You can have the money for a down payment and still benefit from down payment assistance.

That distinction matters.

For some San Antonio buyers, especially professionals moving from one home to the next, the smarter question isn't simply:

“How much can I put down?”

It's:

“How much of my cash should I put down?”

Texas offers down payment assistance programs that can help eligible buyers cover a portion of their down payment and closing costs. And some programs are available to repeat homebuyers, not just first-time buyers.

At Rich Realty Group, we work with our lending partners to determine whether those programs can become part of a larger strategy designed to protect your cash and improve the economics of your purchase.

How Does Down Payment Assistance Work in Texas?

Down payment assistance, or DPA, provides qualified homebuyers funds that can be applied toward eligible down payment and/or closing costs.

For example, the Texas Department of Housing and Community Affairs offers two primary programs:

My First Texas Home is designed for eligible first-time buyers and qualified veterans and offers assistance of up to 5% of the mortgage loan.

My Choice Texas Home has no first-time homebuyer requirement and can provide eligible buyers up to 5% of the mortgage loan for down payment and closing-cost assistance.

Current program requirements include factors such as credit, income, occupancy, loan type and homebuyer education. The specific requirements and available assistance depend on the borrower and program.

Texas State Affordable Housing Corporation, or TSAHC, also operates programs including Home Sweet Texas and Homes for Texas Heroes, which can combine eligible mortgage financing with down payment assistance.

Translation: Don't assume you don't qualify simply because you've owned a home before.

Why Would Someone With Savings Use Down Payment Assistance?

Because qualifying for a larger down payment doesn't necessarily mean making one is the best financial decision.

Imagine you're selling your current home while buying the next one.

You may want cash available for:

• Moving and transition expenses
• Renovations or furnishings
• Emergency reserves
• Investments
• Paying down higher-cost debt
• Simply maintaining liquidity

Putting additional cash into the house converts liquid capital into home equity.

That may be exactly what you want.

But it should be a decision, not a default.

Depending on the loan and assistance program, qualifying grants may be used toward down payment, closing costs or reserves, subject to the applicable underwriting and borrower-contribution requirements.

Where Our Negotiation Strategy Comes In

This is where down payment assistance becomes more interesting.

We don't look at DPA in isolation.

Before writing an offer, we coordinate with the lender and ask:

What assistance is available?

How much cash should our client preserve?

What seller concessions can the loan support?

Would those concessions be better used for closing costs or an interest-rate buydown?

What combination produces the best overall outcome?

Then we study the seller.

Days on market. Price reductions. Competition. Property condition. Seller motivation.

If the opportunity exists, we negotiate accordingly.

A buyer might be able to combine qualified assistance with allowable seller-paid closing costs or an interest-rate buydown, subject to the specific loan and program rules.

On conventional Fannie Mae loans, seller contributions can cover qualifying borrower closing costs and prepaid expenses within applicable limits, but they cannot simply be used to satisfy the buyer's required down payment or reserves.

That distinction is exactly why the lender and REALTOR® should be working together.

The Goal Isn't “Free Money.” It's Better Structure.

Not every down payment assistance program is automatically a good deal.

Depending on the program, assistance may be structured as a grant, forgivable second lien or repayable second lien. Programs can also carry different mortgage rates, income limits, occupancy requirements and repayment provisions.

So we compare.

Option A: Use more of your cash.

Option B: Use assistance and preserve more liquidity.

Option C: Combine assistance with a strategically negotiated seller contribution.

Then we look beyond cash to close.

We consider the mortgage payment, interest rate, long-term cost, available reserves and your plans after closing.

That's the difference between simply getting financing and building a financing strategy.

Frequently Asked Questions About Texas Down Payment Assistance

Do I have to be a first-time homebuyer to get down payment assistance in Texas?

No. Some Texas programs require first-time homebuyer status, while others do not. TDHCA's My Choice Texas Home program, for example, does not have a first-time homebuyer requirement.

How much down payment assistance can I get in Texas?

It depends on the program and current availability. Certain TDHCA programs offer eligible buyers assistance of up to 5% of the mortgage loan.

What credit score do I need for Texas down payment assistance?

Requirements vary by program, lender and loan type. Credit score is only one part of qualification. Income limits, debt-to-income ratio, occupancy, property eligibility and underwriting requirements may also apply.

Can I combine down payment assistance with seller concessions?

Potentially, yes. When the DPA program, mortgage program and lender permit it, assistance may be used alongside allowable seller concessions. Each source of funds must still comply with the applicable loan and program rules.

Can Rich Realty Group help me find down payment assistance in San Antonio?

Yes. We coordinate with lending partners who understand these programs so we can evaluate financing before building the offer strategy.

That matters because the best opportunity isn't always obvious from the advertised interest rate or purchase price alone.

