First Time Homebuyer Programs

The Texas State Affordable Housing Corporation offers two types of programs to first-time homebuyers.  Please read below for more information on our Home Loan Programs and Mortgage Credit Certificate Program. Please note that assistance is subject to funding availability and that both types of programs cannot be used together.

Home Loan Programs – Funds Currently Available!

The Professional Educators, Homes for Texas Heroes, and Home Sweet Texas Home Loan Programs provide 30-year fixed rate mortgage loans to eligible first-time homebuyers wishing to achieve the American dream of homeownership. In addition to a low interest rate, these programs offer down payment and closing cost assistance in the form of a grant. These programs are available through a network of participating lenders across the state.  

The current interest rate on a 30-year fixed FHA, VA or USDA (RHS) mortgage loan is 5.25%.  In addition to this rate, these programs are providing 3% of the loan amount as a grant for downpayment and closing cost assistance.  To see if you meet the basic requirements, please click on How to Qualify. 

If you meet the requirements, you will need to work directly with one of our approved participating lenders. For a list of our lenders, please click on Lenders List.

You probably know that homeowners receive a tax deduction from mortgage interest. But there's another tax benefit you may not have heard about; a Mortgage Credit Certificate (MCC). This benefit is not another tax deduction, but a tax credit.  A tax credit reduces your tax liability, dollar-for-dollar, unlike a tax deduction.

With an MCC, the qualified homebuyer is eligible to take a portion of the annual interest paid on the mortgage as a tax credit, up to $2,000, each year that they occupy the home as their principal residence.  The amount of the tax credit is equal to the mortgage credit rate of 35% multiplied by the annual interest paid.  This credit reduces the federal income taxes of the homebuyer, resulting in an increase in the homebuyer's net earnings.  Increased income results in increased capacity to qualify for a mortgage loan.  The MCC has the potential of saving the MCC holder thousands of dollars over the life of the loan. 

The example below assumes a family purchases a home for $120,000 at a 6.00% interest rate.  Interest paid the first year is approximately $7,200.  An MCC tax credit of 35% of the interest paid would equal $2,520 (35% x $7,200 = $2,520).  However, the maximum annual credit allowable is $2,000.

In this example, the homebuyer would be entitled to a tax credit of $2,000.00.  Any remaining credit amount, $520 in this example, may be carried forward in the subsequent 3 years.  It is also important to note that the homebuyer will still be able to deduct the $5,200 ($7,200 - $2,000 credit) in interest paid when they file their taxes that year. 

If the homebuyer chooses, they may file in advance a revised W-4 withholding form taking into consideration that this tax credit will provide the homebuyer with approximately $166.67 per month in additional disposable income ($2,000 divided by 12 months). If the homebuyer chooses not to revise their W-4, they may claim the benefit of their MCC when they file their annual tax return. 

An MCC may make the difference between dreaming about your first home, and actually owning it.  To see if you meet the basic requirements, please click on How to Qualify. 

If you meet the requirements and decide to utilize an MCC, you will need to work directly with one of our approved participating lenders. An MCC is not a mortgage; but strictly a tax credit.  One of our participating lenders will set the terms of the mortgage which includes the interest rate, down payment, underwriting criteria, discount points, and closing costs.  In addition to these costs, there is a $100 MCC Application Fee (non refundable), a $250 MCC Closing Package Review Fee, and a MCC Issuance Fee of 1% of the loan amount.

For a list of our lenders, please click on Lenders List.