you are not ready today, what needs to happen next.
This is probably the most important step in the process. Not every lender can originate a TSAHC loan. TSAHC requires buyers seeking its assistance to work with an approved participating lender. TSAHC does not accept mortgage applications or borrower documents directly. The lender handles the mortgage qualification and helps determine which TSAHC options you qualify to use. When searching TSAHC's approved lender directory, you may see designations for loan officers with significant experience using the programs. That experience matters. Down payment assistance adds another layer to a real estate transaction, and I want my buyers working with a loan officer who understands the program, its documentation and its timelines.
Am I eligible for Home Sweet Texas, Homes for Texas Heroes or both?
Which TSAHC assistance options do I currently qualify for?
Is the assistance a grant, forgivable second lien or another structure?
How much assistance would I receive based on my estimated loan amount?
What interest rate applies to that option?
What fees are associated with the program?
Which loan type makes the most sense for me: FHA, conventional, VA or USDA if eligible?
How much cash should I still expect to bring to closing?
Does the assistance affect my interest rate or monthly payment?
Are there repayment requirements if I sell or refinance?
Do I qualify for a Mortgage Credit Certificate?
What documents do you need from me to complete a full preapproval?
Do not stop at:
"How much money can I get?"
The better question is:
"What does the entire loan look like?"
Passing an eligibility quiz is not the same as qualifying for a mortgage. Your lender will still need to determine whether you meet the requirements for the underlying home loan. TSAHC programs can work with eligible mortgage products including FHA, VA, USDA-RHS and qualifying conventional loan products.
Your lender may request documents such as:
Recent pay stubs
W-2s or tax documents
Bank statements
Identification
Employment information
Documentation of additional income
Information about your debts and financial obligations
The exact documents depend on your situation and loan type. This is also where we begin separating two questions buyers sometimes combine. Can I qualify for the program and how much house can I comfortably afford? Those are not always the same number.
TSAHC advertises down payment assistance of up to 5% of the mortgage loan amount, depending on the available option. Notice I said loan amount, not purchase price.
For a simplified example, imagine your mortgage loan amount were $300,000.
If a particular program option provided assistance equal to:
3% of the loan amount, that would equal $9,000
4% of the loan amount, that would equal $12,000
5% of the loan amount, that would equal $15,000
That is an illustration only. It does not mean every buyer receives 5%.
The actual assistance available to you depends on the TSAHC option selected, your loan and the program terms available when your lender reserves the assistance. This is exactly why I do not like telling buyers, "There is a program that will give you $15,000." Maybe, but let's run your numbers first.
This catches a lot of first-time buyers off guard. Your down payment and your closing costs are not the same thing.
In addition to the down payment, purchasing a home can involve expenses such as:
Lender fees
Title-related expenses
Prepaid homeowners insurance
Property tax escrows
Appraisal expenses
Inspections
Other prepaid or settlement expenses
Depending on the transaction and loan guidelines, assistance and negotiated seller contributions may help with eligible costs but this is why your REALTOR® and lender need to communicate before we start negotiating. A good offer is not always the offer with the lowest sales price. Sometimes the structure of the transaction matters just as much.
TSAHC requires at least one borrower to complete an approved home buyer education course before closing. TSAHC directs buyers to the Texas Financial Toolbox, which provides access to approved home buyer education and financial counseling resources. Do not look at this as another hoop to jump through.
A good home buyer education course can help you better understand:
Mortgage terminology
Credit
Budgeting
Inspections
Insurance
Property taxes
Closing costs
The closing process
Responsibilities that come with homeownership
Buying the house is one goal. Being financially prepared to keep and maintain the house is the bigger goal.
Once the lender tells us what you can qualify for, I want to talk about what you actually want your life to look like after closing. If the lender says you qualify for a $350,000 house, that does not automatically mean we need to shop at $350,000.
We need to look at the complete monthly housing expense, which can include:
Principal
Interest
Property taxes
Homeowners insurance
Mortgage insurance, when applicable
HOA dues
Maintenance
Utilities
This becomes especially important when buying in the Houston area because property tax rates, insurance costs, HOA dues and other expenses can vary significantly from one community to another. Two houses with the same sales price can have noticeably different monthly payments. That monthly number matters to me more than the number on the front of the house.
Once you have a strong preapproval and we know which TSAHC program you are using, we can build the home search around your actual financial strategy. That may include resale homes or qualifying new construction and yes, you can absolutely ask about using down payment assistance when purchasing new construction. The important part is making sure your lender, REALTOR® and builder understand the financing structure and any applicable requirements. This is also why I recommend getting your own REALTOR® involved before your first builder visit or registration. The builder's sales representative represents the builder and your REALTOR® represents you.
You are not responsible for logging into TSAHC and reserving your own assistance. Your approved lender works behind the scenes with TSAHC's program systems to manage the applicable loan reservation and compliance process. Your job is much simpler, respond quickly when your lender asks for documents. Avoid opening new credit. Do not finance furniture before closing, you can buy the couch later. Do not change jobs without talking to your lender. Do not move large amounts of money between accounts without documentation and please do not buy the new car because "the house is already approved."
Eligible first-time home buyers may also want to ask their TSAHC lender about the Mortgage Credit Certificate, commonly called an MCC. An MCC provides a federal income tax credit based on qualifying mortgage interest. TSAHC currently states that its MCC can only be used in conjunction with its qualifying DPA or 0% assistance option until further notice. Most importantly you must apply for the MCC before closing. You cannot close on your house and decide six months later that you want to add one. For TSAHC purposes, a first-time home buyer generally means someone who has not owned an interest in a primary residence during the previous three years. Certain exceptions may apply, including qualified veterans and purchases in designated targeted areas. Because tax situations vary, buyers should also consult a qualified tax professional about how an MCC may affect their individual federal tax situation.
For the right buyer, TSAHC may help:
Reduce the amount of cash needed upfront
Make homeownership possible sooner
Preserve some savings instead of putting everything into the down payment
Provide access to several mortgage loan types
Offer assistance to both first-time and repeat buyers
Provide additional benefits to qualifying Texas Heroes
Give eligible first-time buyers access to an MCC
Down payment assistance is not automatically the best financial choice for every buyer.
You still want to compare:
Interest rates
Monthly payments
Program fees
Assistance structure
Repayment or forgiveness terms
Cash-to-close requirements
Long-term cost of the mortgage
Sometimes the buyer with enough money for a down payment may still benefit from assistance. Sometimes using their own funds produces a better overall loan. We compare before we decide.
If buying a Texas home is one of your goals, here is the order I recommend:
1. Take the TSAHC eligibility quiz.
2. Speak with a TSAHC-approved lender.
3. Complete a full mortgage preapproval.
4. Ask the lender to compare your TSAHC options with financing without assistance.
5. Complete your required home buyer education.
6. Determine your comfortable monthly payment and cash-to-close budget.
7. Choose a REALTOR® who understands how financing affects the offer and negotiation strategy.
8. Start shopping.
TSAHC Home Buyer Information:
Visit the official Texas State Affordable Housing Corporation.
Home Buyer Education and Financial Resources:
Visit the Texas Financial Toolbox.
Program guidelines, income limits, rates, assistance options and other requirements can change. Verify current program information with TSAHC and a participating TSAHC lender before making financial or real estate decisions.
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