In short
Down payment assistance is money from state or local programs that helps eligible buyers cover down payment and closing costs. In Texas it typically takes the form of grants, repayable second liens, or forgivable second liens, usually with income limits, price limits, and a primary-residence requirement.
Reviewed by Matt Robertshaw, NMLS #925153 · Last updated July 16, 2026
What is down payment assistance and who qualifies for it?
Down payment assistance (DPA) is money from a state, local, or program-based source that helps cover your down payment and, often, closing costs. In Texas, assistance generally comes in three forms: outright grants that never have to be repaid, second liens that are repaid over time or when you sell, and forgivable second liens that are erased after you live in the home for a required period. Qualification typically depends on income limits, purchase-price limits, the home being your primary residence, and often a homebuyer education course. Programs and rules change regularly, so rather than guessing, I match each buyer to the programs they may actually qualify for right now.
Key takeaways
The down payment stops more would-be homeowners than any other single number — and much of the time, it doesn't have to. Texas offers a range of state and local down payment assistance programs designed for first-time and moderate-income buyers, and most people have never heard of a single one of them. Some provide grants. Some provide second liens. Some are forgiven entirely if you stay in the home long enough. My job is to figure out which ones you may qualify for and how they fit into your complete loan strategy in Hays County and across Texas. Because a big bank gives you a rate — I give you a strategy.
The Biggest Myth in Home Buying: "I Have to Save 20%"
I've been doing this since 2003, and if I could retire one belief, it's this one. You do not need 20% down to buy a home — and for eligible buyers, part or all of the down payment you do need may come from an assistance program instead of your savings account.
Most buyers never look into this. Plenty of loan officers never bring it up. Which means qualified families in Hays County and across Texas keep renting for years while money designed for exactly their situation goes unused. That's the gap I want to close.
The Three Basic Flavors of Assistance
Every program has its own rules, but nearly all Texas down payment assistance falls into three structures. Understanding them is the foundation of the whole conversation:
- Grants. Funds you never repay. Once the conditions at closing are met, the money is simply yours, applied to your down payment or closing costs.
- Repayable second liens. A second loan behind your mortgage, often at low or no interest, repaid monthly or when you sell or refinance. You get help now; the program gets its money back later.
- Forgivable second liens. A second loan that requires no payment and is forgiven — usually in stages — after you live in the home as your primary residence for a set number of years. Stay put, and the debt disappears.
Which structure is best isn't obvious. A grant sounds like the automatic winner, but grants sometimes come paired with different loan pricing. This is exactly the kind of trade-off where the math has to be run on your specific numbers — it's not the cost of the help on paper, it's the cost of the whole package on a monthly basis.
What Qualifying Typically Looks Like
Requirements vary program to program, but the common threads across Texas assistance look like this:
- Income limits. Most programs cap household income, often tied to the area median income where you're buying.
- Purchase-price limits. The home usually has to fall under a program price ceiling.
- Primary residence. You'll live in the home — these programs aren't for investors.
- Homebuyer education. Many programs require a course (often online) before closing.
- First-time buyer status — sometimes. Many programs prioritize first-time buyers, and "first-time" often just means you haven't owned a home in the past three years. Some programs don't require it at all.
- Credit and loan qualification. Assistance covers the down payment; you still qualify for the underlying mortgage, which is often more flexible than buyers expect.
Assistance Works With a Regular Mortgage — Not Instead of One
Down payment assistance pairs with a standard first mortgage — often FHA or conventional, and in some cases other loan types. The assistance handles some or all of the cash needed at the closing table; the mortgage does the rest. That's why the right approach is never "find a program first." It's: build the complete loan strategy, then layer in the assistance that strengthens it. Strategy always wins.
Why I Won't Name Specific Programs Here
Deliberately. Program funding opens and closes, income limits get updated, and rules change year to year. A specific program I list today could be paused or revised by the time you read this — and nothing wastes your time like chasing assistance that no longer exists. What I do instead: when we talk, I look at what's actually available and funded right now, in the county where you're buying, and match you to what you may qualify for today.
What This Looks Like in Practice
- We talk about your full picture — income, savings, credit, where you want to buy, and your monthly budget.
