Financial Help & Grants for Building a Home in Texas: The Owner-Builder’s Guide
Building a home in Texas can be more attainable than in many states, but the true cost of new construction—land preparation, permits, materials, labor, utilities, insurance, and Code Compliance—still adds up fast. The smartest way to bring that cost down is to stack multiple funding sources: state-level self-help loans, federal rural programs, disaster-recovery grants, veteran benefits, city repair/reconstruction aid, down-payment assistance for new builds, and Utility Rebates that shrink both upfront and long-term costs. This guide gives you a thorough, current, and practical roadmap to the money that’s actually out there in Texas—and how to use it effectively. All links are embedded naturally in the text so you can jump straight to official details.
How Funding Typically Works (and What “Counts” as Building)
Most programs don’t hand you a blank check for a custom home. Instead, they target specific parts of the build (e.g., site work, reconstruction, energy systems) or specific populations (very-low-income owner-builders, rural households, veterans, disaster-affected owners). A “new build” in program terms may include ground-up construction, reconstruction on the same lot after demolition, or self-help construction where you supply labor (“sweat equity”) under a supervised program. This is why Texans often combine a primary loan with state aid, federal assistance, local grants, and utility incentives.
State of Texas Programs You Should Check First
Texas Bootstrap Loan Program (Self-Help, 0% Interest)
For very-low-income households willing to put in serious labor, the Texas Bootstrap Loan Program through Texas Department of Housing & Community Affairs (TDHCA) is Texas’s signature self-help pathway. Bootstrap provides 0% interest loans (up to the program’s per-household cap) administered by local nonprofit owner-builder providers, and the funds can support land acquisition, new construction, reconstruction, or rehabilitation. In exchange, owner-builders must complete a large share of the work themselves—at least 65% of the labor under program rules—often alongside volunteers and supervised by the nonprofit.
Because TDHCA funds come with quality and performance requirements, you’ll also need to meet Texas minimum energy efficiency standards for single-family homes; these are codified in TDHCA’s Single-Family rules and mirror state-adopted energy codes. The training, documentation, and inspection might feel rigorous, but the upside is a 0% interest gap-financing tool and well-supported build plan. Best for: owner-builders at or below low/very-low income limits who can supply sweat equity and want a structured, supervised path to a code-compliant home.
Homeowner Reconstruction Assistance (HRA)
If your current house is unsafe or beyond feasible repair, TDHCA’s Homeowner Reconstruction Assistance lets qualified local governments or nonprofits demolish and rebuild an owner-occupied home on the same lot. You’ll work through the HRA program page at TDHCA to locate an active administrator in your area (homeowners don’t apply directly to the state). Because HRA is built on HUD’s HOME rules, expect income limits and primary-residence requirements. It’s a powerful tool when rehabilitation isn’t enough and a fresh, code-compliant structure is the safest option.
Disaster Recovery: Texas General Land Office (GLO) Homeowner Assistance
After federally declared disasters, the Texas General Land Office manages CDBG-DR funds that can repair, reconstruct, elevate, or even replace homes damaged by floods, hurricanes, and severe storms. Start with the GLO Homeowner Assistance portal and check whether your county is included in the current round; programs specify damage thresholds and whether your case qualifies for reconstruction rather than repair. If you’ve already done work, look for reimbursement pathways; if you haven’t, look at rebuild options with strict scopes, standards, and contractor oversight.
Down-Payment & Mortgage-Credit Help for New Builds
If you plan to buy a newly built home from a builder (instead of acting as your own general contractor), Texas offers robust purchase-side assistance that can reduce your cash to close and after-tax mortgage cost. TDHCA’s My First Texas Home combines 30-year fixed mortgages with down-payment and closing-cost assistance, and you can pair it with an MCC (Mortgage Credit Certificate) to lower your federal tax liability on mortgage interest; the product lineup and eligibility are clearly laid out on TDHCA’s homeownership page. The nonprofit Texas State Affordable Housing Corporation (TSAHC) offers similar bundles under Home Sweet Texas and Homes for Texas Heroes; explore lender networks, income/price limits, and MCC details at TSAHC’s site. While these aren’t “build grants,” they’re extremely useful if your goal is to purchase a new construction home and you need help with the cash stack.
