Best First Time Home Buyer Programs in Texas

Read our Advertiser Disclosure.
Contributor, Benzinga
August 8, 2023

There’s a slew of first time home buyer programs that are available to you if you’re looking for your first home in Texas. Who knew, right? 

Once you’ve found the right program, you’ll want to move on to finding the right lender for you. Benzinga can help you do both — we’ve put together this guide to buying your first home in Texas.

Best First Time Home Buyer Programs in Texas:

  • Homes for Texas Heroes Home Loan Programs
  • Home Sweet Texas Home Loan Program
  • Mortgage Credit Certificates

Best National First Time Home Buyer Programs:

First Time Home Buyer Programs in Texas

There are a number of first-time home buyer programs in Texas. Each program has its own eligibility requirements, so it’s important for you to review each to see if you qualify. These programs can make homeownership possible. Here are some of the programs you might want to look into.

1. Homes for Texas Heroes Home Loan Programs

This program provides home buyer assistance for Texas heroes — teachers, law enforcement officers, first responders and more. It offers a 30-year fixed interest rate mortgage loan and may be available even if you’ve owned a home before. You can also receive down payment assistance for up to 5% of the loan amount. The down payment assistance can be provided as a grant that never needs to be repaid or as a forgivable second lien loan. There may be income limits and purchase price limits, depending on your county.

Eligibility requirements: 

This grant is only available if you work in a specific profession in Texas. You must meet 1 of the following requirements to qualify. 

  • You may qualify if you work in a K-12 public school in Texas. Professions that qualify include teachers, teacher aids, school librarians, school counselors and school nurses.
  • You may qualify if you’re licensed through the Texas Commission on Law Enforcement (TCOLE) as a peace officer or public security officer.
  • Certain first responders may qualify, including firefighters, emergency care attendants, emergency medical technicians and licensed paramedics.
  • You may qualify if you work for a jail or other corrections facility as a corrections officer, juvenile corrections officer or county jailer.
  • Veterans and active military members may be eligible for this program.

2. Home Sweet Texas Home Loan Program

This program provides home buyer assistance for Texas residents with low and moderate incomes. You may be eligible for this program even if you’re not a first time home buyer. It offers a 30-year fixed interest rate mortgage loan and down payment assistance for up to 5% of the loan amount. Your down payment assistance may be a grant that never needs to be repaid or it could be a forgivable second lien loan. 

Eligibility requirements: 

  • You must meet certain income limits. The income limits vary by county, so you’ll need to look up the limits for the county your new home is in.
  • The home you are purchasing must meet certain purchase price limits. This means that your home can only cost a certain amount to qualify. Again, the limit depends on the county where the home is.
  • You may be able to qualify if your income and purchase price are higher than the standard limits if you’re purchasing a home in a targeted area. You can use this tool to determine whether the home is in a targeted area.

3. Mortgage Credit Certificates

If you’re a first time home buyer, you may also be eligible for a mortgage credit certificate, also known as MCCs. Mortgage credit certificates offer a tax credit on your mortgage’s interest tax. This reduces the amount of federal income taxes that you need to pay each year, allowing you the ability to save thousands over the lifetime of your mortgage loan. There is no minimum credit score required if you use this program with a fixed-rate mortgage loan that is not from the Texas State Affordable Housing Corporation.

Eligibility requirements: 

  • You must be a first time home buyer in Texas. Although it doesn’t sound this way, in Texas a “first-time home buyer” is defined as anyone who has not owned a home in the last 3 years. So you may be able to qualify even if you owned a home in the past. 
  • You must meet the qualifications for either the Home for Texas Heroes Home Loan Program or the Home Sweet Texas Home Loan Program.

Best National First Time Home Buyer Programs

As a first time home buyer, it’s important for you to know about the most common national programs that you may qualify for. Benzinga has put together this overview of national home buyer programs and the best lenders for each type. 

FHA Loans

An FHA loan is a mortgage that is issued by a lender that is approved by the Federal Housing Administration (FHA). These loans are designed for low- and moderate-income borrowers. When you apply for any home mortgage loan, you’ll have to meet certain standards, including a minimum down payment and a minimum credit score. Lenders will use your credit score to determine how trustworthy you are when it comes to repaying your debts and managing your money. 

You will also need to pay a certain percentage of your home’s purchase price upfront. The FHA insures these loans, meaning that it will pay a claim to your mortgage lender if you default on your loan. You will make mortgage insurance payments to the FHA to pay for this coverage. 

FHA loans are a popular option for first time home buyers because lenders will accept lower credit scores and minimum down payments if you’re qualified for an FHA loan. Lenders will accept credit scores of 580 and above and a minimum down payment of 3.5% for these loans. If your credit score is 500–579, you may be able to get approved for an FHA loan if you can make a minimum down payment of 10%. You may also be able to receive a grant for down-payment assistance.

