Austin Down Payment Assistance and First-Time Homebuyer Programs

In a state known for its affordable housing, Austin is an exception. Because it is one of the most desirable Texas cities to live in, it is also one of the most expensive, with median home prices more than $200K above the national average. 

This means that the upfront costs for buying a home in Austin — down payment, closing costs, and other expenses — can easily top the ten thousand dollar mark. If you are like many first-time homebuyers, that is a significant barrier you’ll have to overcome.

Fortunately, Austin has quite a few down payment assistance and first-time homebuyer programs you might qualify for. These programs offer up to $40,000 to help buyers get beyond the barrier of upfront costs and make their dream of homeownership a reality.  

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.

Types of down payment assistance for Austin homebuyers

Down payment assistance in Austin is primarily awarded as forgivable loans and liens. 

Loans and liens essentially work in the same way, at least from the buyer’s perspective. The loan or lien gets attached to your house, and it can be forgiven, meaning you don’t have to pay the money back if you meet certain requirements.

Austin forgivable first-time homebuyer loans

As we mentioned earlier, most first-time homebuyer loans available to Austin residents have forgiveness criteria. If you meet this criteria, you don’t have to repay the loan. 

Most of the time, forgivable loans require you to live in the home for a number of years, usually somewhere between three and ten years, in order to have the loan forgiven. ‘Living in the home’ just means the house is your primary residence, and you do not refinance, sell, or rent out the property during that time.

Additionally, almost all forgivable loan programs require you to consistently make your mortgage payments on time. Occasionally, you’ll find loans that don’t get forgiven until you completely pay off your mortgage. These are relatively rare, though. 

Down payment assistance programs in Austin

The City of Austin has its own down payment assistance (DPA) program. Travis County offers down payment assistance as well, along with several national and Texas state programs available to Austin residents. Below is a list of all down payment assistance available in Austin, along with basic eligibility requirements. 

If sorting through all of this information sounds daunting (not to mention finding an approved lender who works with these programs) Stairs Financial can help.

Stairs Financial streamlines your access to down payment assistance, making it easy for you to connect with a trusted lender and compare the loan and assistance programs you may qualify for, all in one place.

Learn more about your down payment assistance options.

Austin’s Down Payment Assistance Program

Austin’s Down Payment Assistance Program gives DPA loans to first-time homebuyers purchasing within Austin city limits. The program has a high maximum payout, with loans up to $14,999 eligible for forgiveness after five years and loans up to $40,000 eligible for forgiveness after 10 years.

Assistance type: Forgivable loan

Sponsor: City of Austin

Assistance amount: $40,000 maximum, up to a 30% down payment 

Purchase price limit*: $614,054

Minimum borrower contribution: $1,000

Eligibility requirements: 

• First-time homebuyer
• Purchasing within city limits 
• Income limit*: 80% of area median income

*For all DPA programs, purchase price and income limits are regularly reviewed and updated. Be sure to check the most current limits before assuming you don’t qualify. 

Hill Country Home Down Payment Assistance Program

The Hill Country Home Down Payment Assistance Program offers DPA in the form of a forgivable loan to first-time homebuyers in Travis County, including Austin. The loan can be forgiven after 10-years if the home is not sold or refinanced during that time. 

Assistance type: Forgivable loan

Sponsor: Travis County Housing Finance Corporation

Assistance amount:  Up to 6% down payment, no fixed maximum 

Purchase price limit*: $364,452

Minimum borrower contribution: None

Eligibility requirements: 

• First-time homebuyer
• Purchasing in Travis County
• Credit (FICO) score of 640 or higher 
• Income limit: 140% of area median income

Statewide down payment assistance programs available in Austin

In addition to locally available down payment assistance, Austin homebuyers can take advantage of a number of statewide programs.

TSAHC Home Sweet Texas HFA Loan

The Home Sweet Texas HFA Loan is a down payment assistance loan available everywhere in Texas that can be fully forgiven if you don’t sell or refinance the home for a period of three years after purchase. 

This program can also be combined with the Texas Mortgage Credit Certificate (MCC) tax credit which we describe in greater detail below.

Assistance type: Forgivable loan

Sponsor: Texas State Affordable Housing Corporation

Assistance amount: Up to 5% down payment, no fixed maximum

Purchase price limit: None

Minimum borrower contribution: None

Eligibility requirements: 

• Purchasing in Texas
• Credit (FICO) score of 620 or higher
• Income limit*: $71,280 to $97,840 depending on location of home

*For all DPA programs, income limits are regularly reviewed and updated. Be sure to check the most current limits before assuming you don’t qualify. 

TSAHC Homes for Texas Heroes HFA Loan

The Homes for Texas Heroes HFA Loan is a forgivable down payment assistance loan program available to Texas residents working in certain helping professions. The loan can be combined with the Mortgage Credit Certificate (MCC) tax credit, and it can be forgiven if you do not sell or refinance the home within three years.

