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Both the Texas state government and the federal government offer special programs for first-time home buyers. These programs may allow you to get a loan with low down payment and credit score requirements. They’ve also designed programs for specific demographics, such as veterans or school teachers. If you want professional help during the home buying process,
A financial advisor can help you explore your options and build a budget that puts you on a path to home ownership.
Federal First-Time Home Buyer Programs
Before we get to the programs available only to Texas residents, we’ll first touch on several national home buyer programs that anyone can access. It’s a good idea to consider both federal and state programs when you conduct your mortgage search.
FHA Loans 1
| Pros | – No down payment required – Can be for the entire value of your new home |
| Cons | – Larger down payment needed for those with a credit score below 580 |
| Eligibility | – As little as a 3.5% down payment – Credit score must be 500 or above |
| Best For | – Those who don’t have a great credit history and money for a down payment |
The Federal Housing Administration actually handles FHA loans in conjunction with the lenders that include them as part of their mortgage portfolio. These loans offer the lowest down payment options available (save for those programs offered specifically to veterans) typically around 3.5%. For reference, some conventional mortgage programs also permit down payments as low as 3% but the median down payment in 2025 was 10% for first-time buyers. 2
The 3.5% down payment only applies to applicants who have a FICO® credit score of 580 or higher. Should you fall below that threshold, the FHA will require you to pay a 10% down payment, which still beats what most mortgages in Texas can offer.
VA Loans
| Pros | – Can have up to 100% loan coverage of your home’s value – Usually come with lower closing costs than conventional loans – No private mortgage insurance |
| Cons | – The application process can be drawn out – Must pay a VA funding fee |
| Eligibility | – Must be a current or former military member, or a member’s spouse or another eligible beneficiary – Must have a credit score of 620 or higher 3 |
| Best For | – Veterans with little monthly income and savings for a comfortable down payment |
Veterans, current members of the U.S. military, their spouses and other eligible beneficiaries can apply for a VA mortgage through the Department of Veterans Affairs. These are perfect for first-time home buyers who lack the capital for a normal down payment but have the monthly income to take on a mortgage. So as long as your new home’s value falls within the standards of a VA loan, you can have as much as 100% of the price covered by your loan.
As great as this sounds, VA loans do come paired with a VA funding fee that can range anywhere from 1.25% to 3.3% of the loan amount, depending on the type of loan, down payment and whether the borrower has used the benefit before. 4 Some borrowers are exempt from the fee. You could think of this as a substitute down payment, but even if you do, it’s still less than the vast majority of other options. On top of this, individual lenders may impose their own credit score requirements, although the VA doesn’t set a minimum.
Outside of this funding fee, you won’t have to pay much else at the time of your purchase as closing costs are low. Also, because the VA insures these loans buyers won’t have to get private mortgage insurance.
USDA Loans 5
| Pros | – Can have up to 100% loan coverage of your home’s value |
| Cons | – If you qualify for a conventional mortgage, you can’t get one |
| Eligibility | – Adjusted household income can’t surpass 115% of the area median income for most USDA loans – Must purchase a home within an eligible rural area |
| Best For | – Low-to-mid-income Americans looking to live in a rural or suburban area |
In an effort to get home buyers to move into rural, semi-rural and certain suburban areas around the U.S., the United States Department of Agriculture developed the USDA loan program. These apply to single-family homes that are located in approved areas.
Similar to their VA loan counterparts, USDA loans do not come with minimum down payment requirements, allowing you to finance up to 100% of your new home’s value. However, borrowers must satisfy the USDA’s credit, income and repayment requirements. A low credit score does not automatically trigger a 10% down payment requirement.
Your biggest risk for approval would be having too much income. To qualify for a common USDA loan through the guaranteed loan program, your household income generally can’t exceed 115% of the median income for the area you wish to live in.
Good Neighbor Next Door Program 6
| Pros | – Get a flat 50% discount on the value of your new home – After three years, you can sell the home and keep all equity |
| Cons | – Not available to most people and in most areas – You’re required to live in the home for at least three years following purchase |
| Eligibility | – Must be a police officer, firefighter, emergency medical technician or a pre-K to 12th grade teacher |
| Best For | – Teachers or emergency personnel with little in savings |
By design, the Good Neighbor Next Door Program attracts pre-K through 12th-grade teachers and emergency personnel to areas around the U.S where there is a need for such professionals. The federal government has identified these various places and deemed them “revitalization areas.” So if you’re a police officer, firefighter, emergency medical technician or school teacher, you can use this program to get a house in one of these areas for 50% off.
While this program is obviously beneficial, you don’t physically obtain your mortgage through it. Instead, your discount will apply through the program, and you can pay cash or get a conventional, FHA or VA mortgage to cover the balance. However, the law requires you to use this home as your primary residence for no less than three years, at which point you can sell it and keep the profits.
