Here, you’ll find expert advice so that you can start your homebuying process with the resources and confidence to succeed. You’ve worked hard to be ready. Let us help you make your homeownership dreams come true.
Steps for Homebuyers
Learn How It Works
Buying a home is not a simple process, but with the right information and tools you can make it happen. Here are a few terms you should know:
A mortgage is a loan that you agree to pay back in monthly installments for 15 or 30 years. The total amount borrowed will include the cost of the house you decide to buy and any closing costs and down payment requirements.
Credit Score, Debt and Income
In order for the mortgage to be issued, a Lender (bank) will qualify you by examining your credit score and your current debts and income. Provided you meet the requirements set forth by the Lender, a mortgage will be issued for the total amount borrowed.
Closing costs can typically range from $5,000 to $10,000. Let us show you how you can qualify for help with your down payment and closing costs. We can help you in your final steps across the threshold.
Help with Down Payment and Closing Costs
Sometimes homebuyers find themselves coming up short without enough funds for a down payment or closing costs to buy a home.
The Texas Homebuyer Program can help provide down payment and closing costs available in the form of a zero percent interest 2nd loan that remains “silent” and requires no monthly payment and the balance never increases from the original amount, needed to close your loan. In the event you sell, refinance or payoff your original 1st lien mortgage, your 2nd lien down payment assistance will need to be paid back, at that time, so these important funds can be recycled to help another deserving homebuyer.
We have assembled a whole team dedicated to your success. You can always contact us with any questions at 1−800−792−1119 or firstname.lastname@example.org.
If you’re ready to continue, let’s determine where you are in the process. See our Readiness Calculator.
Answer 3 simple questions to see if you’re ready for homeownership today.
You have completed a vital step in the home buying process. Choose the “Ready” or “Almost Ready” tab based on the Readiness Calculator Quiz Outcome above.
Congratulations! You’re ready.
You’re ready. Now what?
Based on your readiness score we want to put you in contact with one of our Lender partners. Set up an appointment today and let them know that The State of Texas Homebuyer Team sent you. Make sure to ask for our products by name.
We created a searchable database of participating Lenders for your convenience. Pick one close to home and set up the appointment today.
Next Steps — Preparation
1. Prepare the following items:
- Driver’s License
- Social Security Card or ITIN
- 3 Months Bank Statements (all pages)
- 2 Months Pay Stubs
- 2 Years Most Recent Tax Returns or Tax Transcripts (need 3 years if using the My First Texas Home and or Texas MCC options)
- 2 Years W‑2s or 1099’s. If Self Employed – recent Profit and Loss Statement.
2. Email a participating lender to set up an initial appointment or call. Click here to use our email message template.
3. Review our products prior to your appointment.
- My First Texas Home
- My Choice Texas Home
- Texas Mortgage Credit Certificate Program
- Texas Homebuyer U
- Texas Statewide Homebuyer Education Program
4. After you are Pre-Approved for a Mortgage, it’s time to look for a TX Realtor who will help you find your dream home and guide you through all the steps: TX REALTOR® Locator
Let’s get you in touch with a Housing Counselor
Based on your readiness score you are so close to becoming a homeowner. No one in Texas should feel alone when trying to buy a home. At this juncture the help of a Housing Counselor is your best bet in realizing your dream of homeownership. The Texas Homebuyer Program values our Housing Counselors – our guides and partners – as important members of the support system we foster. We have compiled a list of Housing Counselors for you to search.
A Housing Counselor will meet with you and conduct a complete assessment of your household budget, credit score and give you a roadmap to get you qualified for a mortgage. These are certified professionals in the field and their sole purpose as counselors is to serve you. They work with all budgets and circumstances.
Once you find a counselor near you, use our email template to set up an appointment.
Here’s a list of products each with a unique benefit to better serve you on your homebuying journey. Find your best match here.
My First Texas Home
My First Texas Home is available only to first-time homebuyers and veterans. It provides a 30-year, low interest rate mortgage with up to five percent of assistance. Combine your loan with a Mortgage Credit Certificate and potentially save even more.
My Choice Texas Home
Perhaps you are already a homeowner, but you could still use a little help. We’ve got you covered. We offer a 30-year low interest rate mortgage loan and up to five percent of assistance.
The Texas Mortgage Credit Certificate (MCC)
The MCC is available to veterans and first-time homebuyers and as a stand-alone option. This certificate entitles you to a dollar-for-dollar reduction on federal tax liability. There is no minimum credit score requirement for MCCs.
Texas Homebuyer U
This is a free online educational resource about the home buying process and MCCs. Make sure you enter your name correctly when registering to avoid delays in your loan process.