Assistance type: Forgivable loan

Sponsor: Texas State Affordable Housing Corporation

Assistance amount: Up to 5% down payment, no fixed maximum

Purchase price limit: none 

Minimum borrower contribution: None 

Eligibility requirements: 

• Purchasing in Texas
• A veteran, or currently working as: a teacher, emergency medical professional, nurse, law enforcement officer, or active duty service member 
• Credit (FICO) score of 620 or higher
• Income limit: $126,140 to $163,520 depending on location of home

SETH 5 Star Texas Advantage Forgivable Lien

The 5 Star Texas Advantage Forgivable Lien provides down payment assistance in the form of a community second lien which is forgiven after three years, provided you do not sell or refinance the home in that time. 

Assistance type: Forgivable loan

Sponsor: Southeast Texas Housing Finance Corporation

Assistance amount: Up to 5% down payment, no fixed maximum 

Purchase price limit for FHA loans*:  $472,030 to $571,550 (depending on location)

Purchase price limit for all other loan types: $492,500 

Minimum borrower contribution: None 

Eligibility requirements: 

• Purchasing anywhere in Texas except Travis County, El Paso, McKinney, and Grand Prairie
• Credit (FICO) score of 640 or higher 
• Income limit for USDA-backed loans: $56,880 to $170,800 depending on location 
• Income limit for all other loan types: $78,820 to $171,220 depending on location

*For all DPA programs, purchase price and income limits are regularly reviewed and updated. Be sure to check the most current limits before assuming you don’t qualify. 

TDHCA My First Texas Home Down Payment Assistance

My First Texas Home Forgivable Down Payment Assistance is a down payment assistance program that offers funding to first-time homebuyers in the form of a second lien that can be structured either as a three-year forgivable lien, or as a 30-year deferred repayment lien.

Assistance type: Forgivable loan

Sponsor: Texas Department of Housing and Community Affairs Homebuyer Program

Assistance amount: Up to 5% down payment, no fixed maximum

Purchase price limit: none

Minimum borrower contribution: None 

Eligibility requirements: 

• First-time homebuyer purchasing in Texas
• Credit (FICO) score of 620 or higher 
• Income limit: $90,100 to $163,520 based on location of home 

TDHCA My Choice Texas Home Down Payment Assistance

My Choice Texas Home Down Payment Assistance is a program with no first-time homebuyer requirement. Funds are delivered as second liens which can be structured either as a three-year forgivable lien, or as a 30-year deferred repayment lien.

Assistance type: Forgivable loan

Sponsor: Texas Department of Housing and Community Affairs Homebuyer Program

Assistance amount: Up to 5% down payment, no fixed maximum

Purchase price limit: $481,176 to $712,097 depending on location of home 

Minimum borrower contribution: None 

Eligibility requirements: 

• Purchasing in Texas
• Credit (FICO) score of 620 or higher
• Income limit: $90,100 to $163,520 depending on location of home 

Veterans Housing Assistance Program

The Veterans Housing Assistance Program offers discounted mortgage loans for veterans and active duty service members to purchase a home in Texas. The funding can be structured as a 15, 20, 25, or 30 year loan. It requires minimal or no down payment and offers interest rates which are typically lower than the market rate. 

Assistance type: Discounted mortgage loan

Sponsor: Veterans Land Board

Assistance amount: up to $726,200 loan 

Minimum borrower contribution: none 

Eligibility requirements: 

• Purchasing in Texas 
• Veteran or active duty service member
• Income limit: none

National down payment assistance programs and grants you can use in Austin

If you are an Austin homebuyer, you could be eligible for down payment assistance sponsored by the National Homebuyer Fund. We’ve included details about the program below. 

NHF Down Payment Assistance Program

The NHF Down Payment Assistance Program provides a down payment assistance loan which can be forgiven if the home is your primary residence for a certain number of years. The number of years required to forgive the loan is determined at closing.

Assistance type: Forgivable loan

Sponsor: National Homebuyer Fund

Assistance amount: up to 5% down payment, no fixed maximum

Purchase price limit: Flexible, based on buyer’s income

Minimum borrower contribution: None 

Eligibility requirements: 

• Credit (FICO) score of 600 or higher
• Income limit: 115% of median income in area where home is purchased

In addition to the National Homebuyer Fund, you could potentially qualify for a lender-sponsored assistance program through one of the nation’s largest banks. These programs vary from lender to lender. Stairs Financial does not endorse any single lender-sponsored DPA program over the next. 

Austin down payment assistance program FAQ

Naturally, people often have questions about getting down payment assistance in Austin. Here’s a round up of answers to the most common questions.