Fannie Mae/Freddie Mac 7
| Pros | – Very low down payment stipulations – Little to no credit needed for approval – Many loan styles available |
| Cons | – Could come with higher interest rates |
| Eligibility | – In some cases, no income requirements in underserved areas |
| Best For | – Anyone who is looking for a low down payment loan option, but doesn’t qualify for any of the above options |
The federal government created Freddie Mac and Fannie Mae to help build stability in the mortgage market, and each offered a loan program geared toward first-time home buyers.
Fannie Mae’s HomeReady® mortgage requires a lower down payment than an FHA loan at 3%. So on a $250,000 home, that would be a $7,500 down payment, which should be doable for most applicants. HomeReady generally limits qualifying income to 80% of the area’s median income, and borrowers must meet the program’s credit and underwriting requirements. While you will be required to pay for private mortgage insurance, it may be canceled when the applicable equity and other requirements are met.
Freddie Mac’s Home Possible® program also permits down payments as low as 3% for eligible borrowers. It generally limits qualifying income to 80% of area median income and offers fixed-rate and certain adjustable-rate mortgage options. Mortgage insurance generally becomes a requirement when the down payment is less than 20%.
NADL 8
| Pros | – Minimal credit score requirements – No down payment and no private mortgage insurance – Cheap closing costs |
| Cons | – Limited group of eligible borrowers |
| Eligibility | – Home must be located on allotted lands, Alaska Native corporations, Pacific Island territories or federally-recognized trusts |
| Best For | – Native American veterans that lack money for a down payment |
As an alternative to traditional VA loans, the Department of Veterans Affairs created the Native American Direct Loan (NADL) just for Native American veterans and their spouses. These mortgages feature a 0% down payment requirement and do not call for private mortgage insurance because the VA backs the loan. You’ll also receive lower closing costs than most mortgage alternatives to even further ease the initial financial stress. NADLs are extremely forgiving when it comes to credit score requirements for approval as well.
Unfortunately, you cannot use these loans to purchase, build or renovate just any home. The property must be on eligible federal trust land, and the borrower must meet the VA’s NADL requirements.
Texas First-Time Home Buyer Programs
My First Texas Home 9
| Pros | – Can get up to a 5% loan to help cover your down payment or closing costs – Relatively simple credit requirements |
| Cons | – Limited applicant standards |
| Eligibility | – Only for first-time home buyers or people who haven’t owned a home in the last three years – Need at least a credit score of 620 |
| Best For | – Mid- to low-income borrowers |
The Texas Department of Housing and Community Affairs (TDHCA) handles all of the state’s first-time home buyer offers, including My Choice Texas Home program and My First Texas Home. This program offers a 30-year fixed-rate loan with relatively easy-to-meet credit stipulations, along with decent interest rates.
It’s also paired with a down payment and closing cost assistance that could be worth as much as 5% of the mortgage loan amount, depending on the assistance option available. So while this is definitely preferential for first-time home buyers, those who haven’t been a homeowner within the last three years are also eligible. Certain veterans and buyers in designated areas may qualify for exceptions to the first-time buyer requirement.
Texas Bootstrap Loan Program 10
| Pros | – Allows you to get a loan to build your own home |
| Cons | – Low-income families with very few homebuying options |
| Eligibility | – Cannot have an annual household income higher than 60% of the state/local median family income – Need a “reasonable” credit history |
| Best For | – Low-income families with very little homebuying options |
The Texas Bootstrap Loan Program is one of the more distinctive first-time home buyer programs around the country. Rather than help you purchase a home, this offer quite literally has you build your own home. Within the context of this program, your title will be an “owner-builder.” You’re required to be under the supervision of a Nonprofit Owner-Builder Housing Provider, or NOHP, that is certified by Texas. The purpose of this relationship is to make sure you know what you’re doing and that you are following all laws.
Should you enter this program, you must do at least 65% of the labor associated with the building. The NOHP, family members, friends, and volunteers can help you fill the gap. Your total debt-to-income ratio can’t exceed 45%, and you have to have lived in Texas for at least six months before applying. The maximum benefit of the program is $45,000 on a 30-year, zero-interest term. However, you are not barred from seeking finances from other places as well.
Texas Mortgage Credit Certificate Program 11
| Pros | – Can get a 20% annual mortgage interest payment federal tax credit |
| Cons | – Tax credits are capped at $2,000 |
| Eligibility | – Must be either a first-time home buyer, an eligible veteran or someone who hasn’t owned a home over the last three years |
| Best For | – Those looking to save a little extra on their federal taxes |
The Texas Mortgage Credit Certificate Program is available through TDHCA either alongside an eligible first mortgage or as a stand-alone option, subject to program requirements and available funding. The certificate allows qualifying homeowners to claim a federal income tax credit based on eligible mortgage interest paid during the year. The credit percentage and any annual cap depend on the certificate issued.
