Yes. Texas runs first-time homebuyer programs through two state agencies, the Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC). Both pair a 30-year fixed-rate mortgage at below-market interest with down payment and closing cost assistance worth 2% to 5% of the loan amount, and both offer a Mortgage Credit Certificate that can cut your federal income tax bill by up to $2,000 every year you own the home.
My First Texas Home (TDHCA)
My First Texas Home is TDHCA’s flagship program for buyers who have not owned a primary residence in the past three years. It combines a 30-year fixed-rate FHA, VA, or USDA mortgage with down payment and closing cost assistance between 2% and 5% of the total loan amount.1Texas Department of Housing and Community Affairs (TDHCA). My First Texas Home Program Matrix
The assistance comes as a second lien at 0% interest, and you choose the structure:
- A 30-year deferred repayable second lien with no monthly payments. The full balance is due when you sell, refinance, transfer the home, or pay off the first mortgage. Voluntary payments are allowed anytime with no penalty.
- A 3-year forgivable second lien. The balance is forgiven after 36 months as long as you stay current on your first mortgage and keep the property as your primary residence. Sell or refinance before then and the full amount is due.
Neither option carries prepayment penalties or costs beyond standard recording fees for the second lien.2Texas Department of Housing and Community Affairs. Lender Guide
If you have owned a home before, TDHCA’s My Choice Texas Home program offers the same DPA structure and rates without any first-time buyer requirement.3Texas Department of Housing and Community Affairs (TDHCA). The Texas Homebuyers Program It gets overlooked because buyers assume all state assistance is limited to first-timers.
Homes for Texas Heroes and Home Sweet Texas (TSAHC)
TSAHC runs two programs with similar financial benefits but different eligibility gates. Both let you choose between a grant that never has to be repaid and a forgivable second lien that disappears after a set period if the home stays your primary residence.
Homes for Texas Heroes is aimed at Texans in specific public-service jobs. The eligible categories are broader than most people realize:
- Teachers, teacher aides, school librarians, school counselors, and school nurses
- Peace officers and public security officers
- Firefighters, emergency care attendants, EMTs, and licensed paramedics
- Corrections officers, juvenile corrections officers, and county jailers
- Veterans and active-duty service members
Home Sweet Texas is the parallel program for low-to-moderate-income buyers who don’t work in those professions. The mortgage terms and DPA structure are the same.
The Texas Mortgage Credit Certificate
Both agencies administer a Mortgage Credit Certificate (MCC) that runs for the life of your mortgage. An MCC lets you claim 15% of your annual mortgage interest as a direct federal tax credit rather than a deduction, cutting your tax bill dollar for dollar up to $2,000 per year.5Texas Department of Housing and Community Affairs. Texas Mortgage Credit Certificate Fact Sheet The $2,000 annual cap is set by federal law whenever the certificate credit rate exceeds 20%.6Office of the Law Revision Counsel. 26 USC 25 – Interest on Certain Home Mortgages
You claim the credit by filing IRS Form 8396 with your annual return, using your certified indebtedness amount, the credit rate on the certificate, and the mortgage interest you paid (from your lender’s Form 1098). One detail that trips people up: the mortgage interest deduction you take on Schedule A must be reduced by the amount you claim as a credit on Form 8396.7Internal Revenue Service. Form 8396 – Mortgage Interest Credit
Through TSAHC, the MCC is only available in combination with one of its down payment assistance or no-DPA loan programs. The standalone MCC has been discontinued indefinitely.8Texas State Affordable Housing Corporation. Home Buyer FAQ: Can I Combine a Mortgage Credit Certificate with Down Payment Assistance Stacking the MCC with DPA produces the biggest combined savings for most buyers anyway.
Who Qualifies
Income Limits
Both agencies cap household income based on county, family size, and whether the property sits in a targeted census tract. For TDHCA, limits for a one- or two-person household range from roughly $98,800 in smaller metro areas to $143,900 in higher-cost counties like Kendall County. Households of three or more get higher limits, sometimes exceeding $187,000 in the Austin-Round Rock area.9Texas Department of Housing and Community Affairs (TDHCA). TDHCA Income and Purchase Price Limits The numbers are updated periodically as area median income changes.
