TSAHC Home Sweet Texas Home: Down Payment Help for Austin Buyers

Saving for a down payment is one of the biggest barriers first-time buyers in Austin face. A 3.5% down payment on a $450,000 home is $15,750. That’s before closing costs. The Texas State Affordable Housing Corporation (TSAHC) runs two programs that can provide a grant equal to 3% to 5% of the loan amount, money that does not need to be repaid. If you qualify, this is real money at closing that can cover the gap between what you’ve saved and what the transaction requires.

This post covers TSAHC’s Home Sweet Texas Home Loan Program: who it’s for, how the assistance works, what income and purchase price limits apply in the Austin area, and how to combine it with a conventional or FHA first mortgage.

What Is the Home Sweet Texas Home Loan Program?

The Home Sweet Texas Home Loan Program is TSAHC’s general first-time buyer down payment assistance product. “First-time buyer” in this context means you have not owned a home as a primary residence in the last three years. The program is available statewide through approved lenders and provides a grant, not a second loan, to cover part of your down payment and closing costs.

TSAHC also operates the Homes for Texas Heroes program, which targets specific professions: teachers, police officers, firefighters, EMS personnel, veterans, corrections officers, and nurses. Heroes get a slightly higher grant percentage in some cases. If you work in one of those fields, ask your lender about the Heroes program specifically. If you’re a general first-time buyer, Home Sweet Texas is the applicable track.

Both programs are funded through mortgage revenue bonds, which is why they come with income and purchase price limits. The bonds are designed to serve buyers who earn moderate incomes and are purchasing within a certain price range, not luxury buyers.

How Does the Grant Actually Work?

The grant is funded at closing through the bond program. You receive a grant equal to 3% or 5% of the loan amount (your lender will help you choose based on eligibility and rate tradeoffs) which is applied directly toward your down payment and/or closing costs. The grant money never needs to be repaid, and there is no second lien recorded against the property.

The tradeoff is the interest rate. TSAHC loans are funded through bond programs, and the interest rate is set by TSAHC rather than market negotiation. In many cases, the rate on a TSAHC loan runs 0.25 to 0.75 percentage points above what you’d see on a standard conventional or FHA loan without assistance. Whether this tradeoff is favorable depends on how much grant money you receive and what your down payment situation looks like. Your lender can run the numbers side by side: TSAHC with grant vs. standard FHA with no assistance.

Important: the grant funds the gap in your down payment. If you’re getting a 3.5% down FHA loan and a 3.5% grant, your out-of-pocket down payment is covered entirely. Closing costs would still require either your own funds or a seller concession, unless the grant amount exceeds your down payment need.

Income and Purchase Price Limits in the Austin Area

TSAHC updates income and purchase price limits annually. For 2026, buyers in Travis County and surrounding counties (Williamson, Hays, Bastrop, Caldwell) should verify current limits with a TSAHC-approved lender, as they can shift from year to year. As a general frame, income limits for a household of 1 to 2 people in the Austin MSA have historically run between $80,000 and $100,000, with higher limits for larger households. Purchase price caps have generally been in the $400,000 to $500,000 range for Travis County, though this depends on whether the property is in a Targeted Area (federally designated census tracts where limits are higher).

Buyers purchasing in a Targeted Area get higher income limits and in some cases are not required to be first-time buyers at all. Your lender can look up whether the property you’re considering falls in a Targeted Area by census tract.

If your income exceeds the standard limit, check whether the home address qualifies as a Targeted Area before assuming you’re ineligible. Many buyers who initially think they’re over the income threshold still qualify once the property address is checked.

Which Loan Types Work With TSAHC DPA?

The Home Sweet Texas grant can be paired with a 30-year fixed FHA loan or a conventional loan. There is no 15-year or adjustable-rate option through TSAHC. If you want an ARM or a shorter loan term, you’d need to pursue down payment assistance through other means or fund the down payment independently.

FHA pairing: the most common combination. FHA requires 3.5% down at 580 credit or above. A 3.5% TSAHC grant covers this entirely. You’d still need funds for closing costs unless a seller concession covers them, or the grant amount (on larger loan amounts) exceeds 3.5% of the purchase price.

Conventional pairing: works well if you have a 620 or higher credit score. Conventional loans on TSAHC programs typically require 3% or more down. A 3% grant covers a 3%-down conventional loan’s down payment at some loan amounts. This path avoids FHA mortgage insurance premium (MIP), which can mean lower total monthly cost depending on your credit score and loan-to-value ratio.

See how pre-approval works for first-time buyers in Austin, because for TSAHC loans you’ll want to confirm eligibility with a TSAHC-approved lender before you start house hunting, not after.

