home buyer Texas

Home Buying

Best First-Time Home Buyer Programs in Texas

March 19, 2019 | by Andrew Schmeerbauch

At A Glance

There are more mortgage options for first time home buyers in Texas than you might realize. Along with federal programs, the Lone Star state also offers some of their own options can streamline your path to home ownership. Here’s a closer look at some of the best ones.

home buyer Texas

Being a first time home buyer can be exciting, but the challenges you face can also make it downright frustrating. To get this far, you’ve worked hard to clear the first hurdle: saving up for a down payment. Now, you’re tasked with myriad other financial obligations like closing costs, mortgage payments, homeowner’s insurance, pricier utilities, home maintenance, repairs, moving expenses, and property taxes.

But if you’re buying your first home in Texas, you may be able to get a little financial help that makes your new home adventure a little less stressful — and less expensive!

Texas offers a number of first time home buyer programs, grants, and mortgage options you should look into. Let’s take a closer look:

Texas Programs for First-Time Home Buyers

In the Lone Star state, you have a number of both federal and Texas-specific programs for first-time home buyers.

My First Texas Home Loan

The My First Texas Home program is designed for 30-year mortgages with low fixed interest rates. With this program, first-time home buyers can get assistance with the down payment and closing costs of up to 5% of the total mortgage as a second lien with no interest and no monthly payment.

Texas considers first-time home buyers as those who have not owned a home as their primary residence within the last three years. If you’ve been honorably discharged from the military, this requirement is waived.

Texas Mortgage Credit Certificate

If you’re a first-time home buyer in Texas, this program could help you recoup up to $2,000 in interest per year. Every mortgage payment you make includes interest that goes straight to the lender, not your loan balance. Buyers can use the Texas Mortgage Credit Certificate (MCC) for a federal tax credit of up to 40% of their annual interest payment. This certificate is valid for the lifetime of your loan, provided the home remains your primary residence.

Learn More: 10 First-Time Home Buyer Assistance Programs to Look Into

Federal First-Time Home Buyer Programs

Aside from state programs, you may qualify for federal programs like FHA loans, VA loans, or USDA loans to help you save money on your first home. Down payment options can vary, but keep in mind that whatever you put down will also affect your monthly mortgage payments.

VA Loans

Designed for veterans and guaranteed by the United States Department of Veteran Affairs, this mortgage option bypasses some of the barriers to first time home ownership. There’s no minimum credit score, no down payment, and no mortgage insurance required.

USDA Loans

The USDA home loan program is designed for lower-income buyers. There’s no down payment required, plus you can use nontraditional credit data, such as rent history or utility payments.

FHA Loans

Insured by the Federal Housing Administration, the requirements for an FHA loan are usually less stringent than traditional mortgages. Credit scores as low as 500 could qualify for an FHA loan, though you’ll need to put down 10%. Higher credit scores may only need a 3.5% down payment.

Learn More: The Complete Guide to FHA Loans By State

Private Lender Programs in Texas for First-Time Home Buyers

Private lender programs in Texas also offer attractive options for first time home buyers. Low down payments and less strict credit score requirements have made private lender programs among the most popular.

Fannie Mae

Fannie Mae’s HomeReady program is ideal for low or moderate income home buyers with limited funds for a down payment and a credit score of at least 620. Unlike government programs, Fannie Mae allows you to cancel your mortgage insurance once you earn 20% equity in your home. In addition, you can also use multiple funding sources for closing costs and down payments, including grants and gifts.

Freddie Mac

Freddie Mac’s HomeOne mortgage is competitive with Fannie Mae and FHA loans, requiring a down payment of just 3%. Only first time home buyers are eligible for this loan option; however, if multiple people (e.g. husband and wife) are applying for the loan, only one has to be a first-time home buyer.

Learn More: 7 Easiest Mortgage Lenders for First-Time Home Buyers

Take Advantage of a Home Buyer Rebate in Texas

Texas is one of many states that offer a home buyer rebate or commission rebate. This means that the buyer’s agent will give the buyer a portion of the commission they receive from the seller. You can use this bonus to make an extra mortgage payment, make repairs on the home, buy furniture, or keep it in the bank for when you need it.

If you’re a first-time home buyer in Texas and are currently evaluating your financing options, connecting with a top-rated local real estate agent for guidance can be indispensable. Your agent can help you choose a reputable lender or mortgage type considering your big picture profile.

In addition, agents can help you uncover cost savings through their expertise with the timing of the market, property evaluation, negotiating skills, and networking with other professionals.

Working with a Clever Partner Agent provides you with cost-saving benefits and expertise every step of your home buying journey. Our Home Buyer Rebate gives you up to 1% back when you close on your home, which can help you pay for closing costs, moving expenses, home repairs, or other expenses.

Being a first-time home buyer is one of the most exciting moments in your life, especially if you can lessen your financial burden in the process.

Learn More: How to Get a Home Buyer Rebate

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