Two very different paths to buying a home in Texas with little or no money down have been getting attention lately: Frost Bank's 100% LTV mortgage and the Texas State Affordable Housing Corporation (TSAHC) down payment assistance programs. Both can get first-time buyers into a home without a large down payment. But they're structured differently, they fit different buyer profiles, and choosing the wrong one can cost you tens of thousands of dollars over the life of your loan.
Here's a straight-up comparison.
What Is Frost Bank's $0 Down Mortgage?
Frost Bank — a Texas-headquartered institution — offers a 100% loan-to-value (LTV) portfolio mortgage designed specifically for first-time homebuyers in the state. The key distinguishing features:
- No down payment required — you borrow the full purchase price
- No private mortgage insurance (PMI) — typically required when you put less than 20% down on a conventional loan
- Portfolio loan — Frost holds the loan on its own books instead of selling it to Fannie Mae or Freddie Mac, which gives them more flexibility on underwriting
No PMI on a 100% LTV loan is genuinely unusual. PMI on a conventional loan typically runs 0.5%–1.5% of the loan amount annually. On a $300,000 loan, that's $1,500–$4,500 per year — or $125–$375/month — that Frost Bank buyers don't pay.
That sounds like an obvious win. But the full picture is more complicated.
What Is Texas DPA?
Texas DPA refers to a family of down payment assistance programs, most commonly through TSAHC (Texas State Affordable Housing Corporation) and TDHCA (Texas Department of Housing and Community Affairs). These programs provide:
- Grants or forgivable loans of typically $15,000–$30,000+
- No repayment required on grants (forgivable loans are forgiven after a set period, usually 3 years)
- Paired with a first mortgage — FHA, conventional, VA, or USDA depending on eligibility
- Available statewide, with county-specific income and purchase price limits
The critical point: DPA assistance doesn't come from a single lender. It works with a network of approved lenders across Texas. That means you're not locked into one bank's terms.
Head-to-Head: Frost Bank $0 Down vs Texas DPA
| Frost Bank 100% LTV | Texas DPA (TSAHC/TDHCA) | |
|---|---|---|
| Down payment | $0 | $0 (covered by grant or forgivable loan) |
| PMI required | No | Depends on loan type (FHA has MIP; conventional with 20%+ DPA coverage may avoid it) |
| Eligible lenders | Frost Bank only | Network of 100+ approved lenders |
| Rate competitiveness | Portfolio rate (Frost sets it) | Market rate from multiple lenders (you can shop) |
| Income limits | Not public / varies by product | Yes — county-specific AMI limits |
| Purchase price limits | Set by Frost | Yes — county-specific caps |
| First-time buyer required | Yes | Yes (most programs) |
| Credit score minimum | Not publicly stated | 620+ (most TSAHC programs) |
| Grant vs. loan | Loan (100% financed; must be repaid) | Grant or forgivable loan (no repayment in many cases) |
| Geographic availability | Texas (Frost Bank footprint) | Statewide Texas |
The Big Difference Most Buyers Miss
Frost Bank's product is still a loan — you're borrowing 100% of the purchase price and repaying 100% of it. You avoid the down payment hurdle, but you start with zero equity and owe more than a buyer who put money down.
Texas DPA grants, on the other hand, are not loans. If you receive a $20,000 TSAHC grant and stay in the home for 3 years, that money is gone — it doesn't appear on your credit report, you don't owe it back, and it's not a second lien you carry. Your loan balance reflects only what you actually borrowed for the purchase.
That's a meaningful distinction. Over a 30-year mortgage, borrowing $20,000 more (Frost Bank scenario) vs. receiving $20,000 as a grant (DPA scenario) can mean the difference of $40,000–$55,000 in total interest paid, depending on your rate.
When Frost Bank's Product Might Win
Frost Bank's offer is compelling in specific situations:
1. You earn too much for DPA income limits. TSAHC programs cap household income — often around 115–140% of Area Median Income (AMI). In a dual-income household in a high-cost Texas metro, you may be ineligible for DPA grants entirely. Frost Bank has no published income ceiling.
2. You want to avoid the DPA application and lender matching process. DPA programs involve an additional approval layer — verifying income, completing homebuyer education, and coordinating between your lender and the DPA agency. If your profile is clean and you value simplicity, Frost's one-stop process is faster.
