New Down Payment assistance program for first time home buyers in Austin: TDHCA Bond 77

Real Estate Agent with Realty Austin

This program was just released by the Texas Department of Housing & Community Affairs.  Its budget of $500 million is available to low and middle income first time home buyers in Texas on a first-come, first-served basis.  This means as applications are received, funds are set aside.  It can be used with many loan programs, FHA, Conventional, USDA, and VA; and on residential single family homes or approved condos up to approximately $258,690 in cost for non-targeted areas.  This is a great program for first time home buyers in Austin and the entire state of Texas.

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There are 2 different programs here:  Assisted and Unassisted.

  • Assisted : a second, silent lien of 5% of the mortgage amount to help with down payment and closing costs.  This second lien is interest-free, and will have to be paid back after the 30 year mortgage closes.  Interest rates are a bit above market rates, or about 5.74% interest rate approximately.
  • Unassisted: no second lien, but the interest rate will be a bit below market rates, or 4.99% approximately


Who can use the program?

  • First time home buyer occupant, it does not matter who else is on the loan, as long as the occupant is a first time home buyer and is on the deed
  • Current home owners who purchase in a "targeted" area (see below)
  • Meets income requirements (see below)
  • Completes a certified Home Buyer Education course prior to underwriting, costs is about $400-$500 and can be completed online

"Targeted" area = low income areas, Travis county only has a handful of these areas: Census tracts 000604, 000802, 000804, 001000, 002311, 002316, check the status of your area here

Most of Travis county is a non-targetted area, but I can help you determine if the property you are looking at meets the criteria.White Picket Fences in Austin, TX

Income requirements:

  • Sum of all persons' income (all sources) either living in the property or on the Deed
  • Targeted area, 1-2 persons = $87,960 max
  • Non-targeted areas, 1-2 persons = $73,300 max

Why use the program?

  • I have a down payment, but I would like below market interest rates
  • I need down payment or closing cost assistance

Restriction: Recapture tax!

If the property is sold within 9 years of the mortgage closing and they profit on the sale, the borrowers will have to pay the lesser of these two amounts:

  • 50% of the net gain on the sale, OR
  • 6.25% of the original mortgage amount

Example: If you purchase the property and close the mortgage for $130,000, and then sell the property 6 years later using a Realtor for $145,000 (considering 9% approximate fees for closing and commissions), you will net $1950 in profit.  Your Recapture Tax would be $975.  Disclaimer: this is only an example, and numbers would have to be confirmed by a lender.


Contact me if you would like more information (cell phone 512-789-2062), or are interested in taking advantage of this program!


My thanks go to John McClellan of Supreme Lending in Austin, TX who gave a great presentation on this program!

Comments (2)

Barb & Sal Dragotta
Macomb, MI
Macomb County Michigan

Shawn...Leave it to Texas to come out strong; read earlier today that Congress is considering doing something  similar. do not know the resolution of that effort as of now. Am certain that you will have 'Texas Takers'; may you personally see some results. Have a great Memorial Day.
Barb & Sal 

May 27, 2010 02:30 PM
Shawn Rooker
Realty Austin - Austin, TX

Thank you Barb & Sal!  I think a great follow-up to the tax credit would be some kind of Nationwide assistance plan for First time home buyers!


I will keep an eye out for such a program.

May 28, 2010 01:24 AM