(512) 261-1542
info@LoneStarLending.com

“Your Loan Educator”

Follow us on

Military Veterans Association of Real Estate Professionals

Down Payment Assistance

Down payment assistance programs provide qualified, first-time homebuyers with a low-interest loan to assist with purchasing a home. The loan may cover the down payment, eligible closing costs, and pre-paid expenses associated with buying a home.

The loan typically is in the form of a deferred, forgivable second lien. The loan is forgiven if the you remain in the home for a specified length of time (typically 10 years) without transferring title. Otherwise the loan is due and payable if you sell, lease, transfer title, refinance, get a home equity loan, or pay off the first lien within that period of time.

These programs are available only for the purchase of a primary residence and typically only to first time homebuyers (not owned a home in the last 3 years). They target low to moderate income homebuyers with limits on family income.

Many governmental entities and approved non-profit agencies offer these programs. The remainder of this page describes the First Time Homebuyer Program offered by the State of Texas and the Down Payment Assistance Program offered by the City of Austin. Give us a call if you need help finding other programs in your local area.

How much assistance can I receive?

First Time Homebuyer Program (State of Texas)

The amount of assistance is up to 4% of the first lien loan amount.

Down Payment Assistance Program (City of Austin)

You may receive up to $10,000 on the standard program based on the your demonstrated financial gap. Up to an additional $1000 is available if you enroll in the Mortgage Credit Certificate (MCC) program and up to an additional $4999 for people with disabilities.

The city also offers a shared equity down payment assistance program. This program offers greater assistance - up to $40,000 - in exchange for a equity stake in your home. When you sell your home or the loan matures, the city takes a percentage of the equity gain equal to the percentage of the city's portion of the original sales price. The amount of assistance cannot exceed 30% of the home's purchase price.

What are the loan terms?

The programs offer a 10-year, deferred, forgivable second lien that can be applied towards your down payment and eligible closing costs. No interest accrues on the second lien (0% interest rate), and you are not be required to make monthly payments on it. However, if you sell, refinance, transfer, or otherwise dispose of or cease to occupy the residence within the 10-year period after you purchase the residence, you will have to repay the full amount of the assistance that has not been forgiven.

First Time Homebuyer Program (State of Texas)

Please check the state's Web site for current rates and for the availability of funds for the program.

Down Payment Assistance Program (City of Austin)

The first lien may be any fully amortized, fixed-rate, 30-year loan.

Under the shared equity down payment assistance program, the second lien is not forgivable. When you sell your home or the loan matures, the city takes a percentage of the equity gain equal to the percentage of the city's portion of the original sales price.

Who is eligible for the program?

The programs serves first-time homebuyers who are citizens or legal permanent residents and whose entire household earns no more than 80% of the median family income in their area. The income limit varies by county and household size. Click here to view the limits. Your income is your current, gross, annual income. If you need help calculating your annual income, give us a call.

Down Payment Assistance Program (City of Austin)

Your household assets cannot exceed half of the income limit. The income and assets of everyone residing with you or anticipated to reside with you count against the limits.

You must invest at least $1000 of your own money into the home as earnest money.

What homes are eligible for the program?

Down Payment Assistance Program (City of Austin)

The home must be located within the Austin city limits, and its price cannot exceed 95% of the FHA loan limit for the area. Existing homes must pass a home inspection performed by the city. New construction must meet S.M.A.R.T Housing standards.

How do I apply for the credit?

The mortgage loan is available through a network of participating lenders. You must complete a homebuyer education course prior to loan closing.

First Time Homebuyer Program (State of Texas)

Click here for a list of certified homebuyer education providers in your area.

Down Payment Assistance Program (City of Austin)

Click here for a list of certified homebuyer education providers in your area.