Texas Statewide Homebuyer Education Program (TSHEP)
We have a list of trained Housing Counselors ready to coach you through the home buying process. They offer one-on-one assessments. Some offer their services in Spanish as well as group classes with flexible schedules.
What are the loan options and assistance available to help an individual purchase a home in Texas?
The Texas Homebuyer Program offers the following options:
- 30-year fixed below-market interest rate mortgage loans (subject to availability);
- 30-year fixed low interest rate mortgage loans with up to 5% of loan amount to assist with down-payment and/or closing cost;
- Mortgage Credit Certificates that provide the home buyer with a special federal income tax credit based on the interest paid on the mortgage loan.
Who is eligible for the homeownership programs?
The Texas Homebuyer Program is designed for first time homebuyers or homebuyers who have not owned a home as their primary residence within the past three years. My Choice Texas Home is designed for someone who is a repeat homebuyer and needs access to our competitive interest rate home loan with down payment and closing cost assistance. Potential homebuyers must also meet program income guidelines and program purchase price limits. Additional credit and underwriting guidelines may apply.
Is there a requirement to repay the assistance provided for down-payment / closing cost?
In an effort to create responsible sustainable homeownership,The Texas Homebuyer Program does require the assistance provided to be repaid if the home is sold, refinanced or paid off. By recycling funds, other future homebuyers can be assisted through the program. The assistance is provided to the borrower through a no interest, no monthly payment 2nd lien. The 2nd lien is not considered in loan qualifying for the mortgage loan.
Can the low-interest rate mortgage loan and assistance provided through My First Texas Home be combined with the Texas Mortgage Credit Certificate?
Absolutely!The Texas Homebuyer Program makes it easy to combine the benefits of both programs. The same guidelines apply to both programs; one-step process for the Lender; and low-cost to the borrower. It’s a great opportunity to access the immediate benefit of the assistance to get into the home, and the long-term benefit of tax savings to sustain homeownership. The programs are also available individually. Unfortunately My Choice Texas Home cannot be combined with the Mortgage Credit Certificate Program.
Are there restrictions to income or type of profession?
The Texas Homebuyer Program is available statewide to any profession or individual/family who meet the program guidelines. Income limits are set at up to 115% of the area median family income (AMFI) and vary based on the county the home is purchased in. View the income/purchase price limit table (PDF). If you do not see your county listed, please reference the “balance of state” row at the bottom of the chart.
What type of home can I buy?
Any new or existing home in the state of Texas that does not exceed the maximum purchase price limits of the program. All homes purchased under this program must meet certain quality standards.
The DTI shows how much of your gross monthly income is needed to cover all your debt obligations. For homebuyers maximum DTI follow loan product guidelines.
There is no minimum credit score/DIT requirement to use the MCC program as a stand-alone option. If combining with the My First Texas Home, the credit/DTI requirements mentioned above will apply.
How do I apply for the funds?
The Texas Homebuyer Program does not actually loan you the money. The mortgage loan funds are available through a network of participating Lender partners located throughout the state. If you experience difficulty with one of the participating Lenders, please contact us at 1−800−792−1119.
How do I find a Lender in my area?
Visit our Lender Locator to find a Lender in your area. If you are already working with a Lender, please callThe Texas Homebuyer Program at 1−800−792−1119 to see if that Lender’s mortgage company is approved to assist withThe Texas Homebuyer Program. New Lenders are always welcome to participate.
How do I know if I qualify for a mortgage loan through My First Texas Home, My Choice Texas Home or a certificate through the Texas MCC?
A participating Lender will determine your ability to repay a 30-year mortgage loan by reviewing your employment and income information, total monthly debt obligations and your past experience with credit along with information about the value of the property you want to buy. These Lenders will pre-qualify you so that you will know the approximate price range of homes to shop for. The Lender will complete all necessary paperwork for loan approval and assist in the coordination of loan closing with your real estate professional and closing agent. It’s a good idea to get pre-qualified by one of the participating Lenders prior to shopping for a home. If you do not qualify for a loan due to credit problems, visit Help for Texans to locate a certified consumer credit counseling provider in your area.
Is this a free program, or are there any costs involved?
As with most mortgage loans, there are fees (closing costs) associated with this program.The Texas Homebuyer Program does, however, limit the fees participating Lenders may charge to help minimize your costs of closing the loan. The Texas Homebuyer Program is committed to making their loan programs affordable, and offer low program fees in comparison to other loan program options.
How long does the mortgage process typically take?
