Buying a Home in Texas for the First Time: What You Need to Know

If you are thinking about buying a home in Texas for the first time, you might feel overwhelmed with the entire process. Purchasing your first home is an exciting and significant milestone, but it can also be challenging if you don't know where to start.

Fortunately, there are plenty of resources available for first time buyers in Texas, and we are here to help guide you through the process.

In this blog post, we will cover everything you need to know about buying a home in Texas for the first time, from first-time homebuyer programs to tips for improving your credit score.
So whether you're a Texas native or moving to the Lone Star State, we've got you covered. With our help, you can buy a home in Texas with confidence and start living your dream.

What Qualifies as a First-Time Homebuyer in Texas?

In Texas, a first-time homebuyer is defined as someone who has not owned a home in the past three years. This means that if you have owned a home at any point in the last three years, you are not considered a first-time homebuyer under Texas law.

However, there are some exceptions to this rule. For example, if you are a displaced homemaker or a single parent who has only owned a home with a former spouse while married, you may still qualify as a first-time homebuyer. Additionally, if you are a qualified veteran or currently serving in the military, you may also be eligible for first-time homebuyer programs in Texas, regardless of whether or not you have owned a home before.

It's worth noting that some first-time homebuyer programs in Texas may have additional requirements beyond the state's definition of a first-time homebuyer. It's always a good idea to check the specific eligibility requirements for any programs you are interested in before applying.

First-time Home Buyer Loans in Texas

If you are a first-time homebuyer in Texas, several loan programs are available to help you finance your home purchase. Here are some of the most popular first-time homebuyer loan programs in Texas:

• The Conventional 97, backed by Fannie Mae, offers a low down payment option of just 3% for first-time homebuyers who meet certain income and credit score requirements.
• The FHA Loans are backed by the Federal Housing Administration and require a lower down payment (as low as 3.5%) than traditional mortgages. First-time homebuyers may be eligible for an FHA loan with a credit score as low as 580.
• The VA Loans, backed by the U.S. Department of Veterans Affairs, offer 100% financing to eligible veterans and active-duty military personnel. First-time homebuyers who are veterans or currently serving in the military may be eligible for a VA loan.
• The USDA Loans, backed by the U.S. Department of Agriculture, offer 100% financing to eligible borrowers in rural areas. First-time homebuyers may be eligible for a USDA loan if they meet certain income and property location requirements.

Texas State Affordable Housing Corporation Loans

The Texas State Affordable Housing Corporation (TSAHC) offers affordable home loan programs with fixed-rate mortgages, down payment assistance, and tax savings for eligible homebuyers. These programs are designed for first-time homebuyers or those who haven't owned a home in the last three years and have different eligibility requirements and income limits. Homebuyer education classes are also required for all first-time home buyers who use TSAHC's loan programs.

Texas Bootstrap Loan Program

The Texas Bootstrap Loan Program offers low-interest loans to low-income individuals and families in rural areas of Texas who are unable to obtain financing from traditional sources. This Texas home loan program requires borrowers to participate in the construction of their own homes through "sweat equity" to reduce costs. The loans have flexible repayment terms, and assistance with down payments and closing costs is provided. To be eligible, applicants must meet income and credit requirements and be willing to contribute their time and effort to construct their own homes.

Texas Down Payment Assistance Programs and Grants

Texas has several down payment assistance programs and grants that can help first-time homebuyers overcome the barrier of a large down payment. Here are some of the most popular programs:

• Texas State Affordable Housing Corporation (TSAHC): TSAHC offers several down payment assistance options, including grants and loans, to eligible homebuyers. The program is designed to help low and moderate-income families achieve homeownership. TSAHC provides up to 5% of the loan amount through a grant or a second-lien loan with no monthly payments.
• Homebuyer Assistance Program: This program offers up to $25,000 in down payment assistance to eligible homebuyers through a low-interest loan with deferred payments. The program is offered through the city of Houston and is available to first-time homebuyers who meet certain income and credit requirements.
• City of Dallas Homebuyer Assistance Program: This program offers up to $20,000 in down payment assistance to eligible homebuyers through a zero-interest loan with no monthly payments. The program is available to first-time homebuyers who meet certain income and credit requirements.
• City of Austin Down Payment Assistance Program: This program offers up to $40,000 in down payment assistance to eligible homebuyers through a zero-interest loan with no monthly payments. The program is available to first-time homebuyers who meet certain income and credit requirements.
• Travis County Housing Finance Corporation Down Payment Assistance Program: This program offers up to $40,000 in down payment assistance to eligible homebuyers through a zero-interest loan with no monthly payments. The program is available to first-time homebuyers who meet certain income and credit requirements.

