Texas Lone Star Lending Video
Before You Use Down Payment Assistance, Watch This
Down payment assistance can help — but it’s not always “free.” Understand the trade-offs before you decide.
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Read the transcript
A lot of buyers hear "down payment assistance" and think "free money." It usually isn’t. Here’s how these programs actually work.
Here in Texas, we have statewide assistance programs as well as some local programs for homes in certain communities. The assistance typically ranges from 2 to 5 percent of the loan amount, and it can be applied toward both the down payment and closing costs.
Some programs are limited to first-time buyers, but others are available even if you’ve owned a home before. And while many programs have income limits, they’re based on an area’s median income — which means the limits can be surprisingly generous, sometimes exceeding $150,000 in household income.
But it’s important to understand that most down payment assistance is not free money. Many programs require repayment, or the assistance is forgiven only if you stay in the home and do not refinance the loan for a certain period of time — often 3 to 10 years.
And in most cases, the trade-off is a higher interest rate, typically 3/4% to 1% higher than standard financing.
So these programs can be helpful if you truly need assistance to buy a home. The key is understanding how they work before deciding if they're the right option for you.
And remember — it’s always okay to ask. We’re here to help you get home.