Buying your first home in Dallas can feel exciting and a little overwhelming. You might be wondering how to cover the down payment, which loan to choose, or whether there’s real help for first-time buyers here in DFW. You’re not alone. Many local buyers use assistance to bridge the gap and get into a home sooner. In this guide, you’ll learn the main programs available in Texas and the Dallas area, how they work with common loans, and the key questions to ask a lender before you start shopping. Let’s dive in.
What first-time buyer help covers
First-time buyer support usually falls into a few buckets. You’ll see down payment and closing cost assistance, often called DPA. This can be a grant, a forgivable or deferred second loan, or a low-interest second mortgage. You’ll also see Mortgage Credit Certificates, known as MCCs, which provide a federal tax credit on a portion of your mortgage interest.
There are also affordable first mortgage options, such as FHA, VA, USDA, and low-down-payment conventional loans. Some programs require homebuyer education from a HUD-approved counseling agency. Your lender will help you pair the right first mortgage with the right assistance.
Statewide programs to know
TDHCA at a glance
The Texas Department of Housing and Community Affairs, or TDHCA, administers several statewide homebuyer programs. These often combine a program-approved first mortgage with DPA and may require HUD-approved education. Income and purchase price limits apply and change each year. Work with a TDHCA-participating lender to verify current eligibility, loan types allowed, and counseling steps.
TSAHC highlights
The Texas State Affordable Housing Corporation, or TSAHC, offers statewide programs like Home Sweet Texas and Homes for Texas Heroes. Some options target certain occupations such as teachers, first responders, and veterans. TSAHC provides DPA as a second lien and may offer MCCs. You must use an approved lender and confirm the exact assistance amount, structure, and current availability.
Federal loan options explained
- FHA: Allows a minimum down payment as low as 3.5 percent for qualified borrowers. Many DPA programs pair well with FHA. FHA has upfront and monthly mortgage insurance that will affect your payment.
- VA: Offers zero down for eligible veterans and some service members. There is no private mortgage insurance. Check your VA entitlement and whether the DPA you want can be used with VA.
- USDA: Offers zero down in eligible rural areas and has income limits. Many DFW suburbs will not qualify, so confirm property eligibility and any rules on subordinate financing.
Local DFW options
City of Dallas and Dallas County
The City of Dallas often offers homebuyer assistance for low and moderate income households purchasing within city limits. Programs may require you to live or work in the city and complete homebuyer education. Dallas County can also provide DPA in unincorporated areas or in participating cities. Confirm current program names, amounts, and counseling steps before you go under contract.
Surrounding cities and counties
Many DFW cities operate their own assistance programs. Common examples include the City of Irving, City of Plano, City of Garland, City of Mesquite, City of Grand Prairie, and the City of Fort Worth. Collin and Tarrant counties may also offer resources or maintain lists of approved lenders and counseling agencies. Each program has its own income and purchase price limits, and the structure can vary from a true grant to a forgivable or deferred second.
Nonprofits and counseling partners
Local nonprofit housing counselors and community development corporations in North Texas can help you navigate applications and education. Many programs require HUD-approved counseling. Ask your lender or the program administrator for a list of HUD-approved agencies and confirm completion timing so it does not delay closing.
DPA and loan compatibility
FHA plus DPA
FHA is widely used with DPA in DFW. The assistance is often a forgivable or deferred second lien. Confirm the maximum DPA, whether seller concessions or gift funds are allowed with your DPA, and how FHA mortgage insurance will affect your monthly payment.
Conventional plus DPA
Conventional first-time buyer options can require as little as 3 percent down and may offer lower mortgage insurance with stronger credit. Some DPA programs pair only with specific conventional products, such as HomeReady or Home Possible. Ask your lender about credit score requirements, debt-to-income limits, and any investor overlays.
VA and USDA with DPA
VA loans are zero down for eligible borrowers and do not have private mortgage insurance. Some assistance programs can help with closing costs, but not all DPAs allow pairing with VA, so verify the rules. USDA loans are also zero down but have strict property eligibility and income limits. Many USDA loans do not allow subordinate liens except in specific cases. Check compatibility early.
MCCs and tax credits
MCCs are not down payment assistance. They reduce your federal tax liability by allowing you to claim a portion of your mortgage interest as a credit, subject to program rules and caps. An MCC can improve your monthly cash flow over time. Discuss the tax impact and any recapture rules with your lender and a qualified tax professional.
Eligibility basics to verify
- First-time buyer definition: Many programs define this as not owning a principal residence in the last three years. Others focus on income or target certain occupations.
- Income and purchase price limits: Most programs use Area Median Income to set limits. These numbers change each year by county, so confirm the current caps.
