Buying a house is a huge financial decision. If you’ve never done it before, it’s easy to feel like you’re in over your head. That’s why the Texas Department of Housing and Community Affairs, or TDHCA, offers first-time home buyer programs designed to assist qualified borrowers.
If you haven’t owned a home as your primary residence within the past three years, you’re considered a first-time home buyer in the state of Texas. This requirement is waived if you’re an honorably discharged veteran.
TDHCA highlights and eligibility requirements
- Competitive interest rates
- Down payment and closing cost assistance
- Tax credit possible for annual interest paid on mortgage loan
- Programs can be combined for maximum benefit
- Homes in “targeted areas” enjoy higher income and purchase price limits, and no first-time home buyer requirement
- Borrowers must have a minimum credit score of 620
- Borrowers must meet income and loan requirements
- Property must be located in Texas and not exceed purchase price limits
- Property must be a single-family home or a single-unit condominium
- Some manufactured housing and duplexes allowed
Texas first-time home buyer assistance programs
My First Texas Home (MFTH)
The My First Texas Home program offers 30-year, low fixed-interest rate mortgages for first-time home buyers through a network of participating lenders. The program includes down payment and closing cost assistance of up to 5% of the mortgage amount as a no-interest, no-monthly-payment second lien. Although it’s technically a loan, money provided for down payments or closing costs doesn’t need to be repaid until the home is sold, refinanced or paid off. My First Texas Home loans can also be combined with the Texas Mortgage Credit Certificate program to reduce your federal tax bill.
While the My First Texas Home loan program is available throughout Texas, purchase price and income limits are higher for properties located in areas where most families earn less than 80% of the state’s median income, or “targeted areas.” Learn how to determine if a property is within a targeted area on the TDHCA website.
Texas Mortgage Credit Certificate
Every mortgage payment includes interest charges that go to the lender, rather than your loan balance. First-time home buyers in Texas may be able to recoup a portion of that interest on their federal tax bill using the Texas Mortgage Credit Certificate, or MCC. The tax credit is 40% of your annual mortgage interest, up to $2,000 per year. The mortgage credit certificate is valid for the lifetime of the loan, so long as the home remains your primary residence.
Texas first-time home buyer education courses
Texas Homebuyer U
To take advantage of any of the assistance programs, you will need to complete a home buyer education course that is approved by the Department of Housing and Urban Development. Texas Homebuyer U offers a pair of free online courses: a two-hour tutorial about the homebuying process, which satisfies the educational requirement, and an introductory course that explains how to take advantage of the Mortgage Credit Certificate program.
Texas Statewide Homebuyer Education Program (TSHEP)
Not a fan of online courses? The Texas Statewide Homebuyer Education Program, or TSHEP, can connect you with a local organization approved to provide home buyer education courses. A full list of TSHEP-certified education providers can be found on the TDHCA website.
Your next step
Ready to take the next step toward being a Texas homeowner? It’s time to dig into the specifics. For full details on any of the programs listed above, visit the Texas Department of Housing and Community Affairs website.
The TDHCA doesn’t approve applications or lend money; instead, it has a network of local lenders that provide access to first-time home buyer programs. These lenders may have additional rules about income limits, credit scores and eligible properties. If you’re interested in these home buyer assistance programs, reach out directly to a lender for more information.
To find TDHCA participating lenders, search the lender database here.
National first-time home buyer programs to consider
If you don’t meet the requirements for a TDHCA assistance program, or you just want to research all your options before making a mortgage decision, there are several national first-time home buyer programs to consider:
Conventional mortgages backed by Fannie Mae and Freddie Mac can often be obtained with a down payment as low as 3%.
FHA-backed loans are ideal for borrowers with a lower credit score or smaller down payment.
VA loans are often the best choice for qualified U.S. veterans, active-duty military personnel and certain surviving spouses. These loans come with flexible credit requirements, attractive interest rates and down payments as low as 0%.
USDA loans may be the right choice if you’re interested in rural or suburban living. Designed for low-income applicants, USDA loans offer low interest rates and often don’t require a down payment.
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