Wondering how to buy on El Paso’s East Side with less cash up front? You are not alone. Many first-time and value-conscious buyers use down payment assistance to make a smart move sooner. In this guide, you will learn what programs exist in Texas, how they pair with common loans, who qualifies, and the steps to lock in funds on time. Let’s dive in.
Down payment assistance basics
Down payment assistance, or DPA, helps reduce your cash needed at closing. It can cover your down payment, and sometimes closing costs and prepaids. Programs come in different forms, so it is important to know what you are getting.
Common types you will see:
- Forgivable grants that become a second lien and are forgiven after you live in the home for a set time.
- Deferred second mortgages at 0 percent interest that you repay when you sell or refinance.
- Repayable second mortgages with low interest that you pay monthly.
- One-time closing cost grants from nonprofits or local programs.
- Mortgage Credit Certificates (MCCs) that reduce your federal income tax, which helps cash flow but is not cash at closing.
Programs El Paso buyers use
Several Texas programs are widely used by El Paso buyers. Each one works through approved lenders and has its own rules, limits, and timelines.
TDHCA options
The Texas Department of Housing and Community Affairs runs programs such as My First Texas Home and can connect you to MCCs. You apply through participating lenders. Expect income and purchase price limits tied to El Paso County and a required homebuyer education course for many options.
TSAHC programs
The Texas State Affordable Housing Corporation offers DPA for first-time buyers and “Heroes” such as teachers, first responders, and healthcare workers. These typically pair with specific mortgage products and are often structured as forgivable or deferred second liens. You must use a participating lender and follow program guides.
Veteran-focused options
The Texas Veterans Land Board offers state-level home loan benefits for veterans. This is separate from federal VA loans. VA loans usually require zero down, and DPA may still help with closing costs where allowed. Work with a lender who understands VA rules about subordinate financing and seller concessions.
Local and nonprofit support
Availability for city and county DPA can change during the year because funds are tied to federal allocations. Check with the City of El Paso Housing and Community Development, El Paso County Community Development, and local nonprofits like Habitat for Humanity for current offerings and required counseling.
How DPA pairs with FHA, VA, USDA, and conventional
DPA must be allowed by both the program and your lender’s guidelines. Confirm each piece early, since second liens and grants have specific documentation.
FHA loans
DPA commonly pairs with FHA to cover the 3.5 percent minimum down payment and part of your closing costs. FHA allows properly documented gift funds and approved assistance sources. The lender must treat the DPA correctly as a second lien or grant per FHA rules.
VA loans
VA loans typically require no down payment. DPA and gifts can still help with closing costs or interest rate buydowns if allowed. VA has rules about seller concessions, subordinate financing, and residual income. Use a VA-experienced lender to confirm what is allowed for your situation.
Conventional loans
Conventional options like HomeReady and Home Possible allow low down payments and may accept approved DPA sources. Because loan-to-value affects pricing and private mortgage insurance, ask your lender to show how the DPA structure changes your monthly cost and PMI timeline.
USDA loans
USDA loans offer zero down in eligible rural areas. Parts of El Paso County may qualify based on the exact address. DPA might be used for closing costs when allowed by USDA and your lender. Always verify property address eligibility.
Who qualifies in El Paso
Most programs share a few core requirements. Check current county limits and a lender’s overlays before you apply.
- First-time buyer status often means you have not owned a home in the past three years. Some programs waive this for certain groups, such as veterans or targeted professions.
- Income and purchase price limits are based on El Paso County’s area median income and adjust over time.
- Property must be your primary residence. Some programs limit condos or manufactured homes, so confirm property type early.
- Credit score requirements vary by loan type and lender. FHA typically allows 580 and above for 3.5 percent down, while 500 to 579 may require 10 percent down. Conventional often starts near 620. VA and USDA rely on lender standards.
- Homebuyer education is often required and can be completed online or in person through approved providers.
