Frequently Asked Questions
What assistance is available to help an individual purchase a home?
TSAHC offers two types of assistance:
- 30-year fixed interest rate mortgage loan
- Down payment and closing cost assistance grant of up to 5% of the loan amount (on FHA, VA, USDA and HFA Preferred Assisted loans)
- Down payment assistance grant is a gift and never needs to be repaid
- Provides the home buyer with up to $2,000 every year as a special federal income tax credit based on the interest paid on the mortgage loan
- Can save the home buyer thousands of dollars over the life of the loan
- Exclusively for first-time home buyers or individuals who have not owned a home in the last three years
- Can be used with TSAHC’s Down Payment Assistance
You cannot apply for either type of assistance AFTER you have closed on your home loan. Assistance is only available during the home purchase or refinancing process.
Do I have to pay back any portion of the down payment assistance grant provided by TSAHC?
You never have to pay a portion of TSAHC’s down payment assistance grant. It is a gift to you.
Can I use both the Low Interest Rate Loan and the Mortgage Credit Certificate Programs together?
If you are a first-time home buyer, you may use both forms of assistance when purchasing your first home.
Additionally, TSAHC’s Homeownership Programs can be combined with other down payment assistance programs offered in the home buyer’s city or county.
Who is eligible for the homeownership programs?
TSAHC’s Homeownership Programs were created to provide affordable mortgage loans exclusively for “Texas Heroes" and low to moderate-income Texans. Take the Eligibility Quiz to see if you qualify.
- Click here for definitions of "Texas Heroes".
- Low-income is defined as those individuals or families whose annual incomes do not exceed 80% of the Area Median Family Income. Incomes vary by county.
Who is a "Texas Hero"?
Under the Homes for Texas Heroes Program, the Texas Legislature defines a “Texas Hero” as one of the following:
- Classroom Teacher
- Teacher Aide
- School Librarian
- School Nurse
- School Counselor
- Nursing and Allied Health Faculty member
- EMS Personnel
- Peace Officer
- Corrections Officer (TDCJ or TJJD)
- County Jailer
- Public Security Officer
For detailed definitions, click here. If you do not see your profession listed above, you are not eligible for the “Texas Heroes” program. However, you may qualify for the Home Sweet Texas program and receive the same benefits.
Where can I use TSAHC’s Homeownership Programs and what type of homes can I purchase?
You may use TSAHC’s Homeownership Programs to purchase a home anywhere in Texas. Our programs are not limited to certain areas or to TSAHC-specific homes. You many choose where you would like to live and the home you would like to purchase.
Am I required to stay in the home for any minimum number of years if I use one of TSAHC’s Homeownership Programs?
No, you are not required to stay in the home for any period of time. However, if you use TSAHC’s down payment assistance program prior to June 2012 or receive a TSAHC MCC you may be subject to Recapture Tax if you decide to sell your home within 9 years of purchase. Click here to learn more about Recapture Tax.
Are there income restrictions?
Yes, home buyers cannot exceed program income limits. Please take the Eligibility Quiz to see if you qualify.
Are there credit and debt requirements?
No minimum FICO credit score or maximum debt-to-income (DTI)* requirements. You simply need to meet our income limits and work with an approved lender to use this program.
For DPA or MCC/DPA programs:
Home buyers must have a minimum FICO score of 640 with a maximum DTI of 45%. Please note, home buyers utilizing an FHA loan with a FICO score of 640 to 659 may only receive up to 4% in DPA. Those with a FICO score of 660 or higher may get up to 5% in DPA.
VA or USDA-RHS Loans
Home buyers must have a minimum FICO score of 640 or greater, with the following DTI requirements:
- A maximum DTI of 45% will be required for home buyers with FICO scores of 640 to 659.
- A maximum DTI of 50% will be allowed for those home buyers with FICO scores of 660 or greater.
Fannie Mae HFA Preferred Conventional Loans
For Loan to Values (LTVs) of 95% or Lower: Home buyers must have a minimum FICO score of 640, with the following DTI requirements:
- A maximum DTI of 45% will be required for home buyers with FICO scores of 640 to 659.
- A maximum DTI of 50% will be allowed for home buyers with FICO scores of 660 or greater.
For LTVS of 95.01 to 97%: Home buyers must have a minimum FICO score of 680 or greater, with the following DTI requirements:
- •A maximum DTI of 45% will be required for home buyers with FICO scores of 680 or greater.
Don't know your FICO credit score? Order it today.
Click here to find tips on how you can improve your FICO credit score.
*What is DTI?
DTI stands for debt-to-income, also referred to as the back-end debt ratio. It shows how much of your gross monthly income is needed to cover all your debt obligations. Follow these steps to determine your approximate DTI:
- Add up all your debt (including your mortgage, car loans, child support and alimony, credit card bills, student loans, etc.).
- Divide this amount by your monthly gross income.
- Then multiply this amount by 100. This percentage is your DTI.
Please keep in mind that you must also meet specific underwriting standards. The mortgage lender can help you better understand FICO credit score and maximum back-end debt ratio requirements, as well as any other standards that may apply.