Veterans: Land, Home, and Improvement Loans via the VLB
Texas is rare in offering veterans a Land-first strategy. Through the Texas Veterans Land Board (VLB), eligible vets can finance land purchases, then follow up with VLB Home or Home Improvement loans when it’s time to build or upgrade. This sequencing helps many veterans secure a homesite first, then work toward construction financing—often with interest-rate discounts for service-connected disability. If you’re a veteran planning a multi-phase project, the VLB site is a must-visit.
Federal Programs That Work Well in Texas
USDA Section 502: Direct & Guaranteed (Rural Powerhouses)
If your lot is in an eligible rural area, USDA Rural Development loans are among the most build-friendly owner-occupant options in America. Section 502 Direct (USDA is the lender) can finance to build, repair, renovate, relocate, or purchase a home, and it explicitly covers site preparation and essential water/sewer costs; start with USDA’s 502 Direct overview and use the eligibility tool there to confirm location. Section 502 Guaranteed (through approved lenders) serves moderate-income buyers and can be used for new or existing homes in eligible rural areas; lender participation and program basics are outlined on USDA’s 502 Guaranteed page. Because USDA rules allow ground-up construction and site work, these loans are uniquely effective for rural Texans—especially when paired with state/local help.
USDA Section 504: Repair Loans & Grants
While Section 504 is aimed at repairs for very-low-income homeowners (with grants for elderly owners), it can be part of a phased approach—for example, clearing health/safety hazards or critical systems on a property you will later rebuild. Read the parameters on USDA’s 504 Home Repair page and consult your local Rural Development office about combinations and timing.
USDA Mutual Self-Help Housing (Technical Assistance Grants to Nonprofits)
If you like the sweat-equity idea behind Texas Bootstrap, know that USDA separately funds nonprofits to run Mutual Self-Help Housing groups (families build together, supervised by a technical-assistance grantee). Homeowners don’t receive this grant directly, but the group build model reduces labor costs dramatically. You’ll find the program framework at USDA’s Self-Help TA Grants page and can ask local nonprofits if they operate such cohorts.
Federal Home Loan Bank of Dallas (FHLB Dallas): Grants via Local Lenders
Through local member banks and credit unions, FHLB Dallas funds homeownership supports that often pair well with new builds. HELP grants (Homebuyer Equity Leverage Partnership) offer down payment/closing cost help that is time-sensitive and capped each year; ask your lender about availability via FHLB Dallas’s community programs. The Affordable Housing Program (AHP) provides competitive grants—usually to nonprofits or public partners—that can subsidize owner-occupied construction or rehab in qualified projects; basic rules and annual rounds are also listed on FHLB Dallas’s site.
Local Government Help (Repair, Reconstruction, Fee Waivers, and Speed)
Houston
The City of Houston’s Housing and Community Development (HCD) operates multiple programs. The Home Repair Program can repair or reconstruct a home depending on damage and feasibility, and the Homebuyer Assistance Program offers significant down payment/closing cost aid if you’re buying (including new construction inside city limits). Program details and current windows are tracked on Houston HCD’s website; always check the latest application cycles because demand is high and funding is limited.
Dallas
Dallas’s Home Improvement & Preservation Program (HIPP) supports major rehabilitation and, in certain cases, housing reconstruction for income-qualified owner-occupants. A smaller Emergency Home Repair grant addresses urgent hazards. Program rules and application windows live on the Dallas Housing Department page, and the city posts notices when reconstruction slots are open or filled for the year.
Austin
Austin aggregates several repair grants (for structural, plumbing, barrier removal, and more) under a single Home Repairs portal, and it runs a long-standing S.M.A.R.T. Housing® policy that can provide fee waivers and expedited review for developments that include reasonably priced (income-restricted) housing. If you’re a small builder or a homeowner-developer doing an affordable unit or two, start on the Austin Housing Department site and explore S.M.A.R.T. Housing on the city’s development pages to see whether your plan could receive permit/capital-recovery/inspection fee relief. In high-fee jurisdictions, permit and utility fees can add five figures to a build; if your project qualifies under an affordability policy, waivers and faster reviews can reduce both hard costs and carrying costs.
