Whether you are downsizing after selling a longtime family house, relocating closer to grandkids, or becoming a first time home buyer over 60 in Texas, navigating mortgage rules on a retirement income can feel overwhelming.
This 2026 guide breaks down Texas senior homebuyer programs, including HECM for Purchase reverse mortgages, how lenders count Social Security and pension income, repeat-buyer down payment assistance, and the expanded 65-and-older property tax breaks.
Check Your Texas Home Purchase Eligibility
You will walk away knowing which loan structures fit your retirement budget, how the Texas school tax ceiling works when you move, and what steps to take before you make an offer.
Your Rights as an Older Homebuyer in Texas
If you are worried that retiring from full-time employment or applying for a 30-year mortgage in your 60s, 70s, or 80s will count against you, federal law is firmly on your side.
Under the Equal Credit Opportunity Act (ECOA) and CFPB Regulation B, a creditor may not take an applicant's age into account except as Regulation B permits, and an empirically derived scoring system may not assign a negative factor or value to the age of an elderly applicant.
Just as important for retirees, Regulation B says pension, annuity, and retirement income may not be discounted or excluded. Your income still has to meet the loan program's documentation and continuance rules, covered below.
HECM for Purchase in Texas: Buy a Home at 62+ in One Transaction
For seniors buying a home in Texas who do not want to tie up all their cash in a new house, the Federal Housing Administration's HECM for Purchase is a Texas reverse mortgage option worth comparing.
According to HUD Handbook 4000.1, a HECM (Home Equity Conversion Mortgage) for Purchase allows you to finance the purchase of a new principal residence and obtain a reverse mortgage in a single transaction.
Who Qualifies and Eligible Texas Properties
Under FHA guidelines (including HUD Handbook 4000.1 Update 18, with HECM for Purchase updates marked effective November 10, 2026), borrowers must meet several core rules:
- Age requirement: You must be at least 62 years of age as of the closing date. HUD explicitly states that there is no maximum age limit.
- Occupancy: You (and any eligible non-borrowing spouse) must occupy the purchased property as your principal residence within 60 days of closing. Only one principal residence is allowed, and if you have an existing HECM on a previous home, it must be paid off first.
- Eligible property types: You can buy an existing or new-construction 1-to-4 unit site-built home (as long as you occupy one unit, including a single-family home with an accessory dwelling unit), a condo in an approved project, or an eligible manufactured home. New construction requires specific inspection documentation.
- Contract for deed payoff: FHA rules also permit a HECM for Purchase to pay off an existing contract for deed or land contract.
Texas Section 50(k) Constitutional Rules for Reverse Mortgages
Texas sets its own reverse mortgage rules in Section 50(k) of the Texas Constitution, and Section 50(k)(4) allows reverse mortgages to fund the purchase of a homestead. These rules include specific requirements:
- Age 62 minimum: The Texas rules also set age 62.
- Counseling window: Counseling must take place between 5 and 180 days before closing.
- 12-day notice: Texas requires a 12-day notice.
If you want to explore how reverse mortgages fit into long-term estate and family wealth planning, see our guide to Texas Reverse Mortgages.
2026 HECM Limits and Closing Costs
In a HECM for Purchase, your borrowing power is based on the Maximum Claim Amount (MCA), which HUD defines as the lesser of the home's appraised value, the sales price, or the national FHA HECM limit.
For case numbers assigned from January 1, 2026 through December 31, 2026, HUD Mortgagee Letter 2025-22 sets the nationwide HECM MCA limit at $1,249,125 (150% of the $832,750 baseline conforming limit). This is the current published figure and it can change by year, so confirm the active limit with a participating lender.
| HECM Cost Category | 2026 HUD / FHA Rule | How It Is Paid |
|---|---|---|
| 2026 Maximum Claim Amount (MCA) Limit | $1,249,125 (lesser of appraised value, sales price, or national cap) | Determines base calculation for loan and MIP |
| Initial Mortgage Insurance Premium (MIP) | 2.00% of the Maximum Claim Amount | For HECM for Purchase, must be financed or paid in cash |
| Annual Mortgage Insurance Premium (MIP) | 0.50% of the outstanding loan balance | Payable monthly, accruing from closing |
| Loan Origination Fee Cap | Greater of $2,500 or 2% of first $200,000 of MCA + 1% of MCA above $200,000; capped at $6,000 maximum | May be fully financed (lenders may charge less) |
| HUD Counseling Fee | Agencies may charge a reasonable fee | Allowed Mandatory Obligation that can be paid at closing |
| Third-Party Closing Costs | Customary and reasonable amounts, no more than actually paid (appraisal, lender's title insurance, recording, survey, credit report, flood certification, and similar items) | Collected by the lender at closing |
Here is how the origination fee formula works at different MCA amounts (our arithmetic from HUD's formula):
- MCA of $125,000 or less: Subject to the $2,500 floor (unless the lender charges less).
