First-Time Homebuyer Programs in Texas: What You Qualify For
One of the biggest myths in real estate is that you need 20% down to buy a home.
You don’t — and in Texas, you may need far less than you think.
Between low-down-payment loan programs, gift funds, and seller-paid closing costs, most first-time buyers can get into a home with a fraction of what they expected to bring to the table. Here’s a breakdown of the options worth knowing about — and how to find out which one fits you.
What Counts as a “First-Time Homebuyer” in Texas?
Here’s something most people don’t know: you don’t have to be buying your very first home to qualify for first-time homebuyer loan programs.
The federal definition — used by most loan programs — is that you haven’t owned a primary residence in the past three years. So if you owned a home years ago, sold it, and have been renting since, you may still qualify.
That opens the door for a lot more buyers than people realize.
The Main Loan Options for Texas First-Time Buyers
1. FHA Loans — Low Down Payment, Flexible Credit
FHA loans are the most common loan type for first-time buyers — and for good reason.
3.5% down payment with a 580+ credit score
More flexible credit requirements than conventional loans
Higher debt-to-income allowances than most conventional options
Gift funds allowed for the down payment
If your credit score is between 580 and 640, an FHA loan is often the right starting point. On a $350,000 home, 3.5% down is $12,250 — a long way from the $70,000 the “20% down” myth would have you believe.
Learn more about FHA loans in Texas →
2. Conventional Loans with Just 3% Down
Many buyers don’t realize conventional loans can require less down than FHA.
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs allow qualified first-time buyers to put just 3% down — with income at or below area limits. Standard Conventional 97 financing is also available for first-time buyers without income limits.
Why this matters:
3% down — lower than FHA’s 3.5%
Mortgage insurance cancels once you reach 20% equity (FHA’s usually doesn’t)
Often the cheaper option overall for buyers with credit scores of 680+
If your credit is strong, a 3% down conventional loan frequently beats FHA on total monthly cost. This is exactly the kind of comparison I run for every buyer.
3. VA Loans — $0 Down for Veterans
If you’ve served in the military, a VA loan is one of the best mortgage products available — period.
0% down payment required
No private mortgage insurance (PMI)
Competitive interest rates
Texas has a large veteran population, and VA loans are one of the most underused benefits available. If you’re a veteran or active-duty, let’s talk about whether VA financing fits your purchase.
4. Gift Funds and Seller-Paid Closing Costs
Two tools that dramatically reduce out-of-pocket costs — and that many first-time buyers never hear about:
Gift funds: Both FHA and conventional programs allow family members to gift some or all of your down payment. A properly documented gift letter is all it takes.
Seller concessions: In today’s market, sellers frequently agree to pay a portion of the buyer’s closing costs. On FHA loans, sellers can contribute up to 6% of the purchase price; conventional allows 3% with minimum down.
Combine a 3–3.5% down loan with a family gift and seller-paid closing costs, and your actual cash to close can be a fraction of what you budgeted.
Which Option Saves You the Most?
The honest answer: it depends on your credit score, income, and the home you’re buying — and the difference between picking the right program and the wrong one can be tens of thousands of dollars over the life of the loan.
This is where working with an independent mortgage broker matters. I shop your scenario across multiple lenders and run the FHA-vs-conventional comparison side by side. And because I charge zero lender fees, you’re not paying an extra $2,000–$5,000 on top of everything else.No Lender Fee Mortgage Austin TX — Save Up to $5,000 at Closing
How Do You Find Out If You Qualify?
The fastest way is a quick conversation. I’ll ask a few questions about your income, credit, and target purchase price — and I can usually tell you right away which loan programs you’re eligible for and what your estimated monthly payment would look like.
There’s no cost and no commitment. If it makes sense to move forward, we can get you pre-approved quickly. If it doesn’t make sense yet, I’ll tell you that too and let you know what to work on.
Get Pre-Approved or Ask a Question →Get Pre-Approved
Or call or text me directly: 512-423-4663
First-time homebuying doesn’t have to be overwhelming — and it’s usually more affordable than people think.
Russell Stout | Texas Mortgage Consultants, PLLC | NMLS# 220896 | Company NMLS# 1843758 | Licensed by the Texas Department of Savings and Mortgage Lending | Equal Housing Lender | All loans subject to credit approval. Program details may change — contact us for current eligibility requirements.
