TSAHC Down Payment Assistance

What Is TSAHC Down Payment Assistance?

The Texas State Affordable Housing Corporation (TSAHC) is a nonprofit created by the Texas Legislature to make homeownership more accessible. Through its two home buyer programs, TSAHC provides 30-year fixed-rate mortgage loans paired with down payment assistance (DPA) to eligible buyers anywhere in Texas, in both urban and rural areas.

The assistance works by layering a grant or forgivable second lien on top of a standard mortgage. Borrowers choose from four DPA levels (2%, 3%, 4%, or 5% of the total loan amount) and can apply those funds toward their down payment, closing costs, prepaid items, and other loan-related expenses. No separate closing cost program is needed because the DPA covers it all.

TSAHC operates through a network of approved lenders. The lender originates the first mortgage (FHA, VA, USDA, or HFA conventional) and funds the DPA at closing, making the process seamless for the buyer. You do not apply directly with TSAHC.

Who Qualifies?

TSAHC offers two programs with the same DPA options but different eligibility pools:

Homes for Texas Heroes Program is designed for borrowers in specific public service professions:

• Public school teachers, teacher aides, school librarians, school counselors, and school nurses (must be full-time)
• Police officers and correctional officers
• Firefighters and EMS personnel
• Veterans (as defined by TSAHC guidelines)

Home Sweet Texas Home Loan Program is open to any Texas home buyer who meets the income and credit requirements, regardless of profession. If you do not qualify under a hero profession, this is the program for you.

Both programs are available to first-time and repeat buyers. You do not need to be purchasing your first home to receive DPA. However, certain add-on benefits like the Mortgage Credit Certificate are limited to first-time buyers (defined as not having owned a primary residence in the past three years), qualified veterans, or buyers purchasing in a TSAHC-designated targeted area.

Key Benefits

Grants That Never Need to Be Repaid

When paired with a government-backed loan (FHA, VA, or USDA), borrowers can receive their DPA as a grant. The grant does not require repayment under any circumstances, making it one of the most borrower-friendly assistance options available in Texas.

Forgivable Second Lien with No Monthly Payments

For all loan types, including HFA conventional, the DPA can be structured as a deferred forgivable second lien at 0% interest. There are no monthly payments. If you remain in the home as your primary residence for three years without selling or refinancing, the second lien is forgiven entirely.

Flexible Loan Pairing

Unlike some DPA programs that only work with one loan type, TSAHC assistance pairs with FHA, VA, USDA, and Fannie Mae/Freddie Mac HFA conventional loans. This flexibility means your lender can find the loan structure that results in the lowest total monthly payment for your situation.

Mortgage Credit Certificate for Extra Savings

Eligible first-time buyers can stack a Mortgage Credit Certificate (MCC) on top of their DPA. The MCC provides a federal income tax credit equal to 15% of the annual mortgage interest you pay, reducing your tax liability dollar-for-dollar every year you live in the home. Over a 30-year loan, those savings add up significantly.

Program Details at a Glance

Things to Know Before You Apply

Primary residence only.

TSAHC assistance cannot be used to purchase investment properties, second homes, or vacation properties. The home must be your principal residence in Texas.

The grant option is limited to government loans.

If you use an HFA conventional loan, your DPA will be structured as a forgivable second lien. The grant (no-repayment) option is only available with FHA, VA, or USDA financing.

DPA affects your interest rate.

TSAHC sets interest rates based on the DPA level you choose. A higher DPA percentage typically comes with a slightly higher rate on the first mortgage. That said, a modestly higher rate often still results in a lower monthly payment when the DPA reduces or eliminates your out-of-pocket costs. Your lender can model the options so you can compare total monthly costs side by side.

Selling or refinancing within three years triggers repayment of the second lien.

If you chose the forgivable second lien and sell, refinance, transfer ownership, or stop occupying the home before the three-year forgiveness period ends, you will owe the full second lien balance. Plan accordingly.

MCC is now bundled with DPA.

TSAHC no longer offers the Mortgage Credit Certificate as a standalone product. To receive an MCC, you must also use TSAHC’s down payment assistance. The MCC is only available to first-time buyers, qualified veterans, or buyers purchasing in a targeted area.

Who Is This Loan Best For?

• Texas home buyers who have the income and credit to qualify for a mortgage but need help covering the down payment and closing costs.
• Public school teachers, first responders, correctional officers, and veterans who qualify for the Homes for Texas Heroes program and want lower upfront costs.
• Repeat buyers who assume they do not qualify for assistance because they have owned a home before.
• First-time buyers looking to combine DPA with a Mortgage Credit Certificate for both upfront and ongoing savings.

Alternatives to TSAHC Down Payment Assistance

FHA Loans: If you do not meet TSAHC’s income limits or prefer not to use a layered assistance program, a standard FHA loan requires as little as 3.5% down with a 580+ credit score. You will need to cover the down payment from your own funds, gift money, or another source.

VA Loans: Eligible veterans and active-duty service members can purchase with 0% down through a VA loan, with no monthly mortgage insurance. If you qualify for VA financing, it may offer a lower total cost than TSAHC depending on your situation.

Conventional Loans with Low Down Payment: Some conventional programs allow as little as 3% down for qualifying buyers. If your credit score is strong and your income exceeds TSAHC limits, a conventional loan with a small down payment may be a straightforward alternative.

Frequently Asked Questions

What is TSAHC down payment assistance?

TSAHC (Texas State Affordable Housing Corporation) provides up to 5% of the loan amount in down payment and closing cost assistance to eligible Texas home buyers. The assistance is available as a grant that never needs to be repaid or a forgivable second lien loan with no monthly payments.

Do I have to be a first-time home buyer to qualify for TSAHC?

No. Both first-time and repeat home buyers can qualify for TSAHC down payment assistance through the Homes for Texas Heroes or Home Sweet Texas programs. However, the Mortgage Credit Certificate (MCC) tax credit is limited to first-time buyers, veterans, or buyers in targeted areas.

What credit score do I need for TSAHC?

You need a minimum credit score of 620 for government loans (FHA, VA, USDA) and 640 for HFA conventional loans. Manufactured home purchases with government loans also require a 640 minimum.

Do I have to repay TSAHC down payment assistance?

If you choose the grant option (available with government loans), you never repay it. If you choose the forgivable second lien, it is forgiven after three years as long as you remain in the home as your primary residence without selling or refinancing.

What loan types work with TSAHC down payment assistance?

TSAHC assistance can be paired with FHA 203(b), FHA 203(k), VA, USDA/RD, Fannie Mae HFA Preferred, and Freddie Mac HFA Advantage conventional loans.

Is TSAHC Down Payment Assistance Right for You?

If you are buying a home in Texas and want to reduce your out-of-pocket costs, TSAHC is one of the most accessible and generous DPA programs in the state. The combination of grants, forgivable second liens, and the MCC tax credit can meaningfully lower both your upfront and ongoing homeownership costs.

The best way to find out if you qualify is to talk to one of our mortgage experts at JVM Lending. As an approved TSAHC lender, we can walk you through the eligibility requirements, model different DPA and loan combinations, and help you choose the option that saves you the most.

Contact us today at (855) 855-4491 or hello@jvmlending.com for a free consultation.