- I identify current programs you may be eligible for, and what each would really do to your cash-to-close and monthly payment.
- We run the comparison — assistance versus no assistance, grant versus forgivable second — in plain numbers.
- You decide with certainty. No surprises at the closing table, because you understood every piece before we started.
If the down payment is the thing standing between you and owning a home in Hays County or anywhere in Texas, don't assume — ask. The answer is better than most people expect.
This is general information, not a loan offer or a commitment to lend. Down payment assistance programs are subject to funding availability, eligibility requirements, and change without notice; nothing here guarantees qualification for any program. Contact me to review current options for your situation.
Quick facts
- What it is
- State and local funds for down payment and closing costs
- Common structures
- Grants, repayable second liens, forgivable second liens
- Typical requirements
- Income limits, price limits, primary residence, buyer education
- First-time buyers only?
- Often prioritized, but 'first-time' usually means no home owned in 3 years
- Pairs with
- A standard first mortgage — often FHA or conventional
- My role
- Matching you to currently funded programs you may qualify for
Is this loan right for you?
Who it's for
- First-time buyers short on down payment savings
- Moderate-income households within program income limits
- Buyers who haven't owned a home in the past three years
- Anyone assuming they can't buy because of the cash needed at closing
Who it may not fit
- Investors — these programs require the home to be your primary residence
- Households above program income limits (though other low-down-payment options may fit)
- Buyers purchasing above program price ceilings
Pros and cons
Pros
- Can cover some or all of your down payment and closing costs
- Grants and forgivable seconds may never need to be repaid
- Pairs with common first mortgages such as FHA and conventional
- Turns 'I can't save enough' into a solvable math problem
Trade-offs to weigh
- Income and purchase-price limits exclude some buyers and homes
- Program funding opens and closes — availability changes throughout the year
- Some structures involve repayment or occupancy requirements you need to understand up front
Frequently asked questions
Do I have to pay down payment assistance back?
It depends on the structure. Grants are never repaid. Repayable second liens are paid back over time or when you sell or refinance, often at low or no interest. Forgivable second liens require no payment and are erased after you live in the home for the required period. When we review your options, the repayment terms of each program are one of the first things I'll put in front of you.
Is down payment assistance only for first-time buyers?
No. Many programs prioritize first-time buyers, but 'first-time' usually means you haven't owned a home in the last three years — so plenty of previous owners qualify. And some programs have no first-time requirement at all. Don't rule yourself out before we've looked at what's actually available.
Will using assistance make my offer weaker in a competitive market?
Handled properly, it shouldn't. Sellers care about certainty of closing, and that comes down to a strong pre-approval and a loan officer who has structured the file correctly from the start. I make sure the assistance piece is fully arranged before you make offers, so your contract timeline looks like any other well-prepared buyer's.
Can I combine assistance with an FHA, VA, or conventional loan?
Often, yes. Most assistance programs are designed to pair with common first mortgages — frequently FHA and conventional, and in some cases other loan types. Compatibility depends on the specific program's rules, which is part of what I check when matching you to options. The assistance is a layer on top of your loan strategy, not a replacement for it.
What if my income is too high to qualify?
Then we solve the down payment a different way — there's more than one path. Income limits vary by program and by county, so you may be over the limit for one program and eligible for another. And if assistance genuinely isn't a fit, options like lower-down-payment loan programs or a different structure may accomplish the same goal. The point is the strategy, not any single program.
Related loan programs
Your payment starts two percentage points below your note rate, steps up one point in year two, and settles at the full rate in year three — usually funded by the seller. I'll show you when it beats a price cut, and when it doesn't.
Buying your first home shouldn't feel like a test you never studied for. I've walked first-time buyers through every step since 2003 — and I'll walk you through yours, from first question to closing table.
Solid credit, 3% to 20% down, and a loan officer who's closed conventional files through every rate cycle since 2003. No drama — just a well-run loan.
Last updated July 16, 2026 · Reviewed by Matt Robertshaw, NMLS #925153. This page is educational and not a commitment to lend; program details change — ask for current figures.