It's important to note that eligibility requirements and availability may vary depending on the specific program and location. Be sure to do your research and compare the options to find the program that best fits your needs and financial situation.

Homes for Texas Heroes Program

The Homes for Texas Heroes program, administered by the Texas State Affordable Housing Corporation (TSAHC), offers affordable mortgage financing and down payment assistance to eligible professionals, including Texas veterans, active-duty military personnel, school teachers, school counselors, police officers, correctional officers, firefighters, EMS personnel, and surviving spouses of veterans. This program provides low-interest mortgage loans and up to 5% of the loan amount in the form of a grant for the down payment and closing cost assistance. The program is available to both first-time and repeat homebuyers and includes benefits such as reduced mortgage insurance premiums and a free homebuyer education course. Its main goal is to provide affordable homeownership opportunities to those who have served their country or community.

Home Sweet Texas

Home Sweet Texas is a program offered by the Texas State Affordable Housing Corporation (TSAHC) that provides down payment assistance and mortgage credit certificates to eligible first-time homebuyers in Texas. Through the program, borrowers can receive up to 5% of the loan amount in the form of a grant for down payment and closing costs, as well as a mortgage credit certificate for a portion of the mortgage interest paid each year. Eligibility requirements include being a first-time homebuyer, meeting certain income and credit requirements, and completing a homebuyer education course. The program offers a variety of loan options and a streamlined application process, making home ownership more affordable and accessible for low and moderate-income families in Texas.

My Choice Texas Home Program

My Choice Texas Home is a program offered by the Texas State Affordable Housing Corporation (TSAHC) that provides fixed-rate mortgage loans and down payment assistance to eligible homebuyers in Texas. Through the program, borrowers can receive up to 5% of the loan amount in the form of a grant for down payment and closing costs, and choose from a variety of fixed-rate mortgage loan options. Eligibility requirements include meeting certain income and credit requirements, being a first-time homebuyer or not owning a home in the last three years, and completing a homebuyer education course. The program offers a streamlined application process, reduced mortgage payments and insurance premiums, and additional benefits, making home ownership more affordable and accessible for low and moderate-income families in Texas.

If you meet one of the professions listed above, you should complete our online Eligibility Quiz. We’ll ask you a few questions to determine which TSAHC home-buying program is best for you.

Texas Closing Cost Assistance

Texas Closing Cost Assistance is a program offered by the Texas State Affordable Housing Corporation (TSAHC) that provides a grant of up to 5% of the total loan amount to eligible homebuyers in Texas to help cover their closing costs. The program is available to both first-time and repeat homebuyers who meet certain income and credit requirements and are purchasing a home located within TSAHC's targeted areas. Combining closing cost assistance with other forms of assistance, such as down payment assistance and mortgage credit certificates, can further reduce the costs associated with purchasing a home.

Homebuyer Education and Pre-Purchase Counseling

Homebuyer education and pre-purchase counseling are valuable resources available to first-time homebuyers in Texas. Homebuyer education courses, required by the Texas State Affordable Housing Corporation (TSAHC), cover topics such as budgeting, credit, and the home-buying process and can be taken online or in person. Pre-purchase counseling provides personalized guidance and support to help buyers navigate the home-buying process, particularly for those with credit issues or limited experience. These resources help homebuyers make informed decisions about homeownership and are often offered at low or no cost.

Texas Mortgage Credit Certificate Program (MCC)

The Texas Mortgage Credit Certificate Program (MCC) is designed to help first-time homebuyers in Texas save money on their federal income taxes by providing a percentage of their mortgage interest payments as a tax credit every year. To be eligible, homebuyers must meet certain income and home purchase price limits, have a minimum credit score of 620 and complete a homebuyer education course. The maximum credit is $2,000 per year and can be combined with other TSAHC programs. This program makes homeownership more affordable for first-time homebuyers in Texas.