Utility & Energy Incentives That Lower Build and Lifetime Costs
You won’t usually find “build this house free” from your utility, but rebates for high-efficiency HVAC, insulation, windows, heat-pump water heaters, and solar can shave thousands off a project—and reduce monthly bills thereafter. Plan your specs up-front to qualify, and align rebate requirements with state energy-code compliance.
- Austin Energy lists new construction and retrofit rebates for single-family homes, along with occasional bonus incentives tied to performance; the current lineup and application instructions start at Austin Energy’s residential rebates page (navigate to residential → rebates & incentives).
- CPS Energy (San Antonio) maintains home energy rebates for equipment and building-shell upgrades and updates its STEP program targets; see “Save for Home” at CPS Energy’s site for eligible measures and forms.
- Oncor funds market-transformation programs that include High-Performance New Homes and retrofit paths delivered via participating builders and raters; links and contractor lists begin at Oncor’s energy efficiency portal (look for “Save Energy”).
- CenterPoint Energy (electric service areas around Houston) offers residential standard offer incentives delivered via approved contractors; start at CenterPoint Energy’s Texas page and navigate to energy efficiency programs.
Because TDHCA-funded single-family activity already requires meeting state energy code, coordinating insulation levels, duct sealing, and HVAC sizing with utility rebate specs is an easy win.
ADUs in Texas: Not a Grant—But a Financing Boost
An accessory dwelling unit (ADU) can make a primary build more financeable by adding future rental income or space for family care, but rules vary widely. Austin posts its ADU rules on the city’s code portal; start with the Austin Housing Department and the development services pages for “Two-Family Residential/ADU” to confirm size caps, setbacks, and parking. Dallas allows ADUs primarily through Accessory Dwelling Unit Overlays adopted at the neighborhood level; the process and eligibility live on Dallas Planning & Urban Design. Houston lists “secondary dwelling units” within its development code, but deed restrictions/HOA rules often govern whether you can build and rent one; check with Houston Planning and verify deed restrictions with your title documents.
While Texas doesn’t currently offer statewide ADU grants, a well-planned ADU can improve your loan underwriting and serve as a shock absorber for mortgage payments.
Property-Tax Relief That Reduces Long-Term Carry
Even if property-tax relief doesn’t fund pour-day, it can significantly lower lifetime housing cost. Start with the homestead exemption and senior/disabled freezes, and get the official forms at the Texas Comptroller’s property tax exemption page. Disabled Veterans receive partial exemptions based on VA rating, and veterans with 100% disability or individual unemployability qualify for a total homestead exemption; surviving spouses may also qualify, with details and applications on the Comptroller’s site. For renewable energy, renewable-energy device exemptions (e.g., rooftop solar) can shield the added value of your installation from property tax in many cases; confirm specifics with your county appraisal district and the Comptroller’s guidance.
Nonprofit & Community Partners (A Practical Shortcut)
If you’re income-qualified and want a guided build process, pair state/federal tools with Habitat for Humanity. The statewide network hub at Habitat Texas can route you to local affiliates that offer sweat-equity builds, homeowner education, 0% mortgages, and in some areas group build programs akin to USDA’s Mutual Self-Help. Many affiliates already know how to braid funding (Bootstrap + donations + volunteer labor + local grants), saving you months of legwork.
How to Stack Programs Without Getting Snagged
Step 1: Choose Your Path (Owner-Builder vs. Buy-New vs. Reconstruct)
If you want hands-on building and meet income thresholds, start with TDHCA’s Bootstrap page and ask which nonprofit providers serve your county. If you’re buying a newly built home from a builder, price out TDHCA’s My First Texas Home and TSAHC’s programs to reduce your cash to close and tax burden. If your existing home is failing, contact local administrators listed on TDHCA’s HRA page to assess reconstruction eligibility.
