First-Time Homebuyer Help in Austin TX
Austin's housing costs have made homeownership challenging for first-time buyers, but multiple assistance programs exist at the city, county, and state level. Stacking these programs can dramatically reduce the cash needed to close.
City of Austin Programs
Austin Downpayment Assistance Program (DAP)
Austin's primary first-time buyer program provides forgivable loans for down payment and closing costs:
- Assistance amount: Up to $40,000
- Structure: Forgivable loan — no monthly payments
- Forgiveness: 10-year forgiveness period (1/10 forgiven per year)
- Income limits: Varies by household size. Example: 4-person household, approximately $80,000–$95,000 maximum
- Purchase price limit: ~$450,000 for single-family homes (adjust annually)
- Requirements: First-time homebuyer (no ownership in past 3 years), homebuyer education course, principal residence
Apply through Austin Housing Finance Corporation (AHFC) — ausfin.org
Neighborhood Housing and Community Development (NHCD)
City of Austin provides additional affordable housing resources including the Home Repair Program (not purchase assistance but relevant for existing owners).
State of Texas Programs
Texas First Time Homebuyer Program (TDHCA)
Texas Department of Housing and Community Affairs operates the My First Texas Home program:
- Mortgage assistance: 30-year fixed rate FHA/VA/USDA/conventional loan at below-market rates
- Down payment assistance: 2–5% of loan amount as a second loan (0% interest, deferred for life of first mortgage)
- Income limits: 80–115% of AMI depending on program tier and Travis/Williamson County
- Credit minimum: 620 for most programs
- Homebuyer education: Required
Contact: Texas Department of Housing and Community Affairs (TDHCA) — tdhca.state.tx.us
Homes for Texas Heroes (TDHCA)
Specifically for public servants — teachers, firefighters, police officers, veterans, nurses, and others:
- Same structure as My First Texas Home but with slightly better rates and eligibility tailored to heroes
- Veterans: Active duty, retired military, National Guard, and VA-eligible veterans qualify
- Benefit: Below-market rates + 3–5% down payment assistance
This is one of the best programs for veteran first-time buyers in Austin — combining VA loan eligibility with Homes for Texas Heroes rate benefits creates an exceptional financing package.
Texas Mortgage Credit Certificate (MCC)
Tax credit — not a grant — that reduces annual federal income tax liability:
- Credit amount: 20–40% of annual mortgage interest paid
- How it works: If you pay $12,000 in mortgage interest, and your MCC rate is 30%, you get a $3,600 federal tax credit (not just deduction) per year
- Lifetime benefit: MCC stays in effect for the life of the loan
- Eligibility: First-time homebuyer, income limits, purchase price limits
For a buyer in the 22% tax bracket, the MCC effectively reduces the mortgage interest cost by 30%, making a $2,500 monthly mortgage payment feel like $2,100 in after-tax terms.
Federal Programs
FHA Loan
Not a grant, but enables low down payment:
- 3.5% down payment minimum (vs. 20% conventional)
- Credit minimum: 580 for 3.5% down, 500 for 10% down
- Austin metro FHA loan limit 2025: $531,300
- MIP (mortgage insurance) required for life of loan if less than 10% down
VA Loan (Veterans)
The best first-time buyer program for eligible veterans:
- Zero down payment
- No PMI
- Competitive rates
- $806,500 limit in Travis County with zero down (no limit with down payment)
- Must be veteran, active duty, or eligible surviving spouse
USDA Loan (Rural Areas)
Zero down for qualifying rural areas:
- Bastrop, Taylor (some areas), Elgin, Lockhart, and other outer-ring Austin suburbs are USDA eligible
- Income limits apply (~$127,000 for 1-4 person household in Austin MSA)
- Most Austin proper and close suburbs are NOT USDA eligible (too urban)
Stacking Programs: Maximize Your Austin Assistance
Texas allows combining multiple programs:
Example stack for a Travis County first-time buyer:
- TDHCA My First Texas Home loan (below-market FHA rate)
- TDHCA 5% DPA second loan (deferred, 0% interest)
- Texas MCC tax credit (30% of interest as tax credit annually)
- Austin Housing DAP (up to $40,000 forgivable if income-eligible)
A buyer purchasing a $350,000 home with this stack might need less than $5,000–$10,000 out of pocket after assistance, while also receiving a meaningful ongoing tax benefit.
Homebuyer Education Requirement
All major DPA programs require completion of a HUD-approved homebuyer education course:
- Online: Framework (frameworkhomeownership.org) — $75 self-paced
- In-person/live webinar: NHCD Austin offers free classes
- NeighborWorks: Various Austin nonprofits offer free courses
Allow 3–8 hours to complete. Required before funding but can be completed early in the process.
Frequently Asked Questions
Most programs define 'first-time buyer' as anyone who has not owned a home in the past 3 years — not literally your first purchase. If you sold a home 3+ years ago, you likely qualify.
Yes. Veterans using VA loans can also use state and city DPA programs. Many DPA programs are compatible with VA loans. VA zero-down + Austin DAP or TDHCA assistance creates a powerful first-time buyer stack.
