Grant or second lien? The distinction that matters
Almost every "grant" you'll see advertised in Texas is one of three structures, and they are not equivalent. Understanding which one you're being offered is the difference between free money and a lien on your title.
- True grant. Funds are gifted at closing. No lien, no repayment, no occupancy requirement. TSAHC offers up to 5% of the loan amount this way. This is the cleanest structure available in Texas.
- Forgivable second lien. A second lien is recorded but carries no interest and no monthly payment, and it's forgiven entirely after you occupy the home for a set period — commonly three years. If you sell or refinance early, a prorated amount comes back.
- Deferred second lien. No interest and no monthly payment, but the balance is never forgiven — it's repaid when you sell, refinance, or pay off the first mortgage. TDHCA's programs typically work this way.
A true grant is best if you might move or refinance within a few years. A deferred lien is often still excellent if you plan to stay — it's interest-free capital that lets you keep cash in reserve.
TSAHC: Homes for Texas Heroes
The Texas State Affordable Housing Corporation's flagship program is built for public servants, and the eligible professions list is broader than most people assume:
- Teachers, teacher aides, school librarians, counselors, and school nurses
- Police officers, public security officers, and county jailers
- Firefighters and EMS personnel
- Corrections officers and juvenile corrections officers
- Nurses, nurse aides, and allied health professionals
- Veterans and active-duty military
Assistance runs up to 5% of the loan amount, structured as either a true grant or a deferred second lien depending on the option selected. First-time buyer status is not required. Layers on FHA, VA, USDA, and conventional first mortgages.
TSAHC: Home Sweet Texas
Same mechanics as Homes for Texas Heroes, but open to any buyer who meets the income limit for their county — no profession requirement. Income limits are set at the county level and are considerably more generous in high-cost metros like Harris, Montgomery, Travis, and Collin counties than most buyers expect. Plenty of households earning six figures qualify in the Houston and Dallas MSAs.
TSAHC also pairs with a Mortgage Credit Certificate (MCC) — a dollar-for-dollar federal tax credit of up to $2,000 per year against mortgage interest paid, for the life of the loan. The MCC does require true first-time buyer status (or purchase in a targeted census tract). It is one of the most under-claimed benefits in Texas.
TDHCA: My First Texas Home & My Choice Texas Home
The Texas Department of Housing and Community Affairs runs the state's other assistance track through its Taxable Mortgage Program.
- My First Texas Home. For first-time buyers and veterans. Provides a deferred, no-interest second lien of up to 5% of the loan amount for down payment and closing costs, paired with a below-market 30-year fixed first mortgage.
- My Choice Texas Home. Same assistance structure, but available to repeat buyers. Slightly different rate and income parameters.
Both require a minimum 620 credit score, occupancy as your primary residence, and completion of a homebuyer education course. Purchase price and income limits apply by county.
Local and city-level assistance
Statewide programs are only half the picture. Several Texas metros run their own funds that can stack on top of — or substitute for — state assistance:
- City of Houston Homebuyer Assistance Program
- Harris County Downpayment Assistance Program
- Dallas Homebuyer Assistance Program
- City of Austin Down Payment Assistance
- San Antonio Homeownership Incentive Program
- Fort Worth Homebuyer Assistance Program
Funding for city programs is appropriated annually and frequently runs dry mid-year. Timing matters more here than eligibility.
How to actually qualify — the practical checklist
- Credit score of 620+. Both TSAHC and TDHCA set this floor. Higher scores improve the first-mortgage pricing that sits underneath the assistance.
- Income under the county limit. Calculated on qualifying income for the mortgage, by county and sometimes household size.
- Purchase price under the county cap. Separate from the income limit and easy to trip over in appreciating submarkets.
- Primary residence, in Texas. No second homes, no investment property.
- Homebuyer education course. An online course through an approved provider, typically 6–8 hours. Complete it early — it is the single most common cause of delayed closings on assisted loans.
- A participating lender. Assistance can only be originated by lenders approved for the specific program. This is the step most buyers discover too late.
What down payment assistance actually costs you
Assistance is rarely free in pricing terms. The first mortgage attached to a DPA program usually carries a rate slightly above the open market — often 0.25% to 0.75% higher — because the assistance is funded through that spread.
The math is straightforward: compare the total interest cost of the higher rate over your realistic holding period against the cash you keep at closing. For a buyer who's tight on funds today, keeping $12,000 in reserve almost always wins. For a buyer with ample down payment who just likes the idea of assistance, it usually doesn't. That's the analysis I run side by side before you commit to a structure.
Frequently asked
Can I combine TSAHC assistance with an FHA loan?
Yes — FHA is the most common first-mortgage pairing, and the 3.5% FHA down payment can be covered entirely by assistance, putting many buyers into a home with effectively zero out-of-pocket down payment.
Do I lose the assistance if I refinance?
A true grant is yours permanently. A forgivable lien may require prorated repayment if you refinance before the forgiveness period ends. A deferred lien is repaid at refinance. Know which you have before you sign.
Is there assistance for self-employed buyers?
Yes, but qualifying income is calculated from tax returns, which frequently pushes self-employed buyers below the income limits — an advantage here. If your returns don't support the loan size you need, a bank statement loan is the alternate path, though it can't be paired with state DPA.
How long does an assisted closing take?
Plan on 30–45 days rather than the 21–30 typical of a standard purchase. The assistance provider adds a compliance review layer on top of normal underwriting.
Where to go next
Program terms, income limits, purchase price caps, and funding availability are set by TSAHC, TDHCA, and local agencies and change without notice. This page is educational and is not a commitment to lend or an offer of credit. Not tax or legal advice — consult your CPA regarding Mortgage Credit Certificates.