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Houston FHA Down Payment Assistance Programs In 2021

March 23, 2021 | By Reef Merhi
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What is Down Payment Assistance?

Did you know that you can get help paying for your home’s down payment? Saving up for a down payment can be difficult. Luckily there are several types of Houston FHA down payment assistance programs to make it easier to purchase a home.

Down payment assistance reduces the financial burden of saving up for a down payment. It also reduces the time it takes to achieve homeownership.

If you’re struggling to save up for a FHA loan down payment, here’s what you need to know about down payment assistance in Houston.

Down Payment Assistance for Houston FHA Loans

There are several thousands of down payment assistance programs available in the United States, and Houston has several to help you out. Grants and loans are available to FHA loan borrowers who meet certain criteria.

While most programs won’t pay your down payment in full, you may be able to get several thousand dollars to put towards your loan.

Types of Down Payment Assistance

In a nutshell, there are four types of down payment assistance programs that are available to help buyers afford their FHA mortgages.

Grants offered by Texas, Houston, and the various counties in the city are available for FHA borrowers who want to buy a home in Houston. The Texas State Affordable Housing Corporation offers extensive information about down payment assistance programs in Houston. Grants do not have to be paid back.

The other three types of down payment assistance available are second mortgage loans. Second mortgage down payment assistance loans may be required to be paid down alongside your first mortgage, have deferred payments, or may be forgiven over time. You may have to pay interest on some down payment assistance loans.

Am I Eligible for Houston Down Payment Assistance?

Each down payment assistance program comes with a different set of requirements.

Many down payment assistance programs have been set up for first-time homebuyers with low income. Down payment assistance programs may target specific demographics or require the recipient to work with an approved mortgage lender.

If you have a very high income, you may not be able to qualify for down payment assistance in Houston.

How to Get Down Payment Assistance in Houston

Getting down payment assistance can put you on a faster track to buying your first home. However, you may have to live in a certain area in order to qualify for it.

Some areas simply don’t have any down payment assistance programs set up. Depending on your target location, you may be able to get a larger grant.

Having an idea of where you want live is a good place to start when researching down payment assistance programs. In Texas, you can apply with My First Texas Home to receive up to 5% of your loan.

Houston specifically offers loans and grants to teachers, police officers, and veterans along with low- and moderate-income families. Other programs like Homes for Texas Heroes, the Home Star Program, and the 5 Star Texas Advantage Program are also available.

FHA Loan Requirements

Depending on your credit score, you will be required to put down between 3.5% and 10% on your FHA mortgage.

Borrowers with a credit score between 500 and 579 must put down 10%. KNowing this, you will be able to determine how much you still need to save after you receive the down payment assistance.

FHA borrowers must also have a debt-to-income ratio of less than 50%.

FHA Loan Limits

Typically, the FHA loan limit for a single-family home is $356,362. In a high-cost area, you may be able to borrow up to $822,375. The larger the loan, the more you’ll need to come up with for the down payment.

FHA Lenders in Houston: Tips for Matching with the Right Lender

If you are receiving down payment assistance, some lenders may have detailed requirements about how you can use it with your FHA loan.

Shop around and find a lender that will work with your needs and who offers affordable fees. Talk to multiple lenders before settling on one so you can get the most help at the best price.

Buying an FHA Home with Down Payment Assistance

Once you’ve found a property you’d like to purchase, it must pass the FHA’s requirements before you can use your loan to buy it. It has to pass through appraisal, and you must intend to put your name on the deed and make it your primary residence.

You cannot use your FHA loan for house flipping or investing. Spend time looking for bargains and negotiating with sellers so that your down payment assistance funds go further and your loan is manageable.

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