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The Lone Star State is a great place to buy a home.

With a strong, diversified economy and plenty of wide open spaces, becoming a first-time homebuyer in Texas is easy. In this article, we will walk you through everything you need to know about moving to Texas, or transitioning from renting to owning if you already live in the 28th state.

Types of Mortgage Loans Available in Texas

There are many types of loans available to first-time homebuyers in Texas. We’ll explain all of your options here so you can make the best possible choice for you.

Federal Loans in Texas

Texans have some fierce pride in their state, but many of them choose to use federal loans when they purchase a home. This is because these loans are very accessible to Texans.

Here are the common types of loans that Texans go for:

Conventional Loans

Conventional loans are a really popular choice for mortgages among Texans. As a first time homebuyer, you can get a conventional loan with only a 3% cash down payment. This is, however, also only if you meet the mortgage requirements of organizations like Fannie Mae and Freddie Mac. If you put at least 20% cash down payment, then you don’t even need to buy mortgage insurance.

FHA Loans

FHA loans are another popular loan option among Texan residents. This is because you can actually still qualify for an FHA home loan even if you have a bad credit score. For example, as long as you can put 20% cash down on the house, then you can qualify with a score as low as 500.

VA Loans

There are many veterans living the Lone Star State so VA loans and assistance programs tend to be a very popular option for first-time homebuyers there. These loans are available to current and former military members as well as their surviving spouses if they have passed away. Those who qualify enjoy great benefits like no minimum credit score and no down payment or mortgage insurance. However, they do have to pay a small VA funding fee in advance.

USDA Loans

If you are interested in buying a home for the first time in more rural areas of Texas, then this is the perfect loan for you. This is because the program offers no down payment mortgages to people who don’t have a traditional credit history. So, even if you only have things like rent or utility payments on file, you could still qualify.

State Loans in Texas

There are also first time homebuyer programs specific to Texas. As mentioned, Texans are a very independent bunch, so it makes sense that they would have state-specific mortgage opportunities. Most of these loans are a part of the Texas Department of Housing and Community Affairs (TDHCA).

One perk of buying in Texas? If you've already been a homeowner in Texas but haven't used the house as your primary residence in the past three years, then the TDHCA thinks you are a first-time homebuyer. The only exception to this would be if you are an honorably discharged veteran.

This department offers several different loan types. However, most of them have similar perks. Here are just a few of them:

  • Low interest rates
  • Closing cost assistance (help with down payments, too!)
  • Federal tax credits available for annual interest paid on mortgage loan
  • Combine loans for maximum benefit.

Now onto the actual loan programs themselves:

Homes for Texas Heroes Home Loan Program

This loan program is specifically for people in community service careers to have a better go of becoming a homeowner in Texas. Many different people can qualify. If you work as a teacher, police or correctional officer, firefighter, EMS personnel, or are a veteran, you can apply for this program.

It comes with a 30-year fixed interest rate and down payment assistance (DPA) of 3% to 5% of the loan amount. You don’t even have to be a first-time homebuyer to use this program!

Homes Sweet Texas Home Loan Program

One of the best parts of the Home Sweet Texas Loan Program is that not only does it offer down payment assistance (DPA) of 3% to 5% of the loan amount, but this DPA can be a second lien loan or a grant. If you receive the money as a grant, it means that you never have to pay it back. Ever. How cool is that? And, like similar loans in the state, you do not even really need to be a first-time homebuyer to use this loan.

My First Texas Home Loan

This loan offers homebuyers 30-year fixed rates on their total loan amounts. It also includes no down payments and closing cost help up to 5% of the total loan amount. You can have this help as a no interest, no monthly payment second lien.

Texas Mortgage Credit Certificate Program

Each time you make a mortgage payment, you pay interest to your lender on top of your principal loan balance. By using a Texas Mortgage Credit Certificate (MCC), some Texas homeowners can recover a portion of those taxes. You qualify for 40% of your annual mortgage interest or up to $2,000 per year.

Best Places To Live in Texas

The entire Lone Star State is filled with great places to live. There are small pockets of community everywhere. In the more rural areas, housing is cheap and the economy is strong. In the cities, the same is true, as most homes sell for less per square foot than their counterparts on the costs.

Houston is business-oriented. Austin is self-labeled as weird. Dallas is for the oilmen and cowboys. San Antonio has a thriving cultural community. No matter where you pick, as a buyer, Texas is the place to be.

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Ready to move to Texas? Our Texan team at Clever can’t wait to show you the Southern Hospitality you deserve.


Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

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