- Property eligibility: Most programs require a primary residence and may limit property types. Condominiums can have additional approval steps.
- DPA structure: Grant, forgivable loan, deferred second, or repayable second. The repayment triggers matter if you plan to sell or refinance.
- Counseling requirement: Many programs require HUD-approved education. Complete it early to avoid delays.
- Timelines: Some programs require you to reserve funds before or shortly after going under contract. Know the deadlines.
Buyer checklist: DFW start to close
Before you shop
- Gather pay stubs, W-2s, bank statements, and ID.
- Build a simple budget that includes target monthly payment, estimated down payment, and closing costs.
- If you plan to use assistance, enroll in a HUD-approved homebuyer education course.
Shop lenders and programs
- Get pre-approved by at least two lenders who regularly close Texas DPA and TDHCA or TSAHC loans in DFW.
- Ask which city, county, or state programs they participate in and how often they close them locally.
- Request sample Loan Estimates that show the DPA structure, all fees, and total cash to close.
Once you are under contract
- Confirm program reservation steps and deadlines with your lender and the program administrator.
- Verify property eligibility and any condo or HOA requirements.
- Complete all program disclosures and education certificates on time.
Questions to ask every lender
Program participation
- Which Texas and local DPA programs do you routinely close, and which have you closed in Dallas or DFW in the last 12 months?
- Are you an approved lender for TDHCA, TSAHC, and local city or county programs such as the City of Dallas or Dallas County?
Loan terms and costs
- Which first mortgage do you recommend for me and why: FHA, conventional 3 percent down, VA, or USDA?
- What credit score and debt-to-income ratios do I need for the loan and the DPA?
- Will pairing with DPA change my interest rate or lender fees? Show me side-by-side Loan Estimates with and without DPA.
DPA structure and repayment
- Is the assistance a grant, forgivable loan, deferred second, or a repayable second? What are the exact repayment triggers?
- Are there resale or income restrictions, and how long must I live in the home?
- Can the DPA be subordinated for a future refinance? Under what conditions?
MCC and taxes
- Is an MCC available with this program and with your company? What is the credit percentage and annual cap?
- What are the recapture rules, and should I talk to a tax professional about them?
Fees, timelines, and documents
- What program fees apply, and how long do reservations and closings typically take?
- What documents and counseling certificates do I need to provide, and by when?
Common tradeoffs to weigh
Assistance can lower your upfront cash needs but sometimes comes with a higher interest rate, a second lien, or occupancy and resale requirements. An MCC can improve monthly cash flow but adds paperwork and has recapture rules. VA and USDA offer zero down for eligible borrowers, yet may not pair with every DPA. The best fit balances your short-term cash, long-term payment, and how long you plan to stay in the home.
Heads up on program changes
Program names, income limits, purchase price caps, and availability change often. Always verify current terms with the administrator and a participating lender before you make offers. This guide is informational and not legal, tax, or loan advice. Speak with your lender, program administrator, and a qualified tax professional for your specific situation.
Next steps for Dallas buyers
- Gather your documents and rough budget.
- Speak with two or three local lenders who actively close TDHCA, TSAHC, and Dallas-area DPA.
- Complete a HUD-approved homebuyer education course if you plan to use assistance.
- Ask the lender questions from the checklist and request written Loan Estimates that include any DPA.
- Confirm reservation steps as soon as your contract is signed.
When you are ready to map your options to neighborhoods, timelines, and a practical budget, let’s talk. You will get clear guidance, local insight across Collin, Dallas, and Tarrant counties, and steady support from first tour to closing. Reach out to Nichelle Keithley to get started.
FAQs
What does “first-time buyer” mean in Texas?
- Many programs define it as not owning a principal residence in the past three years, though some options focus on income or targeted occupations.
How do Dallas down payment programs work?
- Assistance can come as a grant, forgivable or deferred second loan, or a low-interest second, with income and purchase price limits that vary by city or county.
Can I use DPA with FHA, VA, or USDA loans?
- Many DPAs pair with FHA and conventional loans, while VA and USDA compatibility varies by program, so confirm early with a participating lender.
What is a Mortgage Credit Certificate (MCC)?
- An MCC provides a federal tax credit on a portion of your mortgage interest, which can improve monthly cash flow but includes specific rules and caps.
Do DPA programs affect my interest rate?
- Some lenders or program structures may result in a slightly higher rate or added fees, so compare written Loan Estimates with and without DPA.
Will I have to repay down payment assistance?
- It depends on the program; grants may not require repayment, while forgivable and deferred seconds often have repayment triggers like sale or refinance.
