Housing grants are a way for low-income families to get the money they need to fund the purchase of a home or rental property, the refurbishment of existing properties, or the receipt of aid if they are in danger of losing their home due to foreclosure.
In Texas, first-time home buyers can take advantage of various loan programs to finance their home purchase. Affordable lending programs and down-payment funding are available to help families unable to afford a home. We will walk you through the buying process and path to homeownership with different options and how to get a grant for a house.
Below are the programs that can help you fund your home purchase:
Frisco Down Payment Assistance Program
The City of Frisco now maintains a Down Payment Assistance Program to assist low and moderate-income families that work for the City of Frisco or the Frisco Independent School District in purchasing a single-family home in Frisco.
Families with at least one adult working full-time for the City of Frisco for at least six months may be eligible for assistance in purchasing a Frisco property. The program offers eligible buyers forgiving loans of up to $10,000 for the downpayment and closing cost assistance. You can visit their website to learn more about how to get a grant for a house.
Eligibility Criteria
A household must be a first-time homebuyer to be eligible (with some exceptions). Income requirements and purchase price limits differ depending on the size of the household. Income limits dictate that the total household income of all people must not exceed $131,989, and the maximum sale price must not exceed $411,700. Government agencies and government programs, like the first-time buyer program, combined with the Down Payment Assistance Program can assist practically anyone in becoming a homeowner and creating generational wealth.
McKinney Down Payment & Closing Cost Assistance Program
The City of McKinney Homebuyer Assistance Program assists low-to-moderate-income first-time homebuyers with downpayment and closing costs. For the downpayment and non-recurring closing costs associated with the purchase process of a new home, assistance is provided up to $10,000 in the form of a 0% mortgage interest rate, five-year forgiving loan. Only if you refinance, pay off the first mortgage, sell, or otherwise pass title to the property during the five years, you will need to repay the loan, potentially avoiding mortgage insurance.
Eligibility Criteria
Now that you know how to get a grant for a house in McKinney, you will need to assess your eligibility for this program. You are eligible for the City of McKinney Homebuyer Assistance Program if you match the following criteria:
- You've never bought a house before. A first-time homebuyer is a person or family who has not owned a home in the past three years or is a displaced homemaker.
- Show proof of citizenship or permanent legal resident alien status in the United States.
- You may be able to get a mortgage loan from a private lender.
- The debt-to-income ratio (also known as the "back-end ratio") cannot be more than 45%.
- The housing ratio (also known as the "front-end ratio") must be at least 20%.
- As your primary residence, you will live in the house.
- The house must be located within the city limits of McKinney, Texas.
- Your earnings do not reach 80% of the Area Median Earnings.
- Take a path to homeownership class certified by HUD and the City of McKinney.
Application Process
The eligible buyers start the process by contacting their preferred private lender.
- The buyers start the process by contacting their preferred private lender.
- The buyer and the seller sign an accepted real estate purchase contract. Proof of payment of earnest money is required.
- The buyer submits a Homebuyer Assistance Program Application to the McKinney Housing and Community Development Department, along with any required papers. The Housing Services Office must receive completed applications at least 45 days ahead of the property's estimated closing date.
- Only applications that are filled out will be evaluated. A note will be sent to the homebuyer explaining the issues that are still pending within five business days of receiving an incomplete application. Applications that are still unfinished 30 days after they were first submitted will be rejected.
Travis County - Hill Country Home Down Payment Assistance
The Travis County Housing Finance Corporation offers the Hill Country Home Down Payment Assistance grant program to assist homebuyers in obtaining government-backed FHA, VA, or USDA-RD loan financing. It aims to help first-time homebuyers in Travis County, including the City of Austin, overcome the barrier of downpayment costs.
Qualified applicants can get a competitive, 30-year fixed-rate loan with either 4%-6% of the initial principal balance of the loan amount to use for downpayment or closing cost assistance through the affordable housing programs. The help comes in the form of a 10-year forgivable second mortgage loan with no interest. To learn more about how to get a grant for a house, visit Travis County's Homebuyers website.
Eligibility Requirements
All borrowers must meet the following requirements to be eligible for the program:
- Buyers must have a minimum FICO credit score of 640 and a debt-to-income (DTI) ratio of no more than 45%.
- For loan qualification, there are standard guidelines (i.e., adequate income, acceptable credit, and downpayment requirement).
- All first-time homebuyers must complete and receive a certificate from a HUD-approved homebuyer education course.
- The maximum household income for credit-qualifying cannot exceed 140% of the current annual household income of $138,460.
Property Requirements
The funds from the program can only be used to buy a home, not to refinance. They must be in Travis County, including the City of Austin, and the buyers must live in the home as their primary residence (no minimum residency). The type of property and the lender determines the purchase price limit based on the borrower's credit, income, debt-to-income ratio, and other factors. The program's maximum purchase price is $364,452.
SETH 5 Star Texas Advantage Program
The 5 Star Texas Advantage Program, offered by the Southeast Texas Housing Finance (SETH) Corporation, assists eligible candidates with downpayment and closing cost assistance in the form of a grant. Affordable homes are more accessible through these programs. Qualifying candidates can receive up to 6% of the total loan amount, which doesn't need to be repaid. Buyers must take a HUD-approved homebuyer course, and they can choose any FHA, USDA, or VA government loan program to be eligible.