- MCA of $150,000: 2% equals $3,000.
- MCA of $300,000: 2% on the first $200,000 ($4,000) plus 1% on the remaining $100,000 ($1,000) equals $5,000.
- MCA of $400,000 or more: Hits the federal $6,000 maximum cap.
Note that lenders may not pay counseling agencies or counselors for HECM counseling. Under HUD Mortgagee Letter 2011-09, agencies may charge a reasonable fee that does not create a hardship, and they should not collect a fee at the session from clients below 200% of the federal poverty level (though they may charge at closing if the amount was disclosed). The CFPB says agencies cannot charge you if you can't afford it.
Check Your Texas Home Purchase Eligibility as a Senior Buyer
Qualifying on a Fixed Income: Social Security, Pensions, and Retirement Accounts
You can also buy with a traditional forward loan from our Texas home loan options, such as conventional or FHA loans in Texas. You do not need W-2 wage income to qualify; HUD Handbook 4000.1 (for FHA) and the Fannie Mae Selling Guide (for conventional loans) set specific rules for retirement income.
How Lenders Count Retirement Income
| Income Source | FHA Loan Rules (HUD Handbook 4000.1) | Conventional Loan Rules (Fannie Mae Selling Guide) |
|---|---|---|
| Social Security Retirement | Must verify receipt and 3-year continuance from case number assignment using your Notice of Award (or equivalent). If the award letter has no expiration date, it is treated as continuing and the lender may not request additional documentation. | For retirement benefits drawn on your own account, lenders are not required to verify continuance unless there is reason to believe it will stop. Benefits drawn on another person's account require 3-year continuance documentation. |
| Pensions & Annuities | Must document that income will likely continue for at least 3 years using tax returns, a bank statement, or a pension letter, using the current payment amount. | Verify current payment amount. Fixed pension payments need no minimum receipt history; annuity and retirement distributions require 3-year continuance. |
| IRA, 401(k) & Keogh Distributions | Must be recurring and likely to continue for at least 3 years; requires the most recent account statement. | Eligible 401(k), IRA, and Keogh balances may be combined to prove 3-year continuance. You must have unrestricted access without penalty. Fixed distributions need no minimum history; variable distributions require 12 months of history (averaged over 12 months). |
| Disability Benefits (SSDI / SSI / Private) | Requires Notice of Award plus tax return, bank statement, SSA benefits letter, or SSA-1099. Cannot be used if expiring within 3 years. Lenders may never inquire into the nature of the disability or medical condition. | Own-account Social Security disability and private long-term disability do not require continuance verification unless there is reason to doubt it. For private long-term disability, re-evaluation of benefits is not treated as a reason income will stop. |
The "Gross-Up" Rule: Boosting Your Qualifying Income
Because part or all of your Social Security or disability income may be exempt from federal income tax, mortgage guidelines allow lenders to "gross up" the nontaxable portion—effectively giving you more qualifying income on paper to help lower your debt-to-income (DTI) ratio:
- Fannie Mae Safe Harbor (Selling Guide B3-3.4-15): When you draw Social Security benefits, conventional lenders can automatically treat 15% of the benefit as nontaxable and gross that portion up by 25% without requiring you to provide tax returns or further tax proof.
- FHA Nontaxable Gross-Up (Handbook 4000.1): Nontaxable Social Security or disability income may be grossed up by the greater of 15% or your actual tax rate.
Down Payment Assistance & Loan Options for Older Texas Buyers
Whether you are a first time home buyer over 60 in Texas or a longtime homeowner selling a property to downsize, several state and federal programs can reduce your upfront cash needed at closing. Buyers apply for state and local assistance through a participating lender, and our team helps you check eligibility, compare options, and get connected.