What to expect on El Paso’s East Side
Program funds can be limited or released in cycles. Plan extra time for DPA reservations and second-lien processing. A realistic timeline is to add 2 to 4 weeks for DPA steps on top of your normal loan process.
To keep things smooth, ask your lender to explain how the DPA will appear on your Loan Estimate and Closing Disclosure. This helps you confirm that the assistance is reserved, documented, and applied correctly on closing day.
Step-by-step plan
Use this checklist to move from interest to keys without surprises.
- Choose your loan path
- If you have VA eligibility, compare VA to FHA or conventional to see what saves you most.
- If you are open to USDA and your target address is eligible, price it out.
- Find a participating lender
- Ask lenders which TDHCA or TSAHC programs they regularly use in El Paso County.
- Request a sample breakdown showing the DPA structure and your cash to close.
- Complete required education
- Take the approved homebuyer course early. Keep your certificate handy for underwriting.
- Confirm availability and limits
- Check current income and price limits for El Paso County and whether funds are open.
- Verify that your property type is eligible.
- Get pre-approved in writing
- Ask for a written scenario that shows the DPA, interest rate, PMI (if any), and expected monthly payment.
- Reserve funds at contract
- Many programs require a reservation or approval before closing. Confirm the timing so funds are ready on schedule.
- Gather documents early
- Government ID
- Last 30 days of pay stubs
- Last 2 years of W-2s and tax returns
- Last 2 months of bank statements
- Gift letter if applicable
- Homebuyer education certificate
Smart pairing tips
- Stacking rules vary. Some programs cannot be combined, and some lenders limit subordinate liens. Confirm before you write an offer.
- Rates and PMI can shift based on down payment structure. Ask your lender to compare scenarios with and without DPA.
- Read the promissory note. Some DPAs are forgivable only if you remain in the home for a set number of years. Others are due at sale or refinance.
- Plan for future refinancing. Subordinate liens may need to be subordinated again or paid off to refinance later.
Local contacts to start with
- Texas Department of Housing and Community Affairs: Statewide DPA and MCC details; lender lists; county limits.
- Texas State Affordable Housing Corporation: Homes for Texas Heroes and other DPA options; participating lenders.
- City of El Paso Housing and Community Development: Local DPA availability and counseling resources when funded.
- El Paso County Community Development: County-level HOME or CDBG assistance for eligible areas outside city limits.
- HUD, VA, and USDA: Official rules and eligibility for FHA, VA, and USDA loans.
- CFPB: Consumer guides on gifts, closing costs, and comparing loan offers.
The bottom line
If you are buying on El Paso’s East Side, you likely have more options than you think. With the right lender, verified DPA, and a clear reservation timeline, you can reduce cash to close and move forward with confidence. When you are ready to plan your path, we are here to help you compare programs and coordinate the steps.
Have questions or want a local game plan tailored to your budget and timeline? Connect with Erica Barnaby - Homes By Harshaw for one-on-one guidance.
FAQs
What is down payment assistance in Texas?
- DPA helps reduce your cash to close through grants or second liens, and it may cover down payment and sometimes closing costs, depending on the program.
Which El Paso programs should I check first?
- Start with TDHCA and TSAHC for statewide options, then contact the City of El Paso and El Paso County for local funds when available.
Can I combine multiple DPA programs?
- Sometimes. Stacking depends on each program’s rules and your lender’s policy. Confirm before you go under contract.
Does DPA work with FHA, VA, and conventional loans?
- Yes in many cases. FHA frequently pairs with DPA, VA can allow help with closing costs, and conventional may accept approved sources. Verify with your lender.
Will DPA change my interest rate or PMI?
- DPA itself does not set your rate, but the structure can affect loan-to-value and PMI. Ask your lender to compare scenarios.
Do I have to repay DPA?
- It depends. Some assistance is forgivable after you live in the home for a set time. Others are deferred or amortizing second mortgages that you repay when you sell or refinance.
How long does DPA add to my timeline?
- Plan an extra 2 to 4 weeks for reservations and second-lien processing, depending on the program and lender.
