Quick Answer
Chenoa Fund (CBC Mortgage Agency) provides 3.5% or 5% of the loan amount as down payment assistance for Texas homebuyers. Two options: a forgivable soft second (forgiven after 36 on-time payments, requires 580+ credit) or a repayable second mortgage (10 or 30 year term, requires 620+ credit). No income limits, no first-time buyer requirement, available in all 254 Texas counties. Best used when buyers don't qualify for TSAHC, TDHCA, or SETH state programs.
Texas has some of the strongest state-level down payment assistance programs in the country. TSAHC offers a 5% grant. TDHCA provides 5% as a forgivable loan. SETH's 5 Star program delivers 5% in assistance. For most qualified Texas buyers, those programs should be the first option.
But state programs have gaps. TSAHC and TDHCA require a 620 minimum credit score. SETH requires 640. All three have income limits and can run out of funding mid-quarter. Chenoa Fund fills those gaps. It is a national DPA program administered by CBC Mortgage Agency, a federally designated Community Development Financial Institution (CDFI), and it works in every Texas county with no income cap and credit scores as low as 580.
This guide covers how Chenoa Fund works in Texas, who it is best suited for, how the two assistance options compare, and when you should use a state program instead.
How Chenoa Fund Works in Texas
Chenoa Fund is not a standalone loan. It is a second mortgage layered on top of CBC Mortgage Agency's FHA first mortgage. The DPA covers the borrower's required FHA down payment (3.5% of the purchase price) or, if the borrower elects the 5% option, provides additional funds for closing costs.
The program works through approved lenders who originate CBC's FHA first mortgage product. At closing, the buyer receives two loans: the FHA first mortgage from CBC and the Chenoa Fund second mortgage covering the down payment. From the buyer's perspective, the process looks identical to any other FHA purchase, except the down payment comes from the DPA second lien instead of personal savings.
Every county in Texas is eligible. Houston, Dallas, San Antonio, Austin, Fort Worth, El Paso, and every rural county in between. There are no geographic restrictions beyond the standard FHA loan limits that apply county by county.
Two DPA Options: Forgivable vs. Repayable
Chenoa Fund gives Texas buyers a choice between two structurally different forms of assistance. The right pick depends on your credit score, how long you plan to stay in the home, and your tolerance for a higher interest rate.
Option 1: Forgivable Soft Second (Rate Advantage)
The forgivable option is a second mortgage at 0% interest with no monthly payments required. The balance is forgiven entirely after 36 consecutive on-time payments on the first mortgage. If you sell, refinance, or default before 36 months, the second mortgage becomes due.
The tradeoff: CBC's first mortgage rate carries a premium above market FHA rates. This premium funds the forgiveness mechanism. Buyers need a minimum 580 credit score for this option, making it the only path for borrowers in the 580-619 range who cannot access Texas state programs.
Key Detail
The rate premium on the forgivable option applies for the entire life of the loan, not just the first 36 months. Even after the second mortgage is forgiven, your first mortgage rate stays the same. Run the math on total interest paid over 30 years before choosing this option over the repayable alternative.
Option 2: Repayable Second Mortgage
The repayable option is a traditional second mortgage amortized over either 10 or 30 years. Monthly payments are required from day one. The first mortgage rate is more competitive because CBC does not need to build in the forgiveness cost.
This option requires a 620 minimum credit score. It is the better choice for buyers who plan to stay in the home long-term and want the lowest total loan cost. The monthly payment on the second mortgage is relatively small (on a $10,500 second over 30 years, expect roughly $50-70/month depending on the rate), and the lower first mortgage rate saves significantly more over time.
Chenoa Fund Options: Side-by-Side
| Feature | Forgivable (Rate Advantage) | Repayable Second |
|---|---|---|
| DPA Amount | 3.5% or 5% of loan amount | 3.5% or 5% of loan amount |
| Min Credit Score | 580 | 620 |
| Monthly Payment | None (0% interest, deferred) | Yes (amortizing) |
| Forgiveness | After 36 on-time payments | No forgiveness |
| Loan Term | 30-year (forgiven at month 36) | 10-year or 30-year |
| First Mortgage Rate | Above-market (rate premium) | More competitive |
| Income Limits | None | None |
| First-Time Buyer | Not required | Not required |
Who Should Use Chenoa Fund in Texas
Chenoa Fund is not the default recommendation for Texas buyers. State programs offer better terms for most qualified borrowers. Chenoa Fund becomes the right choice in specific situations.
Buyers with 580-619 Credit Scores
This is the primary use case in Texas. TSAHC and TDHCA both require a 620 minimum. SETH's 5 Star program requires 640. If your credit score falls between 580 and 619, Chenoa Fund's forgivable option is one of the few DPA paths available. No other major Texas program serves this credit range.
Buyers Who Exceed State Income Limits
TSAHC, TDHCA, and SETH all impose income caps tied to area median income. A dual-income household in Dallas or Austin can easily exceed those thresholds while still lacking the savings for a down payment. Chenoa Fund has no income limits, making it accessible regardless of household earnings.
When State Program Funding Runs Out
Texas state DPA programs allocate funding in quarterly cycles. When TSAHC or TDHCA funding is fully committed for the quarter, buyers face a choice: wait for the next allocation or use an alternative. Chenoa Fund operates on its own funding timeline and is typically available year-round.
