Down payment assistance (DPA) is money, often a grant or a forgivable second loan, that helps cover your down payment and closing costs, and Texas has one of the most active assistance landscapes in the country, from statewide TSAHC programs to City of San Antonio and Bexar County funds. The catch is that most programs work a specific way: they attach to a first mortgage, carry income and credit requirements, and usually trade assistance for a slightly higher interest rate. Understand that trade and DPA can cut your cash-to-close by thousands; miss it and you can overpay for a decade in rate.
This guide maps the landscape, explains how the programs actually work, and shows how to combine them with your loan type. For the fastest comparison of the top Texas programs, my best DPA programs answer is a two-minute read.
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Texas First Time Home Buyers | Best Down Payment Assistance - 2026
Patrick runs through the best DPA programs in Texas, how they work, and the restrictions to watch for.
Watch the videoThe Landscape: State, City, and County Programs
The most useful way to see the landscape is by who funds it:
TSAHC Home Sweet Texas (statewide). The Texas State Affordable Housing Corporation runs the state's flagship program. You select a down payment assistance tier, commonly 2%, 3%, or 4% of the loan amount, delivered as a grant or a deferred, forgivable second lien that is forgiven after roughly three years. In exchange, the program carries a pricing premium on the rate, and it pairs with 30-year fixed FHA, VA, USDA, or conventional loans. Minimum credit is 620 on government loans, 640 on conventional, and income limits go up to about 125% to 150% of area median income in qualifying areas. The Home Sweet Texas deep dive and the Texas DPA guide cover the tiers and the rate trade in detail.
City of San Antonio (HIP). San Antonio's Homeownership Incentive Programs lend qualified buyers 0% interest second loans: HIP 80 provides $1,000 to $30,000 for households at or below 80% of area median income, forgivable as you stay in the home, and HIP 120 provides $1,000 to $15,000 for households between 81% and 120% of area median income, with 75% forgiven over 10 years. The programs cap purchase prices, around $301,700 for existing homes and $332,800 for new construction in the current guidelines, and funds can be limited, so timing matters. Your loan officer should check the city's current limits before you plan around a specific number, since both income limits and funding windows refresh over time.
Bexar County and community partners. Bexar County funds its own down payment program for eligible buyers outside the city, and nonprofits like Neighborhood Housing Services of San Antonio run additional assistance. Amounts and income caps change by funding cycle, so treat them as "check current guidelines" items. For veterans, the Texas Veterans Land Board offers its own below-market financing worth knowing.
How DPA Actually Works: Grants, Forgivable Seconds, and the Rate Trade
Every assistance program is one of three shapes. A grant never has to be repaid, no strings past occupancy and continuing to own the home for the required period. A forgivable second lien is a real second mortgage that is forgiven in pieces or in full after you stay in the home a set number of years, usually 3 to 10. A deferred loan is a genuine loan you repay only when you sell, refinance, or pay off the first mortgage, sometimes with no monthly payment and no interest. The grant vs loan answer explains the differences that matter when you sell early.
The trade you need to see before you sign: most DPA programs fund the assistance by charging a higher rate on the first mortgage, either a fixed premium or a rate that climbs with the assistance tier. On a $300,000 loan, each quarter-percent of rate costs roughly $45 to $50 a month, so a 0.5% premium is about $90 to $100 a month for the life of the loan. The question is whether the $9,000 you keep in your pocket today is worth that monthly cost over the years you own the home. For a buyer with little cash, the answer is almost always yes. For a buyer with plenty of reserves, self-financing the down payment and skipping the premium is often cheaper. That is the conversation I have with every client, and it is why credit score and DPA get discussed together before we pick a program.
Income and Credit: What Programs Expect
Two filters decide most eligibility. First, income: programs use area median income (AMI) for your county and household size, and you must stay under the ceiling, which is why higher-income buyers get locked out of the biggest assistance. TSAHC's limits reach up to 125% to 150% of AMI in qualifying areas, which is generous by national standards. City programs are stricter, at 80% or 120% of AMI depending on the tier. The income limits answer explains how AMI math works. Second, credit: most programs require a 620 to 640 minimum, and higher scores unlock better pricing on the underlying loan, so a 640-score buyer and a 740-score buyer can face very different total costs for the same house.
Many programs also add softer requirements: a homebuyer education course, a first-time buyer definition, or a purchase price cap. The application sequence is worth knowing before you shop: get pre-approved first, then match your approval to the program's first mortgage requirements, then apply for the DPA with your lender. The DPA application steps answer lays out the order in plain English.
Combining DPA With Your Loan Type
The classic combination in this market is DPA on an FHA loan. FHA needs only 3.5% down, and a 3% DPA tier covers most of it: on a $300,000 home, 3.5% down is $10,500 and a 3% DPA is $9,000, leaving just $1,500 of the down payment for you to cover. FHA also allows sellers to contribute up to 6% of the price toward your closing costs, and when you stack DPA with seller concessions, buyers regularly get to closing with only their earnest money plus a few thousand dollars. The FHA plus DPA answer and the $1,000 cash-to-close example show the math worked out.
Conventional loans combine with DPA too, especially HFA-backed conventional programs, which carry 640 credit minimums and 3% down structures, and VA buyers can stack certain assistance where program rules allow it, though VA's zero-down benefit already minimizes what DPA needs to cover. The conventional plus DPA and VA plus DPA answers cover the combinations, and the no-money-down guide shows buyers walking to closing with near-zero cash using all three levers: DPA, concessions, and loan structure.
The Bottom Line
Down payment assistance is one of the few places in home buying where the government and local programs hand you money you did not have before. Use it well and you buy sooner with less cash; use it carelessly and you pay a rate premium for years. The programs shift: income limits refresh, funding windows open and close, and tiers change. That is exactly why you want a loan officer who runs Texas DPA programs every week, not one who reads about them once a year. The current program details are always verified against the latest guidelines before we structure anything.
Frequently Asked Questions
How much down payment assistance can I get in Texas? Tap to expand
Does down payment assistance have to be paid back? Tap to expand
What credit score do I need for down payment assistance? Tap to expand
Can I use down payment assistance with an FHA loan? Tap to expand
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Patrick Kevin Fagan
Loan Officer and Realtor | AXEN Realty LLC | San Antonio and Texas Hill Country
Licensed Sales Agent | 454749 | TX | NMLS 877741
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