Yes, down payment assistance programs pair exceptionally well with FHA loans. FHA already requires only 3.5% down, and DPA programs can cover most or all of that amount plus your closing costs.
This combination is one of the most popular paths for Texas first-time buyers. TSAHC grants, My First Texas Home DPA, and San Antonio local programs all work with FHA as the first mortgage.
Why FHA + DPA Is the Most Popular Combination
FHA has the most flexible credit requirements (580+ for 3.5% down). DPA programs are designed to pair with FHA. Together they create the lowest barrier to entry for first-time buyers.
- Home price:$300,000
- FHA down payment (3.5%):$10,500
- DPA grant (up to 5%):$15,000
- DPA coversthe down payment AND some closing costs
FHA + TSAHC Example
Let us walk through a real scenario using a TSAHC grant with an FHA loan:
| Home price | $300,000 |
| FHA loan at 3.5% down | $10,500 |
| Closing costs (estimated) | $7,500 |
| Total needed at closing | $18,000 |
| TSAHC grant at 5% | $15,000 |
| Buyer's remaining cash needed | $3,000 |
That is just 1% of the purchase price to buy a home. The buyer only needs $3,000 out of pocket for earnest money and remaining closing costs. Compare that to the standard 3.5% down payment of $10,500 on its own — the DPA grant cuts the upfront cash requirement by over 70%.
FHA Mortgage Insurance With DPA
FHA requires two types of mortgage insurance, and it is important to understand how they work with DPA:
- Upfront MIP: 1.75% of the loan amount, rolled into the loan itself. On a $289,500 loan, that is about $5,066 added to your balance. You do not pay this out of pocket.
- Annual MIP: 0.55% of the loan balance, paid monthly. On that same loan, it works out to roughly $133 per month.
DPA does not change your mortgage insurance requirements — it covers your cash-to-close needs, not your loan terms. The mortgage insurance stays for the life of the loan unless you put 10% or more down, which is rare when using DPA. The trade-off is worth it: you get into a home now rather than waiting years to save a full down payment.
Which DPA Programs Work With FHA
Almost every major Texas down payment assistance program works with FHA loans. FHA is the most widely accepted first mortgage across all DPA programs:
- TSAHC (Texas State Affordable Housing Corporation): Yes
- My First Texas Home (TDHCA): Yes
- City of San Antonio homebuyer assistance: Yes
- HBA of San Antonio (Home Builders Association): Yes
- TDHCA (Texas Department of Housing and Community Affairs): Yes
Each program has its own income limits, purchase price caps, and homebuyer education requirements, but they all share one thing in common: FHA is their preferred first mortgage. If you qualify for FHA, you likely qualify for these DPA programs too.
Step-by-Step Process
Here is exactly how to combine FHA and DPA, step by step:
- 1 Find an FHA-approved, DPA-participating lender. Not every lender participates in every DPA program. Ask upfront whether they work with TSAHC, My First Texas Home, or local San Antonio programs.
- 2 Get pre-approved for FHA. Your lender will check your credit, income, and assets to determine how much home you can afford under FHA guidelines.
- 3 Apply for DPA simultaneously. Your loan officer can help you apply for the DPA program at the same time as your FHA loan. Both applications run in parallel.
- 4 Complete homebuyer education. Most DPA programs require an approved homebuyer education course. This is usually 4 to 8 hours online and costs $50 to $100.
- 5 Find your home and make an offer. With both pre-approval and DPA certification in hand, you are ready to house hunt with confidence.
- 6 Close with DPA covering your down payment and closing costs. At closing, the DPA funds are applied directly to your costs. You bring only the remaining cash needed — sometimes as little as $2,000 to $3,000.