Repeat Buyers
Some Texas state programs restrict eligibility to first-time homebuyers (or buyers who have not owned in three years). Chenoa Fund has no such requirement. If you currently own a home or have owned within the past three years, Chenoa Fund remains available.
Chenoa Fund vs. Texas State Programs
Texas buyers with a 620+ credit score and income within state limits should compare Chenoa Fund against TSAHC, TDHCA, and SETH before committing. Here is how they stack up.
| Program | DPA Amount | Type | Min Credit | Income Limits | Rate Impact |
|---|---|---|---|---|---|
| TSAHC | 5% grant | Grant (no repayment) | 620 | Yes (AMI-based) | Competitive rates |
| TDHCA | 5% forgivable | Forgivable loan | 620 | Yes (AMI-based) | Competitive rates |
| SETH 5 Star | 5% | Grant or second lien | 640 | Yes (AMI-based) | Competitive rates |
| Chenoa (Forgivable) | 3.5% or 5% | Forgivable soft second | 580 | None | Rate premium |
| Chenoa (Repayable) | 3.5% or 5% | Amortizing second | 620 | None | More competitive |
The bottom line: if you qualify for TSAHC's 5% grant at a competitive rate, that is almost always the better deal. TSAHC's grant never needs to be repaid and does not carry a rate premium. Chenoa Fund's forgivable option also eliminates the DPA balance after 36 months, but the higher first mortgage rate adds cost over the full 30-year loan term. Run both scenarios through a mortgage calculator to compare total interest paid.
Texas FHA Loan Limits and DPA Amounts
Chenoa Fund assistance is calculated as a percentage of the first mortgage loan amount. Your maximum DPA depends on the FHA loan limit in your county.
Most Texas counties have a 2026 FHA limit of $472,030 for single-family homes. Higher-cost counties reach up to $541,250. At the standard limit, 3.5% equals $16,521 in assistance. At 5%, that increases to $23,602.
Major metro areas and their approximate FHA ceilings:
| Metro Area | FHA Limit (1-unit) | 3.5% DPA | 5% DPA |
|---|---|---|---|
| Houston (Harris Co.) | $472,030 | $16,521 | $23,602 |
| Dallas (Dallas Co.) | $472,030 | $16,521 | $23,602 |
| San Antonio (Bexar Co.) | $472,030 | $16,521 | $23,602 |
| Austin (Travis Co.) | $499,500 | $17,483 | $24,975 |
| Fort Worth (Tarrant Co.) | $472,030 | $16,521 | $23,602 |
| El Paso (El Paso Co.) | $472,030 | $16,521 | $23,602 |
Eligibility Requirements
Chenoa Fund eligibility in Texas is straightforward compared to state programs. There are fewer restrictions, but the program still requires an FHA-eligible property and borrower.
- Credit score: 580 minimum (forgivable option) or 620 minimum (repayable option)
- Loan type: FHA only, originated through CBC Mortgage Agency's first mortgage product
- Property: Primary residence, 1-unit, must meet FHA property standards
- Occupancy: Owner-occupied only (no investment properties)
- First-time buyer: Not required. Repeat buyers qualify.
- Income limits: None
- Homebuyer education: HUD-approved course required (standard FHA requirement)
- DTI ratio: Standard FHA guidelines apply (typically 43-50% depending on compensating factors)
- Employment: Standard FHA documentation (2 years employment history, pay stubs, W-2s or tax returns)
How to Apply for Chenoa Fund in Texas
You cannot apply directly with CBC Mortgage Agency. Chenoa Fund DPA is originated through approved lenders who have been certified to offer CBC's FHA first mortgage product.
Application Steps
- Check your eligibility. Confirm your credit score range and compare Chenoa Fund against TSAHC, TDHCA, and SETH programs. If you qualify for a state program with a grant or competitive rate, explore that first.
- Find a Chenoa Fund-approved lender in Texas. Not all FHA lenders offer Chenoa Fund. You need a lender specifically approved to originate CBC's first mortgage product.
- Get pre-approved. The lender will run your credit, verify income and employment, and determine which Chenoa Fund option (forgivable or repayable) fits your profile.
- Complete homebuyer education. A HUD-approved course is required for FHA loans. Many are available online and take 4-8 hours.
- Find a home and make an offer. The property must meet FHA standards and fall within your county's FHA loan limit.
- Close. The Chenoa Fund second mortgage is built into your closing. Both the first and second liens fund simultaneously.
Chenoa Fund Coverage Across Texas
Chenoa Fund is available in all 254 Texas counties. Whether you are buying in a major metro area or a rural community, the program applies as long as the property meets FHA requirements.
Buyers in the state's largest cities often pair Chenoa Fund with local assistance programs for additional support. Check your city's DPA options alongside Chenoa Fund:
Texas City DPA Guides
Related Resources
Frequently Asked Questions
What is the Chenoa Fund and how does it work in Texas?
How much down payment assistance does Chenoa Fund provide in Texas?
What credit score do I need for Chenoa Fund in Texas?
Do I need to be a first-time homebuyer to use Chenoa Fund in Texas?
Are there income limits for Chenoa Fund in Texas?
How does Chenoa Fund compare to TSAHC and TDHCA in Texas?
Is the Chenoa Fund forgivable option truly free money?
What are the FHA loan limits in Texas for Chenoa Fund?
Can I use Chenoa Fund in Houston, Dallas, San Antonio, or Austin?
How do I apply for Chenoa Fund in Texas?
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