Texas is one of the most generous states in the country for first-time homebuyers. The combination of state programs through the Texas Department of Housing and Community Affairs (TDHCA), federal loan programs like USDA and VA, and local lender incentives means that a buyer in Bastrop County with as little as $5,000 in savings can potentially close on a home — and get a tax credit that reduces their federal tax bill for the next 30 years.
This guide covers every meaningful program available to Texas first-time buyers in 2026, with specific attention to how each one applies in Bastrop and Bastrop County.
Under most Texas programs, you qualify as a first-time homebuyer if you haven't owned a home as your primary residence in the last three years. This means divorced homeowners, people who previously owned but sold, and renters who owned years ago may all qualify again. Some programs in targeted economic zones waive this requirement entirely.
TDHCA: Texas's Main First-Time Buyer Agency
The Texas Department of Housing and Community Affairs is the state agency responsible for most first-time buyer assistance programs. TDHCA offers three interrelated programs that work together to reduce your upfront costs and ongoing monthly payment:
The flagship TDHCA program. Provides a 30-year fixed-rate mortgage at a below-market interest rate, plus down payment and closing cost assistance of up to 5% of the loan amount. The assistance comes as a 0% interest second lien that doesn't require repayment unless you sell or refinance within a certain period.
A TDHCA-administered 30-year fixed mortgage offered at a competitive rate. Can be combined with the Texas Mortgage Credit Certificate (MCC) for maximum savings. Unlike MFTH, this doesn't include DPA but can be used by buyers who don't need down payment help but want the below-market rate.
The MCC is arguably the most underused benefit in Texas. It gives you a federal tax credit equal to 20–40% of your annual mortgage interest, up to $2,000/year. Unlike a deduction (which just reduces taxable income), a credit directly reduces your tax bill dollar-for-dollar. You can claim it every year you live in the home, for the life of your loan.
On a $288,000 mortgage at 6.82%, you pay approximately $19,500 in interest in year one. A 20% MCC credit gives you a $3,900 tax credit — capped by IRS rules at $2,000/year. That's $2,000 back on your federal taxes every year you live in the home. Over 10 years: $20,000. The MCC turns a standard mortgage into a tax-advantaged investment.
Texas Heroes: Assistance for Public Servants
If you work in a qualifying profession, the TDHCA Texas Heroes program provides enhanced down payment assistance and a dedicated mortgage rate track. Eligible professions include:
- K-12 teachers and school employees (including Bastrop ISD staff)
- Police officers, correctional officers, and veterans
- Firefighters and EMS personnel
- Nurses, nurse practitioners, and allied health workers
The Texas Heroes program doesn't require prior homeownership history — so even if you owned a home in the past three years, you may qualify. Income and purchase price limits still apply.
USDA Rural Development: Zero Down for Bastrop County
For buyers in qualifying rural and suburban areas of Bastrop County, the USDA Rural Development loan is one of the most powerful tools available anywhere in the country. It offers:
- Zero down payment required
- Competitive 30-year fixed rates (often below conventional)
- No private mortgage insurance (just a 0.35% annual guarantee fee)
- 1% upfront guarantee fee (can be financed into the loan)
- Income limits apply (~$110,650/year for 1–4 person households in most TX counties)
Many areas of Bastrop County qualify, including Cedar Creek, McDade, Smithville, and rural areas outside the city limits. Even parts of the Bastrop city area may qualify depending on the specific parcel. A USDA-approved lender can confirm eligibility using the official USDA eligibility map.
USDA eligibility is determined by the property address, not just the city. Many rural Bastrop County addresses — particularly east of the city, along the SH-71 corridor toward La Grange, and in the Elgin/McDade area — qualify. The USDA eligibility map is the definitive source. Ask your lender to run an eligibility check on any property you're considering.
FHA Loans: 3.5% Down with Flexible Credit
FHA loans remain the most widely used first-time buyer tool nationally, and they're well-suited for Bastrop buyers. Key features:
- 3.5% minimum down payment (on a $321,000 home: $11,235)
- 580+ credit score for 3.5% down (500–579 requires 10% down)
- Higher DTI allowances (up to 57% in some cases)
- Up-front MIP of 1.75% (can be financed) + annual MIP of ~0.55%
- No income limits
FHA is particularly useful for buyers with credit scores in the 580–679 range who wouldn't qualify for the best conventional rates. FHA rates are often competitive with — or better than — conventional rates at lower credit scores. See our full comparison: FHA vs. Conventional Loan in Texas 2026.
VA Loans: Zero Down for Veterans
If you or your spouse is a veteran, active-duty service member, or qualifying surviving spouse, VA loans offer unbeatable terms:
- Zero down payment required
- No mortgage insurance (ever)
- Competitive rates (typically 0.25–0.5% below conventional)
- No income limits
- Fundable VA funding fee (1.25–3.3%, waived for certain disabled veterans)
Bastrop County has a strong veteran community, and VA loans are actively used here. There's no maximum loan amount for VA loans as of 2020 (for eligible borrowers with full entitlement), and the no-PMI benefit alone saves $100–$200/month compared to a conventional loan with less than 20% down.