Before You Decide How Much to Put Down, Know Your Options

Your down payment is only one piece of the transaction.

The better question is how your financing, available cash, seller concessions and negotiation strategy work together.

That's how we approach buying at Rich Realty Group.

Protect your time. Protect your money. Protect your confidence.

If you're planning to buy a home in San Antonio, especially if you're selling and buying at the same time, talk with us before assuming you don't qualify for assistance.

We'll connect you with one of our lending partners, evaluate the available options and build the real estate strategy around the numbers.

Because the goal isn't simply getting you into the next house.

It's helping you make the right move.

Program availability, assistance amounts and eligibility requirements can change. Loan approval, DPA eligibility, interest rates and seller concessions depend on the individual borrower, property, loan program and lender. This article is for general educational purposes and is not financial, tax, legal or lending advice.

Sources

• Texas Department of Housing and Community Affairs, Texas Homebuyer Programs
• Texas Department of Housing and Community Affairs, My First Texas Home and My Choice Texas Home
• Texas State Affordable Housing Corporation, Homeownership Programs
• Fannie Mae Selling Guide, Grants and Lender Contributions
• Fannie Mae Selling Guide, Interested Party Contributions

Yes. With the right conventional loan structure, a seller may be able to pay your upfront private mortgage insurance premium as part of an allowable seller concession.

Why should you care?

Because it can create an entirely different conversation about your down payment.

Instead of automatically putting 20% down to avoid monthly PMI, you may be able to put less down, have the PMI paid once at closing, negotiate for the seller to cover that eligible expense, and keep substantially more of your cash.

It isn't right for every buyer.

And not every lender offers it.

But it's a strategy worth knowing.

What Is Single-Premium PMI?

Private mortgage insurance, or PMI, is commonly required on conventional mortgages when the loan-to-value ratio is greater than 80%.

Fannie Mae recognizes several ways mortgage insurance premiums can be structured, including monthly, annual, split-premium and single-premium plans.

With single-premium PMI, a lump-sum premium is paid at closing rather than collecting a separate PMI premium each month.

Mortgage insurers such as National MI offer borrower-paid single-premium products that may be paid out of pocket, financed when permitted, or paid through an allowable seller concession, subject to applicable investor guidelines.

MGIC also recognizes borrower-paid single-premium mortgage insurance that may be paid at closing by the borrower or an eligible third party.

That's where our negotiation strategy enters the picture.

Can the Seller Really Pay My PMI?

Potentially, yes.

If the mortgage insurer, lender and applicable loan guidelines permit it, the seller can potentially use an allowable concession toward the upfront single PMI premium.

But here's an important distinction:

The seller is not paying your required down payment.

Fannie Mae prohibits ordinary interested-party contributions from being used for a borrower's required down payment or reserves.

Instead, the seller is potentially paying an eligible upfront cost, which can reduce the buyer's overall cash needed to close.

That can allow a buyer to choose a lower down payment without necessarily adding a separate monthly PMI charge.

A Simple Example

Assume you're buying a $600,000 home.

A 20% down payment is $120,000.

A 10% down payment is $60,000.

That's a $60,000 difference in cash.

Putting 10% down means a larger mortgage and normally requires mortgage insurance, so it isn't automatically the better option.

But suppose our lending partner determines that single-premium PMI is available, and market conditions give us enough leverage to negotiate an allowable seller contribution toward that premium.

Now we have a different decision:

Is putting another $60,000 into the house the best use of your capital, or would you rather preserve some of it?

That's the conversation we want you having.

What Type of Loan Allows Single-Premium PMI?

This strategy primarily applies to conventional mortgages that require private mortgage insurance.

Fannie Mae generally requires mortgage insurance on conventional first mortgages with a loan-to-value ratio greater than 80%, absent another acceptable form of credit enhancement, and expressly recognizes single-premium mortgage insurance plans.

This is different from FHA mortgage insurance and the guarantee or funding-fee structures associated with other government-backed loans.

There is also an important difference between borrower-paid single-premium PMI and lender-paid mortgage insurance.

With lender-paid MI, the lender pays the mortgage insurance premium and may recover that cost through the pricing of the loan. It is not simply the same strategy under a different name.

Who Qualifies for Single-Premium PMI?

There isn't one universal credit score or down-payment requirement.

Eligibility and pricing can depend on factors such as:

• Credit profile
• Loan-to-value ratio
• Debt-to-income ratio
• Loan amount
• Property and occupancy type
• Conventional loan program
• Mortgage insurer
• Lender guidelines

The borrower must still qualify for the underlying conventional mortgage and satisfy applicable mortgage-insurance requirements.

That's why we don't quote this strategy from a generic online calculator.

We have the lender price the actual loan.

