Making FHA Loans Work: Down Payment Assistance Programs in Texas

Last updated: August 2025

If you’re buying a home in Texas, the down payment can feel like the biggest hurdle—especially with rising prices and competing offers.

But here’s the good news: many Texas down payment assistance programs work seamlessly with FHA loans, often covering all or part of the 3.5% minimum down payment and even helping with closing costs.

With the right guidance, you could combine multiple programs, maximize your savings, and keep more cash in your pocket for moving, furniture, or your first repairs.

At Salute Mortgage, we help first-time buyers—and anyone who needs a low-down-payment option—find and stack the assistance programs that fit their situation. That means you don’t have to navigate the fine print alone.

1. What Down Payment Assistance Programs Are Available in Texas?

Texas offers a wide range of state, local, and nonprofit programs designed to help homebuyers—especially those using FHA financing—get into a home sooner.

Some of the most popular include:

• Texas State Affordable Housing Corporation (TSAHC) – Up to 5% of the loan amount or $15,000, whichever is less
• My First Texas Home program
• Local housing finance agencies
• City and county assistance programs
• Nonprofit organization grants
• Employer-based assistance programs

Many of these programs offer forgivable loans—meaning you don’t have to repay them if you live in the home for a set number of years (often 5–10). Even better, some can be combined for greater benefit.

2. How Texas Assistance Programs Work with FHA Loans

According to HUD guidelines, properly documented down payment assistance can cover your entire 3.5% FHA down payment requirement.

Common assistance structures include:

• Forgivable loans – No repayment after a set period
• Deferred loans – No payments until you sell, refinance, or default
• Grants – Never repaid
• Matched savings programs – Dollar-for-dollar match on what you save
• Employer programs – Benefits from your workplace
• Soft second mortgages – Low or no-interest secondary loans

Most programs are set up as secondary financing with deferred or no interest, ensuring they work alongside FHA financing without creating conflicts.

In some cases, funds need to be in your account for 60 days or accompanied by proper gift documentation—something we’ll guide you through step-by-step.

3. Who Qualifies for Texas Down Payment Assistance?

Eligibility varies by program, but you can generally expect:

• Income limits – Often 80–120% of your area’s median income
• First-time buyer status – No homeownership in the past 3 years (exceptions apply)
• Primary residence – You must live in the home
• Debt-to-income ratio – Usually aligns with FHA’s 43% max
• Credit score – Typically 580–620 minimum
• Geographic limits – Some programs are specific to certain cities or counties

For example, in Harris County, a family of four may qualify with income up to about $95,000, while in some rural counties, the limit could be closer to $65,000.

4. Best Texas Cities & Counties for Assistance

Local housing agencies often offer the most generous benefits:

• Austin – Up to $30,000 in combined city and county programs
• Houston – Harris County up to $25,000 in targeted zip codes
• Dallas – Multiple programs totaling up to $20,000
• San Antonio – Bexar County up to $15,000
• Fort Worth – Tarrant County up to $18,000
• El Paso – City programs up to $12,000

Austin stands out for offering layered assistance through the city, county, and nonprofits, with forgivable loans sometimes reaching $80,000 for qualifying buyers.

5. How to Combine Multiple Programs

Yes—you can stack programs, but it takes planning to get the timing, eligibility, and paperwork right.

Here’s the process we walk our borrowers through:

1. Research every available program in your target area
2. Verify your income and credit eligibility for each
3. Complete required homebuyer education (often available online)
4. Submit applications in the right order
5. Coordinate with your FHA loan process
6. Document all funds for underwriting

Because these programs can have different timelines, a dedicated loan team is key to avoiding delays or missed opportunities.

6. Benefits & Limitations of Down Payment Assistance

Benefits:

• Lower upfront cash needed to close
• Forgivable loan options reduce future debt
• Increased buying power
• Access to free education and counseling

Limitations:

• Income and purchase price caps
• Geographic restrictions
• Recapture rules if you sell or refinance too soon
• More paperwork and coordination required

Even with these limits, the savings can make the difference between buying now and waiting years.

7. Your Next Step

You don’t have to figure this out alone. At Salute Mortgage, we’ll show you:

• Exactly which Texas down payment assistance programs you qualify for
• How to combine them with an FHA loan for the lowest upfront cost
• How to move from pre-approval to closing without delays

Let’s run the numbers together—so you can see how much assistance you could get before you start house hunting.

*Program availability and terms subject to change. Income, credit, and property restrictions may apply. All figures based on latest published guidelines as of August 2025.