Is buying a home the right option for me?
The Texas Mortgage Calculator was created to help potential home buyers determine whether homeownership is the best financial option for their housing needs. The Calculator will help you determine what interest rates and monthly payments you can expect given your credit score, debt and income. Additionally, the Steps to Buying a Home page was created to provide a step-by-step guide to help you gain a greater understanding of the home buying process.
- How do I apply for one of TSAHC’s Homeownership Programs?
How do I find a home buyer education course?
Studies show that home buyers who receive pre-purchase homebuyer education are 33% less likely to fall behind on their mortgages compared to home buyers who don’t take a homebuyer education course. And, not all home buyer education courses are created equal. A quality home buyer education course offered by nonprofit housing organizations, often HUD-approved, or government entities such as a city housing department can help you:
- understand, establish or rebuild your credit, reduce debt, and save for the future;
- determine if you are ready to buy a home;
- understand mortgage loans and recognize and avoid predatory loans and services;
- navigate the home buying process;
- find local and state homebuyer assistance programs; and
- understand the ongoing responsibilities of homeownership and how to be a successful homeowner for life.
Visit the Texas Financial Toolbox to find a home buyer education course in your area. Enter your city and then hit the search button. A list of home buyer education providers will be listed. Call them directly to learn more about course dates and times. Any course listed on this site will meet the requirement.
How do I find a lender in my area?
Click here to find a lender in your area.
If you are already working with a lender, please call the Homeownership Hotline at (877) 508-4611 to see if that lender’s mortgage company is approved to assist you with TSAHC’s Homeownership Programs.
What fees are charged to use TSAHC’s Homeownership Programs?
Lenders have the ability to charge the following fees to assist home buyers with TSAHC's Homeownership Programs:
- $400 Funding Fee (DPA Programs only)
- $85 Tax Service Fee (DPA Programs only)
- $200 Compliance Review Fee (DPA and MCC Programs)
- $500 MCC Issuance fee (MCC Program only)
In an effort to provide you with the most down payment assistance possible, we do not allow lenders to charge you origination points. However, lenders may collect all other reasonable and customary fees and closing costs, provided all fees are fully disclosed in accordance with federal, state and local regulations.
How long does the process take?
Using one or both of TSAHC’s Homeownership Programs should not take any longer than the customary time it takes to close a traditional mortgage loan. On average, it takes 30 days from the time a lender reserves funds for a home buyer to the time the home buyer closes on the mortgage loan.
- What is the definition of a first-time home buyer?
What is a targeted area?
Again, you may purchase a home anywhere in Texas and receive TSAHC’s assistance. However, in the event that you are purchasing a home in a targeted area, you are allowed to have a higher income and purchase price limit under our Homes for Texas Heroes Program. A targeted area is a designated census tract or an area of chronic economic distress. To see if a property is located in a targeted area, click here.
Can I buy a second home using one of TSAHC’s Homeownership Programs?
To qualify for assistance, the home you purchase with one of TSAHC’s Homeownership Programs must be or become your primary residence. Vacation, rental and second homes do not qualify under TSAHC’s Homeownership Programs.
What is the difference between closing costs and required down payment?
Closing costs are fees associated with the cost of obtaining a home loan. These fees include items such as the appraisal, lender origination fees, escrow handling charges, wire transfer fees, discount points, lender's title insurance and prepaid taxes and insurance premiums.
The down payment for a home is applied directly toward lowering your total loan amount. Normally based on a percentage of the total sales price, the amount is typically established early in the loan application process with your lender. While down payment amounts can vary from 3.5 percent for an FHA loan to upward of 20 percent for certain conventional loans.
What is mortgage insurance and when is it required?
Private mortgage insurance, or PMI, makes it possible for you to buy a home with a down payment of less than a 20% by protecting the lender against the additional risk associated with low down payment lending. By purchasing mortgage insurance, lenders are comfortable with down payments as low as 3.5% (for FHA-insured loans) or 5% (for conventional loans) of the home's value.
It may be possible to cancel PMI at some point, such as when your loan balance is reduced to a certain amount (below 80% of the property value). Federal legislation requires automatic termination of mortgage insurance for many borrowers when their loan balance has been amortized to 78% of the original property value.
Is a gift an acceptable source of my down payment?
Gifts are an acceptable source for part of the down payment, if the gift giver is related to you, is your co-borrower, or is from a nonprofit or government organization such as TSAHC.
When can I lock my interest rate?
Your lender will lock your interest rate once you have an accepted Offer to Purchase on a home. Once your lender rate locks your loan, unless there is a rate lock policy that states otherwise, you will not be able to renegotiate the interest rate.
Will inquiries about my credit affect my credit score?
An abundance of credit inquiries can sometimes affect your credit scores since they may indicate that your use of credit is increasing. Note that the data used to calculate your credit score does NOT include mortgage or auto loan credit inquiries that are made during the 30 days prior to the score being calculated. In addition, all mortgage inquiries made in any 14-day period are always considered one inquiry. Don't limit mortgage shopping for fear that it will affect your credit score.