How We Negotiate the Seller-Paid PMI Strategy

We start with the financing.

Our lending partner models the options:

20% down with no PMI

versus

a lower down payment with monthly PMI

versus

a lower down payment with single-premium PMI.

Then we evaluate the property.

If the seller is motivated and the transaction supports concessions, we determine where those dollars create the most value.

Maybe it's PMI.

Maybe it's closing costs.

Maybe it's buying down the interest rate.

Maybe it's a combination.

Fannie Mae permits seller financing concessions toward qualifying borrower closing costs and prepaid expenses within applicable limits. Those limits vary based on factors including occupancy and loan-to-value ratio.

We don't negotiate concessions just to say we got concessions.

We put the dollars where they create the best outcome for our client.

Why Not Just Ask for a Lower Price?

Because price and cash are not the same thing.

A $10,000 price reduction on a financed purchase does not put $10,000 back into your checking account at closing.

A properly structured $10,000 seller contribution toward eligible costs could have a much larger immediate impact on the cash you need for the transaction.

That's why we evaluate more than the sales price.

Price. Payment. Cash to close. Liquidity. Terms.

The best deal is the combination that best supports your goals.

Does Every Mortgage Lender Offer Single-Premium PMI?

No.

This is one of the most important points in this article.

Fannie Mae recognizes single-premium mortgage insurance, and major private mortgage insurers offer it. But that does not mean every lender offers every available PMI structure.

Individual lenders have their own investors, mortgage-insurance relationships, products and underwriting overlays.

So before assuming your only choices are 20% down or monthly PMI, talk with us.

We can connect you with one of our lending partners who understands how to evaluate these structures and coordinate the financing with our negotiation strategy.

Frequently Asked Questions About Seller-Paid PMI

Can a seller pay PMI for a buyer?

Potentially, yes. Certain borrower-paid single-premium PMI products permit the upfront premium to be paid through an allowable seller concession, subject to the lender, mortgage insurer, investor and applicable contribution limits.

Does single-premium PMI eliminate monthly PMI?

It can. A single-premium structure uses an upfront lump-sum premium rather than a separate recurring monthly mortgage-insurance premium. The exact policy terms should always be reviewed with the lender.

Can the seller pay my down payment?

Generally, an ordinary seller concession cannot satisfy the buyer's required down payment on a Fannie Mae transaction.

Is single-premium PMI available with FHA loans?

The strategy discussed here involves private mortgage insurance on conventional financing. FHA loans use a different mortgage-insurance structure.

Is single-premium PMI always better than monthly PMI?

No.

Cost, refundability, how long you expect to own the home, interest rate, down payment and other factors can change the math.

If you pay a significant upfront premium and then sell or refinance sooner than expected, the economics may be very different from those of monthly PMI.

That's why we compare the options before making the decision.

Before You Put 20% Down, Run the Numbers

If you're putting 20% down primarily because someone told you that's how you avoid PMI, don't make the decision on autopilot.

There may be another structure worth considering.

At Rich Realty Group, we coordinate with our lending partners before we negotiate so we know which financial levers are actually available.

Then we use the market, the property's position and the seller's motivation to negotiate around your priorities.

Protect your time. Protect your money. Protect your confidence.

Because we don't just open doors.

We help you structure the move.

Talk with Rich Realty Group and we'll connect you with one of our lending partners who specializes in evaluating these loan structures. Then we'll compare the options and determine whether seller-paid single-premium PMI belongs in your purchase strategy.

Mortgage insurance availability, pricing, seller contributions and underwriting requirements vary by lender, mortgage insurer, investor, borrower and transaction. This article is for general educational purposes and is not a commitment to lend or financial, tax or legal advice.

Sources

• Fannie Mae Selling Guide B7-1-01, Provision of Mortgage Insurance
• Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions
• National MI, Products & Rates
• MGIC, Mortgage Insurance Premium Options
• Consumer Financial Protection Bureau, What Is Private Mortgage Insurance?

By Rich Valadez

When buying or selling a home in Texas, the term "seller concessions" often comes up during negotiations. Seller concessions refer to costs that the seller agrees to pay on behalf of the buyer at closing. These concessions can help buyers reduce their out-of-pocket expenses, making homeownership more accessible. However, limits on seller concessions vary depending on the type of loan and the buyer’s down payment. Let’s explore the details and provide some practical examples to illustrate these limits.

What Are Seller Concessions?

Seller concessions are financial contributions a seller offers to help the buyer with closing costs, prepaid expenses (such as property taxes or homeowners insurance), and sometimes interest rate buy-downs. These concessions are often negotiated as part of the purchase agreement and are capped by the type of loan being used.