Step 2: Check Rural Eligibility (USDA)
Pop your address into the USDA map via USDA 502 Direct or USDA 502 Guaranteed. If you’re rural, you’ve unlocked build-friendly financing few metro products can match.
Step 3: Screen for Disaster Funds (If Applicable)
If storms or floods affected your property, check the active county lists and application windows on the Texas GLO site. Disaster rounds are time-bound; earlier applicants often have an advantage.
Step 4: Add Local + Utility Layers
Visit your city/county housing page—Houston HCD, Dallas Housing, or Austin Housing—to uncover repair/reconstruction grants, fee waivers, or closing-cost assistance for new builds. Before you finalize MEP specs, align with Austin Energy, CPS Energy, Oncor, or CenterPoint Energy rebate requirements so you don’t leave money on the table.
Step 5: If You’re a Veteran, Sequence with the VLB
Map a land-then-build plan using VLB Land Loans and follow with a VLB Home or Improvement product at favorable rates.
Step 6: Plan Your Compliance Folder
Most programs require income documentation, ownership records, site control, plans/specs, contractor bids, energy code compliance, and assorted disclosures. Keep a single digital folder that mirrors checklists from TDHCA, USDA, and your city so you can respond quickly to verification requests.
Common Pitfalls (and How to Avoid Them)
- Assuming you qualify before checking income/area rules. Verify AMI limits and rural maps on the state/federal program pages before you commit to a path.
- Waiting for a perfect “free build grant.” In Texas, full-house grants are rare outside disaster contexts; focus on stacking partial supports.
- Missing the energy details. If you touch TDHCA funds (Bootstrap/HRA), you must meet state energy standards—coordinate your envelope and HVAC design early and sync with utility rebates.
- Ignoring local deed restrictions or overlays. ADUs and even basic setbacks can derail plans; confirm with city planning and HOA/deed restrictions before you spend on plans.
- Funding-cycle timing. GLO and local housing programs run in rounds. Track calendars and submit early.
Quick FAQs
Can I get a grant to build a house from scratch if I’m not disaster-impacted?
Direct, full-home grants are unusual. In practice, Texans combine Bootstrap (0% self-help loans), USDA 502 (rural new-build loans), local repair/reconstruction aid, down-payment assistance for newly built purchases, and utility rebates.
What if I want to be my own GC and not do sweat equity?
Explore Construction-to-permanent Loans through private lenders; then layer USDA 502 Guaranteed (if rural) and utility rebates. You won’t get Bootstrap’s 0% money without the labor component.
Are ADUs funded by the state?
Not currently as a statewide grant, but ADUs can strengthen loan underwriting and help you meet affordability policies (e.g., Austin’s S.M.A.R.T. Housing) that deliver fee waivers or expedited review.
Where do I find active grant windows?
Bookmark TDHCA for state notices, USDA Rural Development for federal rural programs, recovery.texas.gov for disaster rounds, your city housing department for local aid, and your utility’s rebate page for energy incentives.
Final Takeaway (and a Simple Action Plan)
Texas doesn’t usually fund an entire custom build with a single check—but it does make building far more affordable when you layer programs:
- Pick your core path: Bootstrap for sweat-equity builds, USDA 502 for rural construction, HRA for demolish-and-rebuild, or new-build purchase with TDHCA/TSAHC assistance.
- Add local layers: Check Houston HCD, Dallas Housing, or Austin Housing for repair/reconstruction aid and fee relief.
- Stack energy rebates: Align specs with Austin Energy, CPS Energy, Oncor, or CenterPoint Energy before you buy equipment.
- If eligible, sequence VLB: Use VLB to acquire land now and finance the build next.
- Protect long-term costs: File Comptroller exemptions (homestead, disabled veteran, solar) as soon as you qualify.
Follow that plan and you’ll convert a daunting, six-figure project into a coordinated, fundable roadmap—one where each layer (state, federal, local, utility, veteran) removes a chunk of cost or risk and gets you closer to a finished, code-compliant home in Texas.
