Texas Department of Housing and Community Affairs

Texas Mortgage Credit Program

Texas Mortgage Credit Program allows qualified Texas buyers the use of a Mortgage Credit Certificate (MCC):

• An MCC is a federal income tax credit designed to help those seeking affordable homeownership
• Allows the homebuyer to write off a portion of the mortgage interest paid per year, not to exceed $2000.  It is a dollar for dollar reduction against their federal tax liability and it can be claimed each year that they use the home as their principal residence.
  
• The amount of the tax credit is equal to the annual mortgage interest paid multiplied by 30% (the mortgage credit rate) up to $2000.  The credit cannot be larger than the annual federal income tax liability, after all other credits and deductions have been taken into account. MCC credits in excess of the current year tax liability may, however, be carried forward for use in the subsequent three years.
• The credit reduces the buyer’s federal income taxes and offers the potential of saving thousands of dollars over the life of the loan.
• As a military veteran, you may be entitled to additional benefits under this plan

To qualify:

• homebuyer must purchase a home within the State of Texas
• homebuyer cannot have owned a home as a primary residence in the prior 3 years
• the homebuyer’s household income must not exceed the maximum limit
• the purchase price of the house must not exceed the maximum limit
• homebuyer must occupy the home as their principal residence (can’t be second home, vacation home, etc.)
• homebuyer must complete a pre-purchase education course and provide a certificate of completion
• all mortgage loan types are eligible but must apply through participating lender

Other costs/requirements:

• $75 “commitment” fee that is non-refundable
• upon closing, an issuance fee of 1% of the loan amount
• funds available on a first-come first-served basis
• if the home is sold within nine years, a recapture tax may have to be paid

For specific details and a participating lender list: http://www.tdhca.state.tx.us/homeownership/fthb/mort_cred_certificate.htm

Texas First Time Homebuyer Program

Provides down payment assistance to eligible borrowers but requires loan terms designated under the program.  The qualification requirements are basically the same as the Mortgage Credit Program.

What you can receive as down payment assistance:

• Assistance provided through second loan
• Down Payment Assistance Available up to 4% of the mortgage amount
• Terms of the assistance: IO-year deferred forgivable 2nd lien
• No interest accrues on the loan and no monthly payments are required
• As long as you own the home for 10 years following the purchase, the second loan will be forgiven/removed without repayment

Current requirements of first mortgage include:

• Interest Rate: 6.25%
• Loan Term: 30-year fixed interest rate
• Must be through participating lender
• Pre-purchase homebuyer education course

For more info and specific details: http://www.tdhca.state.tx.us/homeownership/fthb/down-payment-assistance.htm

This page is to raise awareness about these programs and may contain outdated information.  If you’re interested in learning more about these programs, contact us so we can help guide you.

Visit http://www.myfirsttexashome.com for the most accurate info on the Texas Mortgage Credit Program and the Texas First Time Homebuyer Program.  Please consult with a tax professional and/or mortgage lender to determine if these programs are right for you.