What a TSAHC Loan Application Looks Like in Practice

The application process runs through a TSAHC-approved lender rather than TSAHC directly. You apply for your first mortgage and the lender simultaneously packages the grant request. You don’t apply to TSAHC separately. From a borrower’s perspective, the process feels similar to a standard FHA or conventional application, with a few additional eligibility checks: income verification against TSAHC limits, first-time buyer certification (if not in a Targeted Area), and homebuyer education completion.

Homebuyer education is required for TSAHC DPA programs. The course takes two to eight hours depending on the provider and can often be completed online. TSAHC accepts courses from HUD-approved housing counseling agencies. Build this into your pre-closing timeline; it’s not something you want to schedule the day before closing.

The first documents your lender will need are the same as any mortgage: pay stubs, W-2s, tax returns, bank statements, and ID. Here’s the full list of documents to gather before your loan application so you have everything ready when you sit down with a TSAHC-approved lender.

Is TSAHC DPA Worth It for Austin Buyers?

For buyers who qualify and need the cash at closing, the answer is usually yes. Receiving $13,500 in grant money on a $450,000 loan (3% of loan amount) eliminates the need to save another year or two to cover the down payment gap. The rate tradeoff (roughly 0.25 to 0.5 points higher) costs money over time, but most buyers use this path to get into a home sooner rather than waiting until they can fully self-fund the down payment.

For buyers who already have 5% or more saved and a solid income, the rate premium may not be worth it compared to a standard conventional loan with no assistance. Run the numbers with your lender: what does the monthly payment difference look like between TSAHC rate + no down payment cost, versus standard rate + your saved down payment? The break-even point is usually clear within a five-year projection.

One thing to check: not every Austin lender is TSAHC-approved. If your first-choice lender doesn’t participate, you can still use TSAHC through a different lender. The full first-time buyer checklist for Austin includes questions to ask any lender before you commit.

Frequently Asked Questions

Do I have to pay back the TSAHC down payment grant?

No. The TSAHC Home Sweet Texas grant does not require repayment and does not create a second lien on your property. Once you close, the grant money is gone. There is no recapture provision if you sell the home early, unlike some second-lien DPA programs from other sources. This is a true grant, not a deferred loan.

What income limits apply for TSAHC in Travis County in 2026?

TSAHC adjusts income limits annually by county and household size. For Travis County in 2026, the limit for a 1- to 2-person household has historically been in the $80,000 to $100,000 range, with higher limits for 3+ person households and for properties in federally designated Targeted Areas. Confirm the exact current numbers with a TSAHC-approved lender since they update each program year.

Can I use TSAHC with a conventional loan instead of FHA?

Yes. TSAHC’s Home Sweet Texas program pairs with both FHA and conventional 30-year fixed mortgages. A conventional pairing can make sense if your credit score is 680 or above, because conventional loans above certain thresholds don’t require mortgage insurance for the life of the loan the way FHA loans do. Ask your lender to run both scenarios side by side before choosing.

Is there a purchase price limit for homes in Austin?

Yes. TSAHC sets purchase price limits by county. For Travis County, the limit has historically been around $400,000 to $500,000 for standard areas, with a higher cap for properties in Targeted Areas (census tracts designated by the federal government). Given Austin’s price levels, this means the program works best in outlying neighborhoods or suburban counties like Williamson and Hays. A TSAHC-approved lender can confirm the current limit and look up whether your target property qualifies.

Do I have to be a first-time buyer to use TSAHC?

For most Home Sweet Texas transactions, yes. TSAHC defines “first-time buyer” as someone who has not owned a primary residence in the last three years. The exception is properties located in a Targeted Area, where the first-time buyer requirement is waived. Homes for Texas Heroes (the profession-based track) also waives the first-time buyer requirement for qualified professionals regardless of location.

What is the interest rate on a TSAHC loan vs. a regular mortgage?

TSAHC sets the rate through its bond program, and it typically runs 0.25 to 0.75 percentage points above market rate for a comparable conventional or FHA loan. The rate tradeoff funds the grant. For buyers who receive $10,000 to $20,000 in grant money, the higher rate often pays for itself within two to four years compared to waiting and saving independently. Ask your lender to model both paths over a five-year horizon.

Want to find out if you qualify? Schedule a discovery call and we’ll check your income, the property address, and the current TSAHC limits together, no pressure, no commitment.

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Ferrando Financial LLC | NMLS# 2403080 | Licensed in Texas. This content is for educational purposes only and does not constitute a commitment to lend. Loan approval is subject to credit, income, and property qualification. TSAHC program availability, income limits, and purchase price caps are subject to change; verify current program terms with a TSAHC-approved lender. Sources: Texas State Affordable Housing Corporation (tsahc.org), program guidelines current as of June 2026.