1. Statewide Texas Programs (First-Time and Repeat Buyers)
Texas has two primary statewide housing agencies: the Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC). For a full list of assistance options across the state, see our guide to 58 Texas First-Time Home Buyer Grants & Programs (2026).
- For Repeat Buyers Downsizing: If you currently own a home or owned one within the past three years, look at the My Choice Texas Home Program (through TDHCA) and the Home Sweet Texas Home Loan Program (through TSAHC). My Choice Texas Home does not require first-time buyer status, and Home Sweet Texas does not require it for Non-Bond DPA or No DPA.
- For First-Time Buyers (or No Homeownership in 3 Years): If you have not owned and occupied a primary residence in the past three years (or you qualify for TDHCA's veteran or Targeted Area exemption), you may also qualify for the My First Texas Home Program.
- For Veterans and Certain Public Servants: Eligible Texas veterans and qualifying professionals can explore Homes for Texas Heroes and the Texas Veterans Land Board Home Loan (2026).
Each of these programs has income limits (some options also have purchase price limits) and requires homebuyer education; see Texas homebuyer income & purchase price limits. Program interest rates change daily, so a participating lender can quote today's rate and confirm current assistance tiers.
2. Local City and Housing Authority Rules for Seniors
Several local Texas programs include specific provisions for older or retired buyers:
- Housing Choice Voucher Homeownership: In Longview, there is no time limit on voucher homeownership assistance for elderly or disabled families (and the standard employment requirement is waived for them). In Grand Prairie, the voucher homeownership term extends up to 30 years for elderly or disabled families, compared to 15 years for other households.
- City Down Payment Programs: Local programs vary by city and funding status. For instance, the Houston Homebuyer Assistance Program (2026) allows its standard cap of under $50,000 in liquid assets to be waived for buyers who are retired, near retirement, or disabled—though Houston's HAP is currently paused because funds are exhausted. Be sure to check active rules in your area, including the Dallas Homebuyer Assistance Program (2026), San Antonio Homebuyer Assistance Programs (2026), and Austin Down Payment Assistance (2026).
3. Low- and Zero-Down Federal and Conventional Mortgages
- Conventional 3% Down (HomeReady & Home Possible): Fannie Mae HomeReady and Freddie Mac Home Possible offer 3% down options (Home Possible allows up to 97% LTV on a 1-unit fixed-rate loan, and HomeReady LTVs above 95% carry extra requirements) for buyers whose total qualifying income does not exceed 80% of Area Median Income (AMI). The 2026 baseline conforming loan limit across all 254 Texas counties is $832,750 for a 1-unit home.
- VA and USDA Loans: Eligible veterans can compare VA loans in Texas, and buyers in eligible rural areas can check USDA loans in Texas (2026).
- Adult Children Buying for an Aging Parent: Under Fannie Mae Selling Guide B2-1.1-01 occupancy rules, if an adult child buys a home for a parent who is unable to work or lacks sufficient income to qualify for a mortgage on their own, Fannie Mae considers the child the owner/occupant.
- Accessibility Modifications After Purchase: If a household member has a disability and household income is at or below 80% AMFI, TDHCA's Amy Young Barrier Removal Program (AYBR) provides one-time grants of up to $22,500 for accessibility modifications (it is not down payment help).
Check Your Texas Home Purchase Eligibility
Texas 65+ Property Tax Exemptions, Tax Ceilings, and Deferrals
One of the biggest financial advantages of owning a home in Texas at age 65 or older is the state's property tax relief structure, which was significantly expanded by Texas voters in November 2025 (Proposition 13 / S.B. 4 and Proposition 11 / S.B. 23). For a complete breakdown of every rule and form, read our dedicated guide to Texas Property Tax Exemptions for Seniors (2026) and our Texas Homestead Exemption Guide (2026).