Does Austin have a first-time buyers program?

Indeed, Austin has a first-time buyers program that is administered by the city. There is also a program available to all Travis County residents, including those in Austin city limits, called Hill Country Home Down Payment Assistance. 

Additionally, there are state and national first-time buyer programs that buyers in Austin can take advantage of. These programs are typically in the form of forgivable loans.

What first-time homebuyer programs are available in Austin?

These are the down payment assistance and first-time homebuyer programs available to people purchasing in Austin:

• Austin’s Down Payment Assistance Program
• Hill Country Home Down Payment Assistance Program
• Home Sweet Texas HFA Loan
• Homes for Texas Heroes HFA Loan
• SETH 5 Star Texas Advantage Forgivable Lien
• My First Texas Home Down Payment Assistance Lien
• My Choice Texas Home Down Payment Assistance Lien
• Veterans Housing Assistance Program
• NHF Down Payment Assistance Program

How does down payment assistance work in Texas?

Down payment assistance in Texas, and therefore Austin, works about the same as in other states. First, you must apply through a qualified lender. In almost all cases, you submit your assistance application at the same time you apply for your mortgage loan. Once you’re approved, the assistance funds get sent either to your lender or directly to you, depending on the program. 

You just use all down payment assistance funds for approved costs.

What is the income limit for first-time homebuyers in Austin?

Income limits are set by each first-time homebuyer program. The most common income limit is 80% of the area median income (AMI), adjusted for the number of people in your household. For example, 80% of the AMI in Austin is $93,450 for a family of four. 

However, individual first-time homebuyer DPA programs sometimes set their income limit higher or lower than this. Also bear in mind that area median income is adjusted regularly, so always check the most current income limits before assuming you don’t qualify for a DPA program. 

What are the minimum requirements for Austin down payment assistance?

Each DPA program sets its own requirements, but these are the most common minimum requirements for Austin down payment assistance:

• A minimum contribution from the buyer, usually $1,000 or less.
• A credit score between 620 and 640.
• Purchasing your first home or have not owned a home within a certain period of time, most often three years.

How do you use down payment assistance in Austin?

If you’re using down payment assistance in Austin, there are three things you should do right away. First, calculate your income from employment, investments, cash reserves, and other sources. Then get a copy of your credit report and find a lender approved with down payment assistance programs.

The majority of down payment assistance programs have income limits, so having an accurate account of your income helps you understand which programs you can qualify for. Many programs also have credit score requirements, and your credit report will tell you if you meet those.

Lastly, you’ll need to find a lender who is approved to work with your specific down payment assistance program. However, finding a trusted lender who is also approved to work with DPA can be a bit of a chore.

Stairs Financial takes the headache out of this process by connecting you with an approved lender and giving you information on all the down payment assistance programs for which you might qualify — all in one place so you can directly compare programs. 

Learn more.

How much is a down payment for a house in Austin (on average)?

In Austin, the average home price is $557,292, as of 8/31/2023. The national average down payment is 6%, according to the National Association of Realtors. Based on these numbers, that puts the average down payment for a house in Austin at $33,437.

This may sound like a lot, and to be fair it’s a pretty hefty number. However, this is just an average, based on the best available data. It’s not necessarily the most optimal, recommended, or even the most common down payment on houses in Austin.

Mortgage lenders typically offer a reduced interest rate for making a 5%, 10%, or 20% down payment, with 20% getting you the lowest interest rate. Therefore, making a 6% down payment might not be the way to go in your case. 

It could be better to make a 5% down payment, then use that extra 1% to buy down your interest rate, also called “mortgage points.” Your lender will help you run the numbers and decide what makes the most sense for your situation.

What is a mortgage credit certificate and does it apply to Austin first time homebuyers?

The Mortgage Credit Certificate (MCC) is a federal tax credit available to buyers all over the United States. The MCC reduces your federal income taxes by 20% of the total mortgage interest you paid for the year. Because this credit refunds a portion of your mortgage interest, it effectively reduces your interest rate.

What is the “up to $40,000 City of Austin shared equity down payment assistance”?

The “up to $40,000 City of Austin shared equity down payment assistance program” is the same thing as Austin’s Down Payment Assistance Program. It is a forgivable loan that first-time homebuyers can use to make a larger down payment and cover certain upfront costs. The loan can be forgiven after five years.

Learn all about the Austin down payment assistance programs you qualify for

There are several down payment assistance (DPA) programs available in Austin, but it can be tough to sort through all of the information and make an informed choice.

Stairs Financial makes finding and comparing down payment assistance programs easy.

Stairs connects you with trusted lenders who work with DPA and then shows you the loan and down payment assistance programs you qualify for, all in one place. You can easily compare your options side-by-side and take the next step toward home ownership. 

Learn more about your down payment assistance options.