Homeownership FAQ

Who is eligible for the homeownership programs?

The programs were created to provide affordable mortgage loans exclusively for Texas Professional Educators, Texas "Heroes", and low-income Texans.

The definition of a Professional Educator is a public full-time classroom teacher, public full-time paid teacher's aide, public full-time school librarian, public full-time school counselor, or public full-time school nurse, or an Allied Health or Professional Nursing Program faculty member.

For detailed definitions of "Heroes", please click here


Low-income is defined as those individuals or families whose annual incomes do not exceed 80% of the Area Median Family Income. Incomes vary by county.  To view incomes in your county click here.


Why are some homeownership programs limited to specific professionals?

The Texas Legislature recognizes that people working in these professions are often paid public service salaries that may present a barrier to owning a home in their communities. These programs are designed to reward these individuals for their dedication and commitment to jobs that are necessary to the health, welfare, and future of our state, as well as provide incentives to them so that they will be able to continue in these professions. There is no minimum time on the job required prior to or after participation in TSAHC homeownership programs.

 

What types of assistance are available to help me purchase a home?

TSAHC offers two types of assistance to choose from:

One form of assistance, our Home Loan Programs, provide financing for the purchase of a home through a 30-year fixed rate mortgage loan. In addition to the fixed interest rate, this form of assistance offers down payment and closing cost assistance in the form of a grant.  There is no second lien associated with the down payment assistance.  It is a true grant to the homebuyer, and needs never to be paid back. Requirements to qualify can be found here.   Important note: You need not be a first-time homebuyer to benefit from this assistance.

The second form of assistance is for first-time homebuyers only and does not provide financing to purchase the home, but rather gives the homebuyer the ability to take a tax credit through the issuance of a mortgage credit certificate (MCC).  An MCC is a federal income tax credit designed to help individuals better afford homeownership. Under this program, the homebuyer is eligible to take a portion of the annual interest paid on the mortgage as a special tax credit.  They have the ability to take a credit of up to $2,000 each year, for the life of the home loan. This potentially saves the homebuyer thousands of dollars over the life of their home loan. Requirements to qualify can be found here. Unlike TSAHC’s Home Loan Programs, borrowers must be first-time homebuyers to utilize the MCC Program.

Can I use both the Home Loan Program and Mortgage Credit Certificate Program together?

If you are a first-time homebuyer, you may use both forms of assistance when purchasing your first home.

 

What is the definition of a first-time homebuyer?

For purposes of the MCC program, a first-time homebuyer is an individual or family that has not owned or had an ownership interest in any residence during the last three years. An exception to this requirement exists if the home to be purchased is in a targeted area.

*Again, you do not need to be a first-time homebuyer in order to benefit from the Home Loan Programs. *

 

How do I apply for one of TSAHC’s homeownership programs?

Eligible borrowers need to contact one of the program’s participating lenders to assist them with the application and qualification process.

 

Can I buy a second home using one of TSAHC’s homeownership programs?

No. To qualify for assistance, the home you purchase must be your primary residence. Vacation, rental and second homes do not qualify under TSAHC’s programs.

 

What is meant by primary or principal residence?

The primary or principal residence is the home in which you intend to live in on a permanent basis.

 

I just moved to Texas two months ago. Will I qualify for assistance?

There is no minimum time of Texas residency requirement under this program.  However, prior to qualifying for assistance, you must reside in Texas, and the home you are purchasing must be your principal residence and must be located in Texas.

 

I’ve heard that only homes in economically distressed areas qualify under these programs. Is that true?

The property does not have to be in an economically distressed area or targeted area. Any new or existing home in the state of Texas that does not exceed the maximum purchase price limits is eligible. Your lender can help you determine if you and your home qualify.

 

Do I have to pay back any portion of the assistance provided by one TSAHC’s homeownership programs?

The only time you might have to pay back a portion of the assistance, would be if you utilize the MCC Program and sell the home within nine years of buying the home. This is called recapture tax.

Recapture tax is owed only when ALL three of the following events occur:

  1. You sell your home within nine years,
  2. Earning significantly more income than when you bought the home, and
  3. Have a gain from the sale of your home.

Recapture tax is a federal tax that a borrower may be required to pay from the net profit they receive from the sale of their home. If they have to pay recapture tax, it would be due when they file their federal income tax for the year in which they sell their home. The maximum recapture tax is 6.25% of the original principal balance of the loan or 50% of the gain on the sale of the home, whichever is less. For more information, please click here.