City of Houston Down Payment Assistance Program

Buying a home with no money down is possible, and today we’ll highlight the The City of Houston (HAP)

Homebuyer Assistance Program:

Houston’s Housing and Community Development Department (HCDD) administers the City’s Homebuyer Assistance Program (HAP) for eligible low- to moderate-income families. Funds may be used to assist an approved applicant in paying down payment, closing costs, and principal buydown.

Homebuyer Assistance Program Qualifications:

  • Must be a first-time homebuyer or not have owned a home within the last three years.
  • Must not have more than $15,000 in liquid assets prior to closing (deferred assets such as pensions, 401(k)s, etc. are not included).
  • The buyer and co-borrower must be a U.S. citizen or permanent resident alien.
  • Buyer must be able to obtain a fixed-rate mortgage. The program does not accept adjustable-rate mortgages (ARM) or seller-financed mortgages.
  • Combined household income must be at or below the incomes listed in the following chart based on household size:

 The total family gross income cannot exceed the following:

2018 Maximum Annual Household Income Limits

Household Size
$25,000
70% of the Area Median Income (AMI) *
$15,000
80% of the Area Median Income (AMI) *
1
$37,800
$41,950
2
$43,200
$47,950
3
$48,600
$53,950
4
$53,950
$59,900
5
$58,250
$64,700
6
$62,600
$69,500
7
$66,900
$74,300
8
$71,200
$79,100

* Income includes any payments from employment, child support, recurring gifts, etc. Household income limits are subject to change.

Homebuyer Assistance Program Guidelines:

  • An eligible homebuyer at or below 70% AMI may receive $25,000 in assistance.
  • An eligible homebuyer at or below 80% AMI (but above 70% AMI) may receive $15,000 in assistance.
  • The selected home must be located within the property tax jurisdiction of the City of Houston.
  • Eligible property types include single-family homes, duplexes, triplexes or quadraplexes, attached townhomes, condominiums, or cooperative units.
  • Each applicant must take an eight-hour Homebuyer Education Course through an approved HUD counseling agency.
  • Applicants must occupy the home as their principal residence for a minimum of five years.
  • The back-end ratio cannot exceed 45%.
  • Property must pass an environmental and inspection review.
  • The borrower(s) cannot be delinquent on any student loans, federal income taxes, as well as state and local taxing authorities, utility payments, or City services.
  • See Homebuyer Assistance Program Guidelines for full details.

HAP Frequently Asked Questions:

  1. May I qualify for more than $25,000 of assistance? No, the maximum amount of assistance under this program is $25,000.
  2. How is the back-end ratio calculated? The back-end ratio is calculated by adding together all of a borrower’s monthly debt payments and dividing the sum by the borrower’s monthly gross income. For example, a borrower whose monthly gross income is $5,000 ($60,000 annually divided by 12) and who has total monthly debt payments of $2,000 has a back-end ratio of 40% ($2,000/$5,000).
  3. How do I determine if a home is located within the property tax jurisdiction of the City of Houston? Visit the Harris County Appraisal District’s (HCAD) website at www.hcad.org and enter the home’s address. If HCAD shows the home is taxed by the City of Houston, the home will qualify for the program. You may also refer to this map (link to map here) as a general guide of the eligible areas of the City.
  4. How is household income determined? Visit the HUD Income Calculator website, go to the “Start Calculating Income” section, and follow the instructions to calculate your household income.
  5. May I take the homebuyer education course online? A HUD-approved homebuyer education course may be done online, as long as you complete a one-on-one homebuyer advising/counseling session with a HUD-approved counseling agency. Each applicant must obtain a Homebuyer Education Certificate through a HUD-approved counseling agency.
  6. What if I need to sell my home before I have lived in it for five years? The loan will be forgiven at a rate of 20% for each full year of residency in the home. For example, if you receive assistance in the amount of $25,000, and complete three of the required five years, 60% or $15,000 of subsidy will be forgiven, leaving a balance owed of $10,000.
  7. How long does the process take? Typically, a preliminary approval can be received within 72 business hours, with a full file approval completed within two weeks.
  8. Am I required to work with an approved program lender? No, the program does not have an approved lender list. Applicants may choose any lender.

Next Steps:

Ready to apply? Once you’ve been pre-approved with a lender and have taken the first-time homebuyers education course, as explained above, please gather all of the documents listed on the following Applicant Checklist form and call us at 832-394-6200 for the next steps in the process.

Additional Resources:

Did you know the City partners with affordable home builders across the Houston area? With the city facing a housing crisis fueled by rising rents, low wages and limited inventory, choosing to partner with an affordable builder, lender, and realtor could bring you that much closer to homeownership. Funds from the Housing and Community Development Department (HCDD)’s Homebuyers Assistance Program (HAP) can be used to qualify towards the purchase of your new home with one of these great partners. Look at the links below and get started today!

Information can change Regularly. Here is the link directly to the City of Houston HAP website: HERE
Download their Brochure: HERE

If you have any other questions or would like more information, feel free to give us a call. As mortgage experts, we would be happy to guide you toward the best option for financing your next home purchase. We look forward to hearing from you soon. Have Questions, contact us below.