First-Time Home Buyer Guide for Texas (2026)

Quick Answer

First-time buyers in Texas have several low-down-payment paths: conventional loans (program minimum down payment of 3% of the price for qualified first-time buyers), FHA loans (program minimum down payment of 3.5% of the price), and VA or USDA loans, which allow no down payment for eligible borrowers; terms and eligibility vary. Texas also runs statewide down-payment-assistance programs through TSAHC and TDHCA (My First Texas Home) that can cover part of your down payment and closing costs, and you generally qualify as a 'first-time buyer' if you haven't owned a home in the past three years.

Step 1 — Know your loan options

• Conventional 97 — program minimum down payment of 3% of the price for qualified first-time buyers; once your balance reaches 80% of the original value you can request mortgage insurance removal, and it ends automatically at 78%.
• FHA — program minimum down payment of 3.5% of the price with a 580+ score; more forgiving on credit and DTI.
• VA — no down payment required for eligible veterans, active duty, and surviving spouses; no monthly mortgage insurance.
• USDA — no down payment required in eligible rural and many suburban areas, with income limits.
• Terms and eligibility vary by program.

Step 2 — Tap Texas down-payment assistance

Two statewide agencies help Texans with the cash-to-close hurdle. TDHCA's My First Texas Home (first-time buyers) offers up to 5% as a deferred, 0%-interest second lien repaid when you sell or refinance. TSAHC's Home Sweet Texas and Homes for Texas Heroes (teachers, first responders, corrections officers, veterans, and others) offer up to 5% and are open to repeat buyers too. Program terms change — confirm current details before you apply.

Many programs also offer a Mortgage Credit Certificate (MCC), a federal tax credit that returns a portion of the mortgage interest you pay each year you live in the home and keep that mortgage. The credit is capped at $2,000 per year when the credit rate is over 20%, and MCC availability depends on annual bond allocation. These programs have income and purchase-price limits that vary by county, so a broker can tell you quickly whether you qualify.

Step 3 — Get your credit and documents ready

You don't need perfect credit. FHA's program minimum is 580; Texas state assistance programs generally require about 620 — and there's no penalty for asking early. Pull your credit, avoid opening new accounts, and keep balances low relative to limits.

Gather two years of income history, recent pay stubs, and two months of bank statements. Getting these ready before you apply makes pre-approval fast.

Step 4 — The process, start to finish

• Get pre-approved (or start with a no-credit-pull pre-qualification).
• Shop with your agent using a real budget and pre-approval letter.
• Make an offer; once accepted, you're under contract.
• Loan processing, appraisal, and underwriting (typically 30–45 days).
• Final approval, closing disclosure, and signing — then keys.

Frequently Asked Questions

Who counts as a first-time home buyer in Texas?

For most loan and assistance programs, a first-time buyer is anyone who has not owned a primary residence in the past three years. That means you can qualify again even if you owned a home years ago. Some programs waive the requirement entirely for veterans or in designated target areas.

How much down payment do first-time buyers really need in Texas?

Less than most people think. The conventional program minimum down payment is 3% of the price for qualified first-time buyers, FHA's program minimum is 3.5%, and VA and USDA allow no down payment for eligible buyers; terms and eligibility vary. Combined with TSAHC or TDHCA down-payment assistance, many first-time buyers get in with very little of their own cash.

What is a Mortgage Credit Certificate (MCC)?

An MCC is a federal tax credit available through Texas housing programs that lets eligible first-time buyers claim a percentage of the mortgage interest they pay as a dollar-for-dollar credit on their federal taxes, each year they live in the home and keep that mortgage. The credit is capped at $2,000 per year when the credit rate is over 20%, and MCC availability depends on annual bond allocation. It can save qualifying buyers hundreds to over a thousand dollars a year.

What credit score do I need to buy my first home?

FHA's program minimum is 580; Texas state assistance programs generally require about 620. A higher score gets you a better rate, but a lower score doesn't disqualify you. If your score isn't there yet, a broker can give you a specific, short list of steps to raise it.

Can down-payment assistance be combined with an FHA or conventional loan?

Yes. Texas down-payment-assistance programs are designed to pair with a first mortgage — commonly FHA or conventional. The assistance covers some or all of your down payment and closing costs, while the first mortgage finances the rest of the purchase.