Program Comparison at a Glance
| Program | Down Payment | Min. Credit | Income Limit? | Best For |
|---|---|---|---|---|
| TDHCA My First Texas Home | Up to 5% DPA | 620 | Yes (~$130K) | Most first-time buyers |
| Texas MCC | Any loan | 620 | Yes | Long-term tax savings |
| Texas Heroes | Up to 5% DPA | 620 | Yes | Teachers, police, nurses |
| USDA Rural Dev. | 0% down | 640 preferred | Yes (~$110K) | Rural Bastrop County |
| FHA Loan | 3.5% | 580 | No | Lower credit scores |
| VA Loan | 0% down | No minimum | No | Veterans & military |
| Conventional 3% | 3% | 620 | No | Strong credit buyers |
Find Out Which Texas Programs You Qualify For
A TDHCA-approved lender can combine multiple programs for maximum benefit — often stacking DPA with MCC and a competitive rate loan. Compare lenders now.
Compare Mortgage Rates →How to Stack Programs for Maximum Benefit
The real power of Texas first-time buyer programs is in stacking them. Here's a powerful combination that many Bastrop buyers don't know is possible:
Scenario: First-time buyer, $75,000 income, $321,000 home in Bastrop County
- Step 1: Apply for My First Texas Home → get a TDHCA-rate 30-year FHA loan + 5% DPA ($16,050 in down payment/closing cost assistance)
- Step 2: Add a Texas MCC → get a $2,000/year federal tax credit for the life of the loan
- Combined 10-year benefit: $16,050 in DPA + $20,000 in tax credits = $36,050 in direct savings
That's the equivalent of buying your home at $285,000 instead of $321,000, in terms of total cost. The stack only works through TDHCA-approved lenders and requires filing the right paperwork at closing — which is why having an experienced lender matters.
Bastrop County-Specific Considerations
A few notes specific to buying in Bastrop County:
USDA Eligibility Is Your First Check
Before going any other direction, determine whether your target property is USDA-eligible. If it is, USDA zero-down is almost always the best financial choice (assuming income limits are met). The guarantee fee is far cheaper than PMI over time.
Homebuyer Education Is Required — Take It Early
All TDHCA programs require completing an approved homebuyer education course. These are available online through HUD-approved counselors (typical cost: $0–$99, ~6 hours). Complete this early in your process — it's required before closing and often provides genuinely useful budgeting and loan guidance.
Work With a TDHCA-Participating Lender
Not all lenders participate in TDHCA programs. Make sure your lender is on the TDHCA-approved list before you get too far in the process. The good news is that many local and regional lenders covering Bastrop County are TDHCA-approved.
Ready to See What You Qualify For?
The best way to find out which programs you're eligible for is to talk to a TDHCA-approved lender. Get pre-qualified today and explore every option available to you.
Compare Mortgage Rates →First-Time Buyer Checklist for Bastrop
- ✅ Check your credit score (aim for 620+; 640+ for USDA; 700+ for best rates)
- ✅ Calculate your debt-to-income ratio (total monthly debts ÷ gross monthly income)
- ✅ Determine your savings: down payment + closing costs (typically 2–5% of purchase price)
- ✅ Complete a TDHCA-approved homebuyer education course
- ✅ Check USDA eligibility for your target area/property
- ✅ Contact a TDHCA-approved lender and ask about MFTH + MCC stacking
- ✅ Get pre-approved (not just pre-qualified)
- ✅ Know your target price range based on your budget (see our Bastrop affordability guide)
For more on the current Bastrop market and what you'll be buying into, see our Bastrop Real Estate Market 2026 report.
Frequently Asked Questions
What is the TDHCA My First Texas Home program?
My First Texas Home is a TDHCA program offering a 30-year fixed-rate mortgage at below-market rates plus down payment and closing cost assistance of up to 5% of the loan amount. You must be a first-time buyer (or not have owned in the past 3 years), have a 620+ credit score, meet income limits (~$130K for Bastrop County), and purchase within the program's price limits.
How much can the Texas MCC save me?
The MCC gives you a federal tax credit worth 20–40% of your annual mortgage interest, up to $2,000/year. On a $288,000 loan at 6.82%, that's $2,000 back on your federal taxes every year you live in the home. Over a 10-year period, that's $20,000 in real savings.
Do I have to be a first-time buyer to use Texas DPA programs?
Most Texas DPA programs define first-time as not having owned a home in the past three years. Some programs — particularly Texas Heroes for public servants and programs in targeted economic zones — waive this requirement entirely.