To get in on this beneficial program, you only need to have not been a homeowner during the last three years. Certain eligible veterans and buyers purchasing homes in designated targeted areas may qualify for exceptions to the first-time home buyer rule. Income and purchase price limits also apply.
Other initiatives available to first-time home buyers are the Home Sweet Texas Home program and the Homes for Texas Heroes program.
How to Compare Texas Down Payment Assistance Programs
The amount of assistance advertised by a program is only one part of deciding whether it will help you buy a home. Texas buyers should also compare the mortgage interest rate, closing costs and repayment requirements attached to each option.
For instance, suppose you are purchasing a $250,000 home with an FHA mortgage and a 3.5% down payment. Your required down payment would be $8,750:
- $250,000 × 3.5% = $8,750
The base mortgage amount would be $241,250 before any financed upfront mortgage insurance premium. If an assistance program offered 5% of that loan amount, the potential assistance would be $12,062.50:
- $241,250 × 5% = $12,062.50
That would be enough to cover the $8,750 down payment and leave $3,312.50 potentially available for eligible closing costs. The actual amount would depend on the program’s terms, lender requirements and limits on how you can use the assistance.
Example
| Assistance Type | How It Works | What to Check |
|---|---|---|
| Grant | Provides funds that generally do not require repayment if program conditions are met | Eligibility rules and any restrictions on use |
| Forgivable second loan | Provides assistance through a second mortgage that may be forgiven after a specified period | Whether selling or refinancing early triggers repayment |
| Repayable second loan | Provides financing that must be repaid under the loan agreement | Interest, payment schedule and when the balance becomes due |
The Texas State Affordable Housing Corporation offers eligible buyers assistance of up to 5% of the loan amount through its Home Sweet Texas and Homes for Texas Heroes programs. 12 Depending on the option selected, assistance may come as a grant or a second loan that can be forgiven after three years if the borrower meets the conditions.
Before choosing a program, ask a participating lender for a Loan Estimate showing the mortgage rate, monthly payment, cash needed at closing and any second-loan obligations. Comparing those figures can help you determine whether a larger assistance amount is worth the financing terms attached to it.
Bottom Line
Buying your first home is one of the most exciting things you can do. The process can be a bit overwhelming for those who haven’t done it before, but both the Texas state government and the federal government offer first-time homebuyer programs that make things simpler. As with any major financial decision, though, do your research and consider talking with a financial advisor before actually putting down any of your own money.
Homebuying Tips
- As a first-time home buyer, you’ll undoubtedly be thrust into financial situations that you’ve simply never come across before. That’s why it may be a good idea to speak with a financial professional. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Before you fall in love with a home outside of your price range, you’ll want to determine what you can actually afford. SmartAsset’s home affordability calculator is a great place to start.
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Article Sources
All articles are reviewed and updated by SmartAsset’s fact-checkers for accuracy. Visit our Editorial Policy for more details on our overall journalistic standards.
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- “Highlights From the Profile of Home Buyers and Sellers.” National Association of REALTORS®, Nov. 4, 2024, https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers.
- Tim Alvis, Loan. “VA Loan Credit Score Minimums and Lender Requirements.” Veterans United, Oct. 31, 2023, https://www.veteransunited.com/realestate/va-loans-and-credit-score-minimums-what-all-buyers-need-to-know/.
- “VA Funding Fee and Loan Closing Costs | Veterans Affairs.” Veterans Affairs, Oct. 5, 2026, https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/.
- “Single Family Housing Guaranteed Loan Program.” Rural Development, June 22, 2026, www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program#overview.
- “HUD Good Neighbor Next Door Program | HUD.Gov / U.S. Department of Housing and Urban Development (HUD).” HUD Logo, http://www.hud.gov/helping-americans/good-neighbor. Accessed Oct. 23, 2026.
- “Homeready Mortgage.” Fannie Mae, singlefamily.fanniemae.com/originating-underwriting/mortgage-products/homeready-mortgage. Accessed Oct. 23, 2026.
- “Native American Direct Loan | Veterans Affairs.” Veterans Affairs, Oct. 7, 2026, https://www.va.gov/housing-assistance/home-loans/loan-types/native-american-direct-loan/.
- “Programs.” The Texas Homebuyers Program, https://welcomehome.tdhca.texas.gov/programs. Accessed Oct. 23, 2026.
- “Texas Bootstrap Loan Program | Texas Department of Housing and Community Affairs.” Texas Department of Housing and Community Affairs, https://www.tdhca.texas.gov/programs/texas-bootstrap-loan-program. Accessed Oct. 23, 2026.
- “Texas Mortgage Credit Certificate Program.” The Texas Homebuyers Program, https://welcomehome.tdhca.texas.gov/programs/texas-mortgage-credit-certificate-program. Accessed Oct. 23, 2026.
- “Home Sweet Texas | Texas State Affordable Housing Corporation.” Texas State Affordable Housing Corporation, https://www.tsahc.org/program/home-sweet-texas-homes/. Accessed Oct. 23, 2026.