Down Payment Assistance in Houston: What It Really Costs You

Down payment assistance in Houston is real, it reaches far more buyers than most people assume, and it is not actually free money: you usually pay for it in your interest rate. That last part almost never makes it into the marketing, so let me lay out both halves. Who qualifies for these programs right now, and what the help costs you over the life of the loan.

First surprise: the income limits are much higher than people assume

Nearly every buyer who asks me about assistance opens with some version of “I probably make too much.” Usually they don’t. The Texas State Affordable Housing Corporation (TSAHC) sets its limits by county, and for the 2026 program year the ceiling across the seven-county Houston core (Harris, Fort Bend, Montgomery, Galveston, Waller, Chambers, and Liberty) is $156,000 in household income under the Home Sweet Texas program. Brazoria County’s limit is $189,000.

If you work in a “Texas Hero” profession, the limits go higher still. Teachers, teacher aides, school librarians, counselors and school nurses; police and public security officers; firefighters and EMS; corrections and juvenile corrections officers; veterans and active military; and nursing and allied health faculty all qualify under Homes for Texas Heroes, where those same seven counties top out at $176,800 (Brazoria, $214,200). Those figures come straight from TSAHC’s published limit schedule, effective June 13, 2026, with the Heroes numbers effective July 9, 2026.

The credit bar is lower than people expect too: 620 for government loans, 640 for conventional. With the Houston median sale price sitting around $340,000, a $156,000 ceiling covers a very large share of the people shopping in this market.

The three programs Houston buyers actually use

There are a lot of assistance programs in Texas. In practice, these are the three my buyers end up in:

• TSAHC — Home Sweet Texas / Homes for Texas Heroes. Statewide, no first-time-buyer requirement for the assistance itself. You pick either a grant that’s never repaid, or a deferred second lien that’s forgiven after three years (repaid only if you sell or refinance inside that window). Assistance runs 2% to 5% of the loan amount. There’s also a Mortgage Credit Certificate: a 15% federal tax credit on mortgage interest, first-time buyers only, and now available only bundled with the down payment assistance. Details at TSAHC’s Houston page.
• SETH 5 Star. This one is ours. Southeast Texas Housing Finance Corporation sits on the Sam Houston Parkway in southeast Houston, and its program offers up to 5% of the loan amount with no first-time-buyer requirement, no maximum sales price, a 640 minimum credit score, and a choice between a three-year forgivable second and a 30-year deferred second that carries no monthly payment and doesn’t accrue interest. Combine it with SETH’s MCC and there’s an additional $3,500 grant. See the SETH 5 Star program page.
• TDHCA — My First Texas Home. The state housing department’s first-time-buyer program, with up to 5% down payment assistance alongside a 30-year fixed loan. “First-time” here means you haven’t held an ownership stake in a primary home for three years; that requirement is waived for veterans and for homes in qualified targeted census tracts. Program details are at The Texas Homebuyer Program.

All three run through approved lenders rather than the agencies themselves, and all three require a homebuyer education course before closing. You don’t apply to TSAHC or SETH directly — you find a participating loan officer and they handle it.

What down payment assistance in Houston actually costs you

Here’s the part I want you to see clearly. Down payment assistance in Houston isn’t donated out of thin air; it’s funded by pricing your mortgage at a higher rate. TSAHC publishes its own rate sheet, which makes the trade unusually easy to measure. As of August 22, 2026, on an FHA loan:

Option	Rate	Cash you get	Monthly P&I
No assistance	6.375%	$0	$2,047
3% as a forgivable 2nd lien	6.750%	$9,843	$2,128
3% as a grant	7.250%	$9,843	$2,238
5% as a forgivable 2nd lien	7.125%	$16,405	$2,210

That’s built on a $340,000 Houston home with FHA’s 3.5% minimum down — $11,900 out of pocket, a $328,100 base loan. Principal and interest only; taxes, insurance and mortgage insurance ride on top of every row equally, so the comparison holds. For context, Freddie Mac’s weekly survey put the national 30-year average at 6.65% on August 20, 2026.

Run the break-even and the picture gets interesting:

• The 3% grant costs you about $191 more per month. You’ve spent the $9,843 back in roughly four and a half years — but you never owe it back, even if you sell in year two.
• The 3% forgivable second costs about $81 more per month, so it takes roughly ten years to spend the assistance back. The catch: sell or refinance inside three years and you repay the $9,843.
• The 5% forgivable second costs about $164 more per month. Break-even is a little over eight years.

So when is the trade worth it?

It’s worth it when the cash is what’s standing between you and a house. If you have $4,000 saved and you need $11,900 plus closing costs, the real choice isn’t assistance versus a better rate. It’s assistance versus renting for another two years. Getting in and starting to build equity generally wins that argument, and you can refinance the rate later if the market gives you the chance.

It’s a worse deal when you already have the down payment sitting in savings and you’re just hoping to keep it there. Then you’re paying a permanently higher rate for money you didn’t need, and thirty years is a long time to carry that. Same conclusion if you’re buying a forever home with no intention of refinancing.

One more wrinkle: if you’re weighing an assistance program against paying points to buy the rate down, those are opposite moves. Assistance trades rate for cash; a buydown trades cash for rate. Which direction you want depends on which one you’re short of. If you’re still deciding what you can put down at all, I wrote a full breakdown of how much down payment you really need in Houston.

How to actually get started

1. Take the eligibility quiz. TSAHC’s takes a few minutes, needs no paperwork, and hands you off to participating lenders.
2. Talk to two or three approved lenders, not one. Program rates and lender fees both vary. TSAHC’s rate sheet notes lenders may charge a 1% origination fee plus customary fees, and those aren’t standardized.
3. Ask each one to price you both ways. With assistance and without, same loan, side by side, monthly payment on each. If a loan officer won’t do that, find another one.
4. Book the education course early. All three programs require it before closing, and it’s a common reason closings slip. SETH’s runs $100, waived at charter income limits.
5. Then go shop. Know your real number before you fall for a house. Current rate context lives in my weekly Houston mortgage rate update, and there’s more on loan types on my mortgage information page.

I’m not a lender and I don’t originate loans. But I’ve sat at enough closing tables to know which questions save people money, and I’m glad to help you sort the options before you commit to one.

Kevan Pewitt is a licensed Texas REALTOR® and Broker, not a mortgage lender. Program terms, rates, and income limits are current as of publication and change regularly — verify every figure with TSAHC, SETH, TDHCA, and an approved lender before relying on it. Payment examples are illustrative, cover principal and interest only, and are not a loan offer. Houston Prime Realty supports Equal Housing Opportunity.

Last updated: August 2026

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