Seller Concession Limits by Loan Type

The maximum seller concessions allowed in a Texas real estate transaction depend on the type of loan and, in some cases, the size of the buyer’s down payment:

1. Conventional Loans
   • If the buyer’s down payment is less than 10%: Up to 3% of the purchase price.
   • If the buyer’s down payment is 10% to 24.99%: Up to 6% of the purchase price.
   • If the buyer’s down payment is more than 25%: Up to 9% of the purchase price.
2. FHA Loans
   • Seller concessions are capped at 6% of the purchase price, regardless of the buyer’s down payment amount.
3. VA Loans
   • Seller concessions are limited to 4% of the purchase price. However, VA loans allow additional contributions beyond this limit for specific expenses, such as loan origination fees.
4. USDA Loans
   • Seller concessions are capped at 6% of the purchase price, regardless of the buyer’s down payment amount.

Examples Using a $500,000 Purchase Price

Example 1: Conventional Loan with a 5% Down Payment

• Purchase Price: $500,000
• Down Payment: $25,000 (5%)
• Maximum Seller Concessions: 3% of $500,000 = $15,000

Example 2: Conventional Loan with a 15% Down Payment

• Purchase Price: $500,000
• Down Payment: $75,000 (15%)
• Maximum Seller Concessions: 6% of $500,000 = $30,000

Example 3: FHA Loan with a 3.5% Down Payment

• Purchase Price: $500,000
• Down Payment: $17,500 (3.5%)
• Maximum Seller Concessions: 6% of $500,000 = $30,000

Example 4: VA Loan with No Down Payment

• Purchase Price: $500,000
• Down Payment: $0
• Maximum Seller Concessions: 4% of $500,000 = $20,000

Example 5: USDA Loan with No Down Payment

• Purchase Price: $500,000
• Down Payment: $0
• Maximum Seller Concessions: 6% of $500,000 = $30,000

Why Seller Concessions Matter

For buyers, seller concessions can significantly reduce the upfront costs of purchasing a home, potentially making homeownership achievable sooner. For sellers, offering concessions can make their property more attractive to buyers in competitive markets. However, it’s essential to balance the concessions offered with the home’s market value and the seller’s net proceeds.

Seller contribution limits generally focus on the allowable amount of concessions (closing costs, prepaid expenses, etc.) that the seller can provide to the buyer as part of the transaction. These limits are set by loan guidelines and do not directly include the buyer's agent compensation. Here's how these concepts interact:

Buyer Agent Compensation1 and Seller Contributions

Buyer Agent Compensation

Buyer agent compensation is typically a separate line item in the seller's closing costs and is part of the listing agreement with the seller's agent. This fee is usually calculated as a percentage of the sales price and is paid by the seller to the buyer's brokerage. It does not count toward the seller contribution limits.

Seller Concessions and Loan Guidelines

Loan guidelines place caps on how much the seller can contribute toward the buyer's expenses (closing costs, prepaid items, etc.) to ensure the buyer has sufficient personal investment in the property. Since agent compensation is not considered a buyer expense, they fall outside the scope of seller concessions.

Example with Buyer's Agent Compensation2

If a $500,000 home sale includes:

• 3% Buyer Agent Compensation: $15,000 (separate from concessions and loan limits)
• Seller Concessions: Capped at 3% ($15,000 for a conventional loan with less than 10% down)

The seller's net proceeds will be reduced by both amounts, but only the $15,000 in concessions is subject to loan-specific limits.

Key Considerations

Custom Negotiations: 

While seller concessions and agent compensation are separate, they are both part of the seller's total cost of the transaction. If a seller feels stretched by both concessions and buyer's agent compensation, negotiations may involve reducing one or the other.

Appraisal Impact: 

Generous seller concessions and buyer agent compensation payouts could raise red flags with underwriters if they seem excessive relative to the property's appraised value, potentially requiring adjustments to the agreement.

Takeaway

Seller concessions and buyer agent compensation do not directly impact each other in terms of limits, but they combine to affect the seller's total transaction costs. Sellers should work with their agent to assess the overall financial impact and negotiate terms that align with their goals. Always consult with a knowledgeable lender to ensure compliance with loan guidelines.

A Final Word of Caution

This information is deemed to be reliable and accurate, but as things continually change, please be sure you are verifying the current limits and guidelines with your lender or real estate professional before making any decisions.

By understanding the role of seller concessions and their limits, both buyers and sellers can negotiate more effectively and achieve their goals in a Texas real estate transaction. If you have questions or need guidance, reach out to a knowledgeable real estate agent or loan officer for assistance.

1) Broker compensation or the sharing of compensation between brokers is not set by law nor fixed, controlled, recommended, or suggested, by the Association of REALTORS®, MLS, or any listing service. Broker compensation is fully negotiable. Brokers independently determine their fees.

2) Amounts are for example purposes only.

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