First-Time Homebuyer Guide for Texas in 2025: FHA, Down Payment Assistance, and What to Expect

Buying your first home is one of the most significant financial decisions of your life. The good news: Texas has excellent programs to help first-time buyers get into homes with minimal upfront cash. The better news: I'm going to walk you through exactly how it works.

Step 1: Know Your Credit Score (And What It Means for Your Loan)

Your credit score determines which loans you qualify for and what interest rate you'll get.

• 760+: Best rates on any loan type
• 680–759: Good rates on FHA and conventional
• 620–679: FHA is often your best option; conventional rates carry significant add-ons
• 580–619: FHA is available with 3.5% down; conventional is difficult
• Below 580: FHA with 10% down; some non-QM options exist

If your score is below where you want it, don't wait years to buy — come talk to me. In many cases, specific credit actions (paying down cards, disputing errors, adding authorized user accounts) can move a score 30–50 points in 90–120 days.

Step 2: Understand Your Loan Options

FHA Loans — The First-Time Buyer Standard

FHA loans are government-backed mortgages designed for buyers with lower credit scores and limited savings. Key features:

• 3.5% minimum down payment (with 580+ credit)
• More flexible debt-to-income ratio guidelines
• Available for condos, single-family, and 2–4 unit properties
• Mortgage Insurance Premium (MIP) required — both upfront (1.75%) and annual (~0.85%)

Conventional 3% Down

For buyers with 620+ credit and stable income, Fannie Mae's HomeReady and Freddie Mac's Home Possible allow 3% down with reduced PMI rates. Unlike FHA MIP, conventional PMI can be cancelled when you reach 20% equity. In an appreciating market, this can happen faster than you think.

VA Loans

If you're a veteran or active duty military, VA is almost always the right answer. Zero down, no PMI, and competitive rates. See my VA loan guide for the full details.

Step 3: Texas Down Payment Assistance Programs

This is where Texas shines for first-time buyers. There are two major state programs that can cover your down payment — and many buyers use them without knowing they exist.

TSAHC — Texas State Affordable Housing Corporation

TSAHC's My First Texas Home program offers:

• 3–5% of the loan amount as a grant (not a loan — no repayment required)
• Available with FHA, VA, USDA, and conventional loans
• Income limits vary by county (generous enough for most first-time buyers)
• Must be a first-time buyer (or not have owned in the past 3 years)
• Available statewide, including RGV, San Antonio, and Austin

The 5% grant on a $250,000 home is $12,500 — this covers your entire FHA down payment and then some, leaving money for closing costs.

TDHCA — Texas Department of Housing and Community Affairs

TDHCA's My Choice Texas Home program is similar and available to both first-time and repeat buyers with income limits. It offers both grants and 0% second liens (deferred loans) for down payment assistance.

Local Programs

Many Texas cities and counties offer additional DPA programs stacked on top of state programs:

• City of San Antonio's Neighborhood Housing Services program
• Cameron County and Hidalgo County programs for RGV buyers
• City of Austin's various DPA programs

I know which programs are currently funded and active. DPA programs run out of money — knowing which ones have current allocations is part of my job.

Step 4: Get Pre-Approved (Before You Look at Houses)

Pre-approval is not optional in today's market. Here's why:

• Sellers won't consider offers without it
• It tells you exactly what you can afford — no guessing
• It reveals any credit or income issues you need to address
• It speeds up closing once you're under contract

Pre-approval is fast with me — typically 24 hours once I have your documents. Here's what I need:

• Photo ID
• Last 2 years W-2s or tax returns
• Last 30 days pay stubs
• Last 60 days bank statements
• Social Security number (for credit pull)

Step 5: Understanding the Full Monthly Payment

New homebuyers often focus only on the principal and interest (P&I) payment — the number quoted in mortgage ads. But your actual monthly payment includes:

• Principal & Interest: The loan repayment
• Property Tax: Escrowed monthly (Texas rates: 2–2.7%)
• Homeowner's Insurance: Typically $150–$300/month in Texas
• MIP (FHA) or PMI (conventional): If less than 20% down
• HOA fees: If applicable

I always quote the full PITI payment, not just P&I. Texas property taxes alone add $300–$600/month to most first-time buyer payments — you need to know this before you choose a purchase price.

What to Expect at Closing

Texas closings happen at a title company (not a law firm like some states). You'll need:

• Cashier's check or wire for closing costs (down payment is already verified)
• Photo ID
• About an hour to sign documents

With DPA, your out-of-pocket at closing can be minimal — sometimes less than $2,000 including all costs on an FHA purchase in the RGV or San Antonio.

Ready to start? Call me at (956) 358-2770 and we'll figure out exactly which programs you qualify for and what your path to homeownership looks like. The first conversation is always free.