Special First-Time Homebuyers Programs

If this will be the first time you've purchased a home, we congratulate you on taking this big step in life. It probably feels exciting and a bit scary at the same time, and you probably have lots of questions. We created this page to answer some common ones, but we invite you to use the chat box to ask about your situation.

Before we look at special programs, it's important to understand that a first-time homebuyer is not just someone who never has owned a home. The mortgage industry considers you a first-time homebuyer if you have not owned a home in the last 3 years. In some cases, a recently divorced homebuyer is considered a first-time homebuyer if the only home he/she owned was the primary residence owned with the ex-spouse.

Conventional Loan with 3% Down

For first-time homebuyers, the minimum down payment for a conventional loan is 3% of the home's price. For a $300,000 home, that's $9000. This can be money you've saved or a gift a relative (or someone with whom you have a family-like relationship). The only special requirement is that you must complete a homebuyer education course, which most people choose to complete online.

There is no income limit, but if your income is no higher than the median income for your area, it may lower your interest rate a little.

Conventional loans follow guidelines from Fannie Mae and Freddie Mac. The other popular loan program for first-time homebuyers is an FHA loan. It differs from a conventional loan in that the minimum down payment is a little higher (3.5% of the home's price), but the minimum credit score is lower (580 versus 620 for a conventional loan). In addition, the FHA program is generally more forgiving of credit issues.

Freddie Mac BorrowerSmart Access

Freddie Mac has created the BorrowerSmart Access program to provide special assistance for historically underserved communities. It applies only to certain metro areas, but three of those are in TX: Houston, McAllen, and El Paso. First time homebuyers whose income doesn't exceed 140% of the metro's median income can receive $3000 that can be used towards down payment and closing costs.

Other standard conventional loan guidelines apply to the program, including a minimum credit score of 620.

If you don't live in one of these targeted metros, you still may qualify for the BorrowerSmart program. If your income doesn't exceed 50% of the area's median income, you can receive a $1500 credit against your down payment and closing costs. The credit drops to $500 if your income exceeds the 50% limit but doesn't exceed 80% of the area's median income.

Unlike BorrowerSmart Access, you don't have to be a first-time homebuyer to qualify for BorrowerSmart.

Down Payment Assistance

Down payment assistance programs provide qualified homebuyers with funds to cover the down payment, eligible closing costs, and pre-paid expenses associated with buying a home. Programs are available for first-time homebuyers and repeat buyers; however, programs that target first-time homebuyers typically offer lower interest rates, but they also have limited availability.

You can find more information on our Down Payment Assistance page.

Mortgage Credit Certificate

A mortgage interest tax credit allows homebuyers to reduce their federal income tax liability based on the amount of mortgage interest they pay. The credit is applied dollar-for-dollar to reduce your income tax liability. The program targets first-time homebuyers and has income limits.

You can find more information on our Mortgage Interest Tax Credit page.

$4000 Down Payment Grant

This program offers up to 2% of a home's price as a grant to homebuyers whose income is no more than 80% of their area's median income. This effectively lowers the homebuyers' down payment to 1%. The maximum amount of the grant is $4000.

This is a grant, so the homebuyer doesn't need to repay it regardless of how long the homebuyer keeps the home.

The program follows conventional loan guidelines including a minimum credit score of 620, and the homebuyers must complete a homebuyer education course.

$5000 Grant for Down Payment and Closing Costs

This program offers a $5000 grant to homebuyers who currently live in certain areas of Houston, San Antonio, Dallas-Ft. Worth, and The Valley. The program has no income limitations, and the homebuyer may use the grant to cover the minimum 3% down payment and closing costs.

Additionally, the program offers a $500 credit towards the appraisal cost, and the homebuyer may qualify for a $500 credit to purchase of a home warranty plan.

This is a grant, so the homebuyer doesn't need to repay it regardless of how long the homebuyer keeps the home.

As the program has geographic limitations, please contact us to see if you qualify.

The program follows conventional loan guidelines including a minimum credit score of 620, and the homebuyers must complete a homebuyer education course.