2026 Texas Senior Property Tax Benefits at a Glance
| Benefit | Tax Code Section | What It Provides (Tax Year 2025 & Later) |
|---|---|---|
| General School Homestead Exemption | Tax Code §11.13(b) | Mandatory $140,000 off appraised value for school district taxes |
| Additional 65+ (or Disabled) School Exemption | Tax Code §11.13(c) | Additional $60,000 off appraised value for school district taxes (stacks with the $140,000 general exemption for $200,000 total off school taxable value) |
| School District Tax Ceiling ("Freeze") | Tax Code §11.26 | Freezes your total school district taxes at the amount imposed in the first year you qualify for the 65+ exemption (unless you add new improvements) |
| Local Optional 65+ Exemption | Tax Code §11.13(d) | At least $3,000 where a taxing unit has adopted one (a unit may specify a larger amount) |
| 10% Annual Homestead Appraisal Cap | Tax Code §23.23 | Limits annual appraised value increases on your homestead to 10% per year plus new improvements |
| Senior Property Tax Deferral | Tax Code §33.06 | Allows homeowners 65+ (or disabled) to defer homestead property taxes by filing Form 50-126; a tax lien remains and accrues 5% annual interest without new penalties |
How the $200,000 Combined School Exemption Works
Under Tax Code §11.13(c), the $60,000 over-65 school exemption is in addition to the $140,000 general homestead exemption.
Here is an illustration building on the Comptroller's $300,000 home example (the second step is our arithmetic):
- On a $300,000 appraised home, the $140,000 general exemption reduces school taxable value to $160,000.
- Adding the $60,000 over-65 exemption reduces the school taxable value to $100,000—before applying any local optional exemptions or your school tax ceiling.
(Note: If you are both 65+ and disabled, Tax Code §11.13(h) states you cannot receive both the elderly and disabled exemptions from the same taxing unit in the same year, though you may receive them from different taxing units. Veterans should also review the Texas disabled veteran property tax exemption.)
Crucial Timing and Downsizing Tax Tips
- You Get the Full Year's 65+ Exemption the Year You Turn 65: Under Tax Code §11.42(c), the 65+ exemption takes effect as of January 1 of the tax year in which you turn 65, even if your 65th birthday is in November or December. You have until the first anniversary of your qualification date to apply using Comptroller Form 50-114 (and if you already have a general homestead exemption and your age is in appraisal district records or DPS data, the chief appraiser must allow the 65+ exemption without an application).
- Transferring ("Porting") Your School Tax Ceiling When You Downsize: Under Tax Code §11.26(g)–(h), when you sell your existing Texas homestead and qualify a new homestead, you can transfer the percentage of school tax savings from your old tax ceiling to your new home. The chief appraiser where you used to live must give you a Tax Ceiling Certificate (Comptroller Form 50-311); then answer the question on Form 50-114 about transferring a tax limitation. (Note: Form 50-311 uses the wording "in this taxing unit," whereas Tax Code §11.26(g) does not specify that the new home must be in the same school district—confirm transfer procedures directly with your new county appraisal district.)
- Surviving Spouse Protection (Age 55+): If a homeowner with the 65+ exemption and school tax ceiling passes away, a surviving spouse who is 55 or older at the time of death keeps both the school tax ceiling and the local 65+ exemption as long as the home was and remains their residence homestead.
Smart Tips for Seniors Downsizing in Texas
- Match Your Texas Driver's License Address Right After Closing: Under Tax Code §11.43(n), your county chief appraiser cannot approve your homestead exemption on Form 50-114 unless the street address on your Texas driver's license or state-issued ID matches the property address of your new home. Update your ID as soon as you move in so your $200,000 combined school tax exemption is not delayed.
- Watch Condominium Approval Lists Before Making an Offer: If you plan to use a HECM for Purchase on a condo, the condo must be in an approved project, so confirm the project's status early. See our Texas condo loans page for more.
- Compare Cash vs. HECM vs. Small Forward Mortgage: Selling a paid-off home gives you options. Paying all cash means no mortgage but ties up your money in the house. A HECM for Purchase (at 62+) combines the purchase and a reverse mortgage in one transaction but carries costs such as the 2% initial MIP and 0.50% annual MIP, while a forward conventional or FHA loan has its own payment and costs. Compare all three side by side with a participating lender before choosing.
- Coordinate Your Tax Deferral With Your Mortgage Lender: Tax Code §33.06 lets homeowners 65+ file Form 50-126 to defer homestead property taxes, but a tax lien remains on the property and interest accrues at 5% a year. If you have a mortgage, ask your lender or servicer how a deferral would affect your loan before you file.
Next Steps to Check Your Eligibility
Whether you want to compare a HECM for Purchase against a traditional fixed-rate loan, see how your Social Security and pension income gross up for qualification, or check requirements to buy a house in Texas with down payment assistance, our team can help you check eligibility, compare options, and get connected with a participating lender.
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