Home Buyer FAQ

• What assistance is available to help an individual purchase a home?

  TSAHC offers two types of assistance:

  Low Interest Rate Loans and Down Payment 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

  
  Mortgage Credit Certificates

  • 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 process.

• How do I apply for one of TSAHC’s Homeownership Programs?

  TSAHC's participating lenders will assist you with the application and qualification process. You will not submit an application directly to TSAHC.

  Follow these key steps to qualify:

  1. Take the Eligibility Quiz
  2. Contact one of the program’s participating lenders. The Lender will assist you with the application and qualification process.  You will not submit an application directly to TSAHC.
  3. Attend a home buyer education course.
• The eligibility quiz says that I qualify. What do I do next?

  The next step is to contact a participating lender (use our Find a Lender  page), who will assist you with the application and qualification process. You do not need to submit an application directly to TSAHC.

• 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 Down Payment Assistance 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 TSAHC's Homeownership Programs?

  TSAHC provides 30-year fixed interest rate mortgage loans, down payment assistance grants, and mortgage credit certificates through the following programs.  These programs are offered through a network of approved mortgage lenders. 

  • Homes for Texas Heroes Home Loan Program: for teachers, fire fighters and EMS personnel, police and correctional officers, and veterans. Click here for definitions of "Texas Heroes".
  • Home Sweet Texas Home Loan Program: for Texas home buyers with low and moderate incomes.

  
  Both programs are restricted to home buyers earning up to 115% of the Area Median Family Income. Incomes vary by county.   Take the eligibility quiz to see if you qualify.

• 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
  • Veteran
  • Firefighter
  • 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. Take the Eligibility Quiz to see if you meet the income requirements.

• 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 may 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?

  For MCC Program:

  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:

  Effective April 3, 2017- No maximum debt-to-income (DTI)* requirements will apply to any loan using DPA or MCC/DPA program that receives an automated underwriting approval.

  FHA Loans, VA or USDA-RHS Loans

  Home buyers must have a minimum FICO score of 620. Please note, home buyers with a FICO score of 620-639 will be charged a .50% origination fee. Manual underwriting is acceptable for FHA loan files with a minimum 640 FICO score and maximum DTI ratio of 43% 

  
  Fannie Mae HFA Preferred Conventional Loans

  Home buyers must have a minimum FICO score of 620. Please note, home buyers with a FICO score of 620-639 will be charged a .25% origination fee.

  
  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:

  1. Add up all your debt (including your mortgage, car loans, child support and alimony, credit card bills, student loans, etc.).
  2. Divide this amount by your monthly gross income.
  3. 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?

  TSAHC created the Steps to Buying a Home resource to help you gain a greater understanding of the home buying process. TSAHC's Down Payment Assistance Calculator can also help you determine your monthly payment with TSAHC’s loan and down payment assistance options.

  TSAHC also requires all home buyers using our programs to take an approved home buyer education course before closing on their home. These courses are taught by trained nonprofit housing counselors and will help you determine if buying a home is the right option for you. To find an approved course in your area, visit www.texasfinancialtoolbox.com.

• 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?

  The following fees apply to TSAHC's Homeownership Programs:

  • $250 Funding Fee (DPA Programs only)
  • $75 Tax Service Fee (DPA Programs only)
  • $10 Flood Transfer Fee (DPA Programs only)
  • $200 Compliance Review Fee (DPA and MCC Programs)
  • $500 MCC Issuance fee (MCC Program only) – Please note that “Texas Hero” borrowers using our DPA program who are also first-time home buyers will receive a FREE MCC!

  Lenders may collect 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?

  For purposes of the MCC program, a first-time home buyer is an individual or family that has not owned or had an ownership interest in any principal residence during the last three years.

• 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.

• What type of home can I buy with TSAHC’s programs?

  With the DPA or Combo DPA/MCC program you can buy the following property types:

  FHA/USDA/VA Loans-

  • New or existing homes
  • Unit in a condo, townhome, or PUD
  • An entire duplex, triplex, or fourplex (one unit must be owner-occupied)

  
  HFA Preferred Conventional Loan-

  • New or existing homes
  • Unit in a condo, townhome or PUD

  • An entire duplex, triplex, or fourplex (must put down 5% or more and one unit must be owner-occupied)

  
  With the MCC program by itself you can buy the following property types:

  Any loan type-

  • New or existing homes
  • Unit in a condo, townhome, or PUD
  • An entire duplex, triplex, or fourplex (one unit must be owner-occupied)
  • Manufactured homes
• 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. One your lender locks your loan, 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.