There is no repayment or recapture time for the monies donated, and there is no second lien on the land, making the 5 Star Texas Advantage Program a pure gift. Furthermore, the program does not need participants to be first-time homebuyers.
Eligibility Criteria
The eligibility criteria to qualify for the Star Texas Advantage Program are as follows:
- Buyers must be able to afford it.
- They must buy a house within the program's boundaries (the entire State of Texas except for the city limits of El Paso, Grand Prairie, and Travis County).
- All mortgage buyers must take the SETH Homebuyer Education Class online.
This program aims to make cash accessible to eligible applicants who want to buy a house but need financial assistance with the upfront costs, such as the downpayment, closing charges, and other things that come with homeownership. These costs can build up quickly, and an inability to pay them can keep people trapped in a renters' trap.
Homes for Texas Heroes Program
The Texas State Affordable Housing Corporation created the Homes for Texas Heroes Program to assist some of its dynamic individuals in realizing their homeownership goals. This program offers downpayment help and a 30-year fixed-rate mortgage with various rates and lending alternatives to teachers, police and correctional officers, firefighters and EMS professionals, and veterans.
Additionally, it provides applicants with cash ranging from 3% to 5% of the total loan amount to contribute to downpayment and closing costs associated with house ownership. This money is a gift with no strings attached, and there is no commitment to stay in the house for a set period.
The Homes for Texas Heroes Program is available to homeowners across the state through a network of partner lenders. While there is no obligation for first-time homebuyers, those who are doing so can apply for a Mortgage Credit Certificate (MCC). Texas Heroes who combine the downpayment and MCC aid will receive a free MCC, saving $500.
Mesquite Down Payment Assistance Program
The City of Mesquite Down Payment Assistance Program (DPAP) aims to give homeownership opportunities to poor and moderate-income households. The program provides first-time home purchasers with a 0% interest forgivable loan to help with downpayment and closing fees. The DPAP is supported by the federal Department of Housing (HUD) and Urban Development's Community Development Block Grant (CDBG). Please review the qualifying conditions below before applying if you are interested in becoming a future homeowner.
Eligibility Criteria
To be considered for the Mesquite DPAP, applicants must meet the following requirements:
- You must be a first-time homebuyer or have not owned a property in the last three years.
- Must have made an offer on a property in Mesquite city boundaries or signed a Sales Contract on one.
- You must be a United States citizen, a citizen national, or a qualified alien to apply.
- The applicant's debt-to-income ratio must be less than 43%.
- Annual income must be less than or equal to 80% of the Area Median Income (AMI).
- The acquisition price of the property must be less than or equal to $246,000 for existing homes and $253,000 for new construction.
Wichita Falls First-time Homebuyers Program
The City of Wichita Falls now offers a First Time Home Buyer Program to low to moderate-income families and individuals. The City grants up to $7,500 for qualified applicants to utilize toward closing costs, downpayment requirements, and principal reduction on a mortgage loan.
Midland Homebuyer Assistance Program
Low-income first-time home purchasers may be eligible for financial assistance of up to $15,000 to help purchase a suitable, safe, and clean house in the city. The program's eligibility conditions include homeownership training, the capacity to qualify for a primary mortgage, a minimum $1,000 investment by the buyer, and being a US citizen and a resident of Midland. The house might be pre-owned or brand new. Call the Community Development Office at 685-7472 to learn more about the homebuyer assistance program.
San Marcos Homebuyer Assistance Program
The City of San Marcos offers low-income homebuyers financial aid to help them acquire a property in the city. Homebuyers who earn less than 80% of the area median income and have not purchased a home in the last three years may be eligible for a $2,000 zero-interest, deferred forgiving loan. These funds can be used to cover closing fees or make a downpayment on a home. It's much easier to qualify than you might imagine. Staff from the City will collaborate with you and your lender. Funding is currently available and distributed on a first-come, first-served basis. Call 512-805-2644 if you have any questions about the program.
Killeen Homebuyer Assistance Program
The First Time Homebuyer Assitance Program, often known as HAP, offers first-time homebuyers up to $14,500 in downpayment and closing cost assistance when they purchase a property inside Killeen's corporate city lines.
The HAP regulations and policies are governed by the Home Investment Partnerships Act (HOME) program's statutory and regulatory standards, provided by the US Department of Housing and Urban Development's Community Planning & Development offices and subject to modification.
Conclusion
Affordable lending programs are available in Texas to assist first-time homebuyers, especially those in low-to-moderate-income brackets, in achieving the dream of homeownership. Various downpayment and closing cost assistance programs can make the process more affordable, offering forgiving loans and grants to eligible candidates.
It's essential to understand all available options and work with a knowledgeable mortgage professional who can guide you through the buying process and offer advice tailored to your unique financial situation.
For families who have never owned a home before, these programs provide a pathway to create generational wealth and ensure that homeownership is not just a distant dream but a tangible reality. Don't wait - explore these loan programs and take the first steps on your path to homeownership today!
Thinking about buying outside of Texas? Explore Pennsylvania's first-time homebuyer programs in our recent blog post. Different states, different opportunities!
Are you interested in learning more about different grants and programs that can help you with your living situation? Check out the rest of Gov Relations’ blog section today!