3. You're buying in a Frost Bank service area and the rate is competitive. Frost holds this loan in-house, which means you're at their mercy on pricing. If their rate is within 0.25% of what you'd get from a DPA-paired lender, and you don't qualify for grants anyway, the no-PMI benefit may tip the balance.
4. You have good credit but no savings. Frost Bank's product rewards buyers who have the income and credit to service a 100% LTV loan but haven't accumulated a down payment. DPA programs also address this, but DPA eligibility adds extra criteria that Frost doesn't.
When Texas DPA Wins (Most of the Time)
For the typical first-time buyer who qualifies, DPA almost always comes out ahead:
1. The grant is real money you never repay. A $20,000 grant is functionally a $20,000 head start in equity. You close with a smaller loan balance, lower monthly payment, and faster equity build compared to a 100% LTV borrower.
2. You can shop your rate. With DPA, you're not locked into a single lender. You apply the DPA benefit on top of a first mortgage from any approved lender — and you can compare rates. Competition among lenders is why DPA buyers often end up with better rates than they'd get from a single-source product like Frost's portfolio loan.
3. PMI avoidance isn't unique to Frost anymore. When DPA covers enough of your down payment (20%+ of purchase price), you can avoid PMI on a conventional loan anyway. And FHA's mortgage insurance premium (MIP) is factored into DPA program comparisons — it's a cost, but it's not the only number that matters.
4. The Texas market rewards DPA-aware buyers. Because DPA programs have purchase price limits (not unlimited), they're most useful in the price ranges where most first-time buyers actually compete. If you're buying a $250,000–$400,000 home in a mid-sized Texas metro, DPA limits are unlikely to be a constraint.
The Honest Math: $300,000 Home Example
Note: The rates and grant amount below are illustrative examples for comparison purposes only. Actual rates and assistance amounts vary based on your credit profile, lender, and program availability.
Let's compare two buyers in the same situation — qualified first-time buyer, 680 credit score, buying a $300,000 home in Texas.
Buyer A — Frost Bank 100% LTV:
- Loan amount: $300,000
- Down payment: $0
- PMI: $0 (no PMI)
- Rate: 7.25% (illustrative portfolio rate)
- Monthly payment (P&I): ~$2,047
- Equity at close: $0
Buyer B — Texas DPA (TSAHC grant $18,000):
- Loan amount: $282,000
- Down payment: $0 out of pocket ($18,000 from grant)
- PMI: Potentially $0 (if grant + first mortgage structure avoids it)
- Rate: 6.875% (illustrative competitive rate from DPA-approved lender)
- Monthly payment (P&I): ~$1,853
- Equity at close: $18,000
Buyer B's monthly payment is roughly $194/month lower. Over 5 years, that's $11,640 in savings. Plus Buyer B starts with $18,000 in equity and owes $18,000 less in total principal. The grant didn't come with strings — it was a foundation.
Rates and grant amounts vary. But directionally, this math holds for most Texas first-time buyers who qualify for DPA.
Who Should Check Frost Bank First?
- Household income over TSAHC limits (~$80,000–$100,000+, depending on county and household size)
- Clean credit profile, stable employment, but genuinely no savings for a down payment
- Buying in a Frost Bank service area (primarily San Antonio, Austin, Houston, Dallas corridors)
- Wants a single point of contact and clean process without DPA coordination
Who Should Check DPA First?
- Income below area median limits (check your county)
- 620+ credit score
- First-time buyer (haven't owned a primary residence in 3 years)
- Stable employment for 6+ months
- Buying within county purchase price limits
If you fit the DPA profile, it's almost always worth checking — the potential upside (free money toward your purchase) is too significant to skip.
How to Know Which Path Is Right for You
Both programs have eligibility rules that interact with your specific financial profile: income, credit score, debt load, county, and purchase price. A generic blog post — including this one — can tell you the framework, but it can't tell you your answer.
The quickest way to know is to run your numbers through a scoring tool that factors in your actual profile and DPA eligibility. First Home AI's readiness survey does exactly that: it detects your optimal loan path (conventional, FHA, DPA-paired, or others), estimates your eligibility for down payment assistance, and gives you a concrete readiness score. No lender required to find out where you stand.
If DPA is on the table for you, you'll know before you walk into any lender's office — Frost Bank or otherwise. And if you're above the income limits, you'll have a clear answer there too.
Rates shown are illustrative and for comparison purposes only. Actual rates depend on creditworthiness, loan terms, and current market conditions. First Home AI is not affiliated with Frost Bank or TSAHC.