Down Payment Assistance Programs for Austin, TX Home Buyers in 2026
Buying a home in Austin is one of the most exciting decisions you can make. One of the biggest obstacles first-time buyers face is coming up with the down payment. The good news: Texas has some of the most robust down payment assistance programs in the country, and many Austin buyers leave money on the table simply because they don’t know these programs exist.
At Mortgage Austin, we walk every client through their full range of options before we talk numbers. Here’s what you need to know about down payment assistance in Texas in 2026.
What Is Down Payment Assistance?
Down payment assistance (DPA) is exactly what it sounds like: money that helps you cover your down payment and, in some cases, closing costs. It can come in the form of a grant (free money you never repay), a forgivable loan (forgiven after you live in the home for a set period), or a second lien (a low-interest or deferred second mortgage).
These programs are designed to close the gap between what buyers have saved and what they need to close. For many Austin buyers, that gap is the difference between renting another year and owning a home today.
TSAHC: The Texas State Affordable Housing Corporation
The Texas State Affordable Housing Corporation (TSAHC) is the go-to source for down payment help in the Lone Star State. They run two flagship programs worth knowing about.
Homes for Texas Heroes
If you work in one of these professions, this program was built for you:
- Teachers and school counselors
- Firefighters and EMS personnel
- Law enforcement and correctional officers
- Veterans and active-duty military
The Homes for Texas Heroes program provides a down payment grant of 3% to 5% of the loan amount, which you never have to repay. You also get access to a competitive mortgage rate, and you can combine this program with a Mortgage Credit Certificate (MCC) for an additional annual tax credit.
Homes Sweet Texas Home Loan Program
Not in one of the hero professions? No problem. The Homes Sweet Texas program is open to any Texas buyer who meets income and credit requirements. You’ll need a minimum 620 credit score and must fall within the county-specific income limits. In Travis County, those limits are based on 115% of the Area Median Family Income (AMFI).
This program also provides 3% to 5% in down payment assistance, and the money can be structured as a grant or a deferred second lien depending on your situation.
The Mortgage Credit Certificate (MCC)
This one often gets overlooked, but it’s one of the most powerful tools available to Texas buyers. An MCC is not a loan or a grant; it’s a federal tax credit that reduces your income tax liability every single year for the life of the loan.
Here’s how it works: a percentage of your annual mortgage interest gets credited directly against your federal taxes. That means real savings every year, not just at closing. Combined with a TSAHC loan, it can meaningfully reduce the true cost of homeownership over time.
To be eligible, you generally need to be a first-time buyer (defined as not owning a primary residence in the past three years) and meet income and purchase price limits.
City of Austin and Travis County Programs
Beyond TSAHC, there are local programs worth exploring. The City of Austin has historically offered homebuyer assistance through its Neighborhood Housing and Community Development department. These programs tend to have stricter income requirements and limited funding, so they open and close periodically. We always check current availability for our clients because the landscape changes.
Travis County also participates in various housing initiatives. If you’re buying just outside the Austin city limits, it’s worth asking whether the specific area has targeted assistance programs available.
Conventional Options: HomeReady and Home Possible
If you don’t qualify for a state grant program, Fannie Mae’s HomeReady and Freddie Mac’s Home Possible loan programs are worth a close look. Both allow as little as 3% down on a conventional loan, with reduced private mortgage insurance (PMI) rates for qualifying buyers.
These programs are income-based and designed for moderate-income buyers. They also allow gift funds and, in some cases, rental income from a boarder to count toward qualification. For Austin buyers in certain census tracts, income limits may be waived entirely.
FHA Loans: Still a Strong Choice
FHA loans remain one of the most popular options for first-time buyers in Austin. With as little as 3.5% down and more flexible credit guidelines than conventional loans, they’re a reliable path to homeownership for buyers who haven’t had decades to accumulate savings.
FHA loans can also be combined with down payment assistance. Many TSAHC-eligible buyers use an FHA loan as the first mortgage paired with a DPA grant for the down payment, effectively reducing their out-of-pocket costs at closing. Visit our loan options page to learn more about FHA and other mortgage programs we offer.
How to Find Out What You Qualify For
Every buyer’s situation is different. Credit score, income, household size, the county you’re buying in, and the type of loan all play a role in which programs you can access. The best move is to have a conversation with someone who knows these programs inside and out.
We start every client relationship with a full picture of their options. That means looking at every available program, running the numbers on what each one actually costs over time, and helping you make the decision that makes the most sense for your life. You can reach out to us here or get a quick quote to get started.
If you already have a Loan Estimate from another lender, our Second Look program will show you exactly how it compares to what we can do for you, side by side, within 24 hours.
Frequently Asked Questions
Do I have to be a first-time buyer to qualify for down payment assistance in Texas?
Not always. Some programs, like the Homes for Texas Heroes program through TSAHC, do not require first-time buyer status. Others, including the Mortgage Credit Certificate, define first-time buyer as anyone who hasn’t owned a primary residence in the past three years. We’ll help you sort through the specifics based on your situation.
Is down payment assistance money I have to repay?
It depends on the program. TSAHC grants are true grants, meaning you never repay them as long as you use the home as your primary residence. Forgivable second liens are typically forgiven over three years. Deferred second liens don’t require monthly payments but do need to be paid back when you sell or refinance. We’ll walk you through the exact terms before you commit to anything.
What credit score do I need to qualify for TSAHC programs?
The minimum credit score for TSAHC programs is 620. A higher score will generally get you better loan terms and interest rates. If your credit is below 620, we can talk through a plan to get you there. Many buyers come to us six months before they’re ready and leave with a roadmap that actually works.
Can I use down payment assistance on any home in Austin?
Most programs apply statewide and don’t restrict you to specific neighborhoods. There are purchase price limits that vary by county, but in most Austin-area zip codes there is plenty of room to work with. We’ll confirm the specific limits based on where you’re looking to buy.
How long does the process take when using down payment assistance?
The timeline is similar to a standard mortgage. Most closings happen in 30 to 45 days. The key is getting pre-approved early so we have time to line up all the program documentation. The earlier you start the process, the smoother it goes.
Ferrando Financial LLC | NMLS# 2403080 | Licensed in Texas. This is not a commitment to lend. Loan approval is subject to credit approval and program guidelines. Down payment assistance programs are subject to availability and eligibility requirements. Rates and terms vary.