In general, the mortgage process takes between 45 to 60 days from the time of application to closing. This time frame is dependent upon a number of factors including the individual Lender’s process and any potential qualifying issues.
What comprises a monthly mortgage payment?
Your monthly mortgage payment includes a payment to the principal balance of your loan, the interest payment, and your escrow payment (monthly payments collected to pay your hazard insurance, mortgage insurance, flood insurance, if applicable, and property taxes.) This is commonly referred to as P.I.T.I. (principal, interest, taxes and insurance). Payments may vary depending on the loan product option. Lenders can talk through all options to determine payment differences and best option for homebuyer/borrower.
Is homebuyer education required?
Yes. Studies show that homebuyers who receive pre-purchase homebuyer education are 33% less likely to fall behind on their mortgage compared to homebuyers who do not take a homebuyer education course. A homebuyer education course is required forThe Texas Homebuyer Program, and the requirement can be satisfied through completion of a course provided by a HUD-approved, non-profit organization or government entity, or a HUD-approved online course, or usingThe Texas Homebuyer Program’s FREE Online Homebuyer Education “Becoming A Homebuyer” Course available through Texas Homebuyer U.
Can I rent my home obtained under this program?
No, you may not rent a home obtained under this program. The home must be your primary residence.
What is a targeted area?
Again, you may purchase a home anywhere in Texas and receiveThe Texas Homebuyer Program’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. A targeted area is a designated census tract or an area of chronic economic distress. For more information on targeted areas, please click here.
Mortgage Words to Know
In early years of an amortized loan, almost all of the payment is applied toward interest, while in the last years of the loan, almost all of the payment is applied to reduce the principal.
Closing Costs & Prepaids
Costs paid in addition to the down payment on closing day. They can include attorney fees, loan origination fee, loan discount point, application fee, appraisal fee, credit report, document preparation, escrow fee, survey and recording fees, tax escrow, hazard insurance, flood zone certification, two months of private mortgage insurance (if down payment is less than 20 percent) and sometimes the entire first year’s private mortgage insurance premium. Typically, the appraisal and credit report fees are paid at application.
This new form combines and replaces the HUD‑1 and final Truth in Lending(TIL) disclosure. A Lender is required to provide the Closing Disclosure to the borrower no later than three business days before loan closing. This form is a statement of final loan terms, projected payments and closing costs. Compare this document with your Loan Estimate.
The difference between the mortgage and the lower of the purchase price or appraisal. The minimum down payment is three and a half (3.5%) percent on most loans. Private mortgage insurance is required for a down payment less than 20 percent.
Deposit money given to the seller by the potential buyer to show that he is serious about buying the house. If the deal goes through, the earnest money is applied to the down payment. If the deal does not go through, it may be forfeited.
The difference between a home’s fair market value and the loan amount, and/or encumbrances (such as liens or claims) against it.
This new form combines and replaces the Good Faith Estimate(GFE) and the initial Truth in Lending(TIL) disclosure. It must contain a good faith estimate of credit costs (loan costs and other costs) and transactions terms. Loan Costs are costs paid by the consumer to the Lender and third-party providers of services the Lender requires to be obtained by the borrower during the origination of the loan. Other Costs include taxes, governmental recording fees, and certain other payments included in the real estate closing transaction. A Calculating Cash to Close table shows the borrower how the amount of cash needed at closing is calculated. The Lender is required to provide the Loan Estimate within three days of receipt of the borrowers loan application.
An estimate of the average interest rate being charged by Lenders for conventional (Fannie Mae/Freddie Mac) or FHA/VA loans.
The origination fee is what the Lender charges for establishing the loan. It is included in the closing costs and may be financed.
Points or Discount Points
A point or discount point is one percent of the loan amount and is charged by the Lender to issue a loan at below market rates.
Private Mortgage Insurance
On conventional financing, Lenders require that the borrower purchase Private Mortgage Insurance(PMI) to protect the Lender against default on loans with less than 20 percent down payment. PMI has nothing to do with homeowners insurance or credit life insurance. PMI should cost the same at all Lenders.
A buyer must qualify for a loan. Typically, the monthly payment cannot be more than 25 percent to 28 percent of the buyer’s gross monthly income, and all the buyer’s monthly debt cannot total more than 33 percent to 36 percent of his/her monthly income. Some leeway may be granted based upon prior credit history, down payment, job history, etc.
An instrument that shows the buyer has a clear ownership of the property. A loan does not usually close until the title company has assured the Lender that there are no hidden problems with a title to a piece of property.
A policy required by the Lender and paid for by the borrower that insures the Lender clear title against future claims. Borrowers may also purchase title insurance to protect their equity.