There are additional qualifications for an FHA loan, including:

  • The home you are purchasing must be your primary residence.
  • You must move into your new home within 60 days of closing on the home.
  • The home will have to undergo an inspection and be determined to meet the minimum property standards.

Best for Bank Statement Home Loans: Angel Oak Mortgage Solutions

Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio mortgage loans, but their most innovative product is the Non-QM home loan. This bank statement-only product for self-employed borrowers does not require tax returns and includes a 1099 Income option for 1099 earners. 

  • Loan amounts up to $3 million
  • 12 or 24 months personal or business bank statements
  • Two years out of bankruptcy, short sale, foreclosure, or deed-in-lieu
  • Owner occupied, non-owner occupied, second homes
  • 1099 option available
  • 40 year fixed interest only
  • Delayed financing available
  • Non-warrantable condos allowed

The customer service team is easy to reach via email, phone or the online contact form, and you can begin your journey by searching for a local advisor right on the website.

Angel Oak is headquartered in Atlanta, Georgia and is licensed in AL, AZ #0927070, licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, CO, CT, DE, DC, FL, GA #32379, ID, IL, IN, IA, KS, KY, LA, ME, MD, MI, MN, MS, NV, NH, licensed by the N.J. Department of Banking and Insurance, NM, NC, OH, OK, OR, PA, Rhode Island Licensed Lender, SC, TN, TX, UT, VT, VA, WA dba AOHL LLC, WI.

Best National FHA Lender: Rocket Mortgage® by Quicken Loans®

Rocket Mortgage® by Quicken Loans® is a popular online mortgage lender that offers a variety of FHA mortgage loan products. It’s a great option if you’re looking for an easy process with customizable mortgage loans. You can use the intuitive Rocket Mortgage® application to input a few personal details that will generate your income information.

This process allows you to get approved quickly. If you run into any issues or questions, Rocket Mortgage® offers an experienced customer service team to help you out.

VA Loans

VA loans are mortgage loans that are issued by private lenders and guaranteed by the U.S. Department of Veterans Affairs (VA). These loans are available to veterans, service members and some military spouses. VA loans do not require a down payment at all, making them an attractive option for qualified home buyers. Unlike FHA loans, you do not need to buy private mortgage insurance for VA loans. If you fall on hard times, assistance is available to help avoid defaulting on your VA loan. 

To qualify for a VA loan, you have to meet the service requirements. If you qualify, you can receive a VA loan even if you’re not buying a home for the first time. You may qualify for a VA loan if you:

  • Served 90 consecutive days of active duty during wartime
  • Served 181 days of active duty during peacetime
  • Served in the National Guard or Reserves for at least 6 years
  • Are the spouse of a military member who passed away in the line of duty or from a service-related disability

Best National VA Lender: Veterans United

Veterans United is a great option for VA loans because it understands the flexibility you may need to purchase your home. It can help you get a VA mortgage loan, even if you owe more debt than most other lenders would allow.

You’ll benefit from financial advisors, some of which have served time in the armed forces themselves. You can apply for a VA loan from Veterans United online and receive an online prequalification. If you need assistance, you can reach the Veterans United customer service team 24/7.

USDA Loans

USDA loans are a little less well known. These mortgage loans are available to buyers who are buying a home in areas that are designated by the U.S. Department of Agriculture (USDA). The USDA designates certain areas of the country that it wants to encourage homeownership in. These areas are usually rural areas, but there may be some suburban areas that qualify.

USDA loans typically come with low down payments, lower minimum credit score requirements and competitive interest rates. Like FHA and VA loans, you will receive your USDA mortgage loan from a private lender, such as a bank. The USDA guarantees USDA loans, meaning that if you default, it will pay the lender a certain amount of your mortgage to cover the loss.

To qualify for a USDA mortgage loan, you must:

  • Purchase your home in a qualifying area.
  • Intend to use the home you are purchasing as your primary residence.
  • Meet certain income requirements. These are based on the cost of living in the area your home is located in.

Best National USDA Lender: Caliber Home Loans

Caliber Home Loans offers USDA mortgage loans with $0 down payments. You will benefit from competitive fixed interest rates, so you’ll be able to budget for your mortgage payments without worrying about your interest rate changing. With Caliber Home Loans, you can also rest easy knowing that your closing costs will be paid by the seller of your home.

If you have questions about Caliber Home Loans or your USDA loan, you can send a secure message online or reach a customer service agent by phone. You may also be able to find a local loan consultant who can help you.

Which First Time Home Buyer Program is Right for You?

As a first time homebuyer in Texas, there are a number of options available to you. You may qualify for programs based on your profession or you may opt for a program that helps you if you’re self-employed. If you think you qualify for a program, reach out to a few lenders and loan consultants to help review your qualifications.

Get Ready for Take Off

Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.

You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.