First Time Homebuyer Programs

Texas State Affordable Housing Corporation (TSAHC) is a self-supporting, not-for-profit organization and does not receive any state funding for its operations. TSAHC was created by statute in 1994 to be operated exclusively for the promotion of public health, safety and welfare through the provision of safe, decent and affordable housing for low-income Texans and other underserved populations.

TSAHC provides a variety of affordable housing programs that range from First-time Homebuyer Programs for individuals and families to assisting in the development of affordable multifamily housing. 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 – When Funds 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 see below.

Great news.... The American Recovery and Reinvestment Act of 2009 which previously authorized a tax credit of up to $8,000 for qualified first-time homebuyers purchasing a primary residence on or after January 1, 2009 and before December 1, 2009, has been extended to those homebuyers under contract by April 30, 2010.  This tax credit may be used in combination with the Professional Educators, Homes for Texas Heroes, Home Sweet Loan, and Mortgage Credit Certificate Programs.   

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.

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.

Program Qualifications

In order to qualify for our Home Loan or Mortgage Credit Certificate Programs homebuyers must meet be one of the following:

• A Professional Educator: Defined as a full time Classroom Teacher, Teacher Aide, School Librarian, School Nurse or School Counselor employed by a public school district in the state of Texas; or a full time faculty member * of either an undergraduate or graduate professional nursing  or allied health program in the State of Texas; or
• A Texas Hero: Defined as a full time, paid Firefighter, Emergency Medical Services Personnel, Peace Officer, Corrections Officer, Juvenile Corrections Officer, County Jailer, or a Public Security Officer working in the State of Texas, or
• An individual at or below 80% of the Area Median Family Income (AMFI).

• Be a first-time homebuyer, have not had an ownership interest in any principal residence during the last three years, or purchasing a home in a targeted area;
• Reside in the State of Texas;
• Meet the income and home purchase price limits;
• Meet standard mortgage underwriting requirements which demonstrate credit worthiness; 
• Occupy the purchased home as their primary residence; and
• Complete a HUD approved homebuyer education course prior to closing on the home loan.  To find a homebuyer education provider in your area, please click here.  Once you are on HUD's website, you can further narrow your search by entering your city and by selecting "Homebuyer Education Programs".