Why you shouldn’t use a bank

First-time homebuyers in Texas should consider alternative financing options instead of traditional bank loans. Various loan programs available, such as the Texas State Affordable Housing Corporation Loans, Texas Bootstrap Loan Program, Texas Closing Cost Assistance, and the Texas Mortgage Credit Certificate Program, cater specifically to low-income individuals and families who may not qualify for bank financing. Using these programs can help you save on down payments, closing costs, and interest rates.

At Ebenezer Mortgage Solutions, we can help you determine which loan program best fits your needs and guide you through the entire home-buying process. By working with multiple mortgage lenders, we can provide access to better mortgage options that may not be available through traditional banks. Contact us today to learn more.

Steps to Buying a Home in Texas for the First Time

Buying a home for the first time can be daunting, especially in Texas, where the process can be quite different from other states. However, with a few key steps, you can successfully navigate the home-buying process in Texas and find your dream home. Here are some essential steps to follow when buying a home in Texas as a first-time homebuyer.

1. LOAN APPLICATION: Every purchase starts with an application. We need you to provide us with all the information we need to make a list of loan programs and monthly payment amount options that best suit your condition. Our application process will usually take just a few minutes.
2. LOAN CONSULTATION/PREQUALIFICATION: When you work with Ebenezer Mortgage Solutions, you'll have a dedicated loan officer or mortgage broker who will provide options that fit your situation. We will provide you with a pre-qualification letter, which is a document that will allow your realtor to evaluate and compare properties that best suit your loan and home requirements and needs.
3. HOME SHOPPING: Your realtor will help you find the right property for the loan amount approved. Once you choose the home, your realtor will advise you, help you make offers to the seller, and negotiate a purchase price.
4. LOAN PROCESSING: Once we have your sales contract, we will start processing it to establish a loan estimate and work up the required disclosures for you to review fully.
5. APPRAISAL: Most mortgage loans require that a third-party appraiser review the property to make sure you're pa third-party appraiser to review the property to ensure
6. UNDERWRITING: As soon as your appraisal is complete, an insurance agent or underwriter will look at all aspects of the mortgage loan, like the contract, supporting documentation you provided, the appraisal party, and other important details. When the underwriter is satisfied with all the information reviewed, your mortgage loan is moved to a "Clear to Close" status.
7. CLOSING: After the insurance agent issues the final approval, we will give you a Closing Disclosure to fully review. On closing day, all the documents will be ready for you, and you will sign all the paperwork needed and get the keys to your new home!

Read our resource page"Mortgage Loan Process" for more information about the entire home loan process!

What are today's mortgage rates in Texas?

As of March 15th, 2023, the current Texas home loan rates are 5.875% for interest rate and 6.031% for annual percentage rate (APR). It's important to note that mortgage rates can fluctuate daily based on market conditions, loan type, credit score, and other factors. You can check this webpage for updated mortgage rates in Texas.

What credit score is needed for first-time home buyers in Texas?

The credit score required for first-time home buyers in Texas can vary depending on the lender and the type of loan you seek. However, most lenders require a credit score of at least 620 to qualify for a conventional mortgage loan and a minimum credit score of 580 for an FHA loan.

It's important to keep in mind that credit score is just one factor that lenders consider when evaluating a borrower's ability to repay a loan. Other factors such as income, debt-to-income ratio, and employment history will also be taken into account.

Additionally, having a higher credit score may also make it easier to qualify for a loan with a lower interest rate, which can save you thousands of dollars over the life of your loan. Therefore, it's always a good idea to work on improving your credit score before applying for a mortgage loan. Read our blog to learn more about how to improve your credit score for buying a home in Texas for the first time.

You can buy a house. We can help you do it. Ebenezer Mortgage Solutions is here to help!

If you're a first-time homebuyer, the home-buying process can be daunting and stressful. Fortunately, mortgage brokers are available to assist you. Ebenezer Mortgage Solutions is a top mortgage lender and broker firm that can help you navigate the process. Although based in Florida, we also offer our services in Texas, providing homebuyers with the same high-quality services and expertise.

As a first-time homebuyer, the mortgage process can be overwhelming. That's why our services include handling the application process on your behalf from start to finish. With our years of experience and expertise, we guide and advise you throughout the entire process to make it as stress-free and smooth as possible.

Don't hesitate to contact us at (813) 284-4027 to start the process of owning your first home today.