Income counts everyone in the household over age 18, not just the person on the mortgage.10Texas Department of Housing and Community Affairs. Students: Eligibility and Income
Credit Score and Debt-to-Income
For FHA, VA, or USDA loans through TSAHC, the minimum FICO score is 620. Scores between 620 and 639 pay an extra 0.50% origination fee. Conventional loans with the forgivable second-lien DPA require a minimum of 640.11Texas State Affordable Housing Corporation. Home Buyer FAQ: Are There Credit and Debt Requirements
If your file gets an automated underwriting approval, there’s no hard cap on debt-to-income. Manual underwriting requires at least a 640 credit score and a DTI of no more than 43%.11Texas State Affordable Housing Corporation. Home Buyer FAQ: Are There Credit and Debt Requirements
Purchase Price Limits
Each county has a maximum acquisition cost, and the numbers are more generous than buyers expect. Under TDHCA, most counties carry a purchase price limit of at least $544,232 for a single-family home. Dallas and Fort Worth top out at $585,006, Austin-Round Rock at $593,363, and San Antonio at $579,037. In designated targeted areas, limits climb to $725,222 in the Austin area and $715,007 in Dallas–Fort Worth.9Texas Department of Housing and Community Affairs (TDHCA). TDHCA Income and Purchase Price Limits
Homebuyer Education
You must complete an approved homebuyer education course before closing. TDHCA recommends its own “Finally Home!” course but also accepts certificates from any HUD-certified provider, Freddie Mac’s CreditSmart program, and Fannie Mae’s HomeView course.12Texas Department of Housing and Community Affairs (TDHCA). Texas Statewide Homebuyer Education Program TSAHC has the same requirement.13Texas State Affordable Housing Corporation. Find a Lender
Eligible Property Types
The programs aren’t limited to detached single-family houses. TDHCA also covers duplexes where you occupy one unit, FHA-approved condominiums, and FHA-approved manufactured homes.14Texas Department of Housing and Community Affairs (TDHCA). Programs at a Glance The property must be your primary residence. Investment properties and vacation homes don’t qualify.
How to Apply
Start by choosing a lender approved to work with the program you want. Both TDHCA and TSAHC publish approved-lender lists on their websites, and TSAHC flags certain loan officers as “Preferred” based on program experience.13Texas State Affordable Housing Corporation. Find a Lender These programs use state-run software portals, specific disclosures, and timing rules that general mortgage officers don’t always handle smoothly, so a lender who already knows the system matters.
Expect to provide two years of federal tax returns and W-2s, pay stubs covering the most recent 30 days, and standard financial documentation. After pre-qualifying you, the lender reserves your assistance funds through the state’s online portal. That reservation holds the money in your name while the mortgage goes through traditional underwriting, which runs roughly 30 to 45 days.
Once the loan gets final approval, the state agency wires the assistance funds directly to the closing agent. At closing, the DPA appears as a credit against your down payment and closing costs on the settlement statement. The second-lien disclosure comes out of the lender portal and accompanies the closing documents; it doesn’t require a separate Loan Estimate or Closing Disclosure.2Texas Department of Housing and Community Affairs. Lender Guide
What Happens If You Sell, Refinance, or Move Out
If you took the 30-year deferred repayable second lien, the full DPA balance is due when you sell, refinance, transfer the home, or pay off your first mortgage.1Texas Department of Housing and Community Affairs (TDHCA). My First Texas Home Program Matrix If you took the 3-year forgivable option and reach the 36-month mark in good standing, the balance disappears. Sell or refinance before then and you owe every dollar back.
One rule surprises many owners: TDHCA will not subordinate its second lien. To refinance your first mortgage for a better rate, the DPA must be paid off at or before closing on the new loan. Re-subordination is explicitly prohibited.2Texas Department of Housing and Community Affairs. Lender Guide TSAHC’s forgivable second lien carries the same trigger: refinancing during the three-year term requires full repayment.15Texas State Affordable Housing Corporation. Home Buyer FAQ: What Are the Benefits of TSAHC’s Forgivable Second Lien DPA Run the numbers before refinancing.
If you received an MCC or financed through a Mortgage Revenue Bond program, selling within the first nine years can trigger a federal recapture tax. The IRS requires Form 8828 when all three apply: you sold the home, your original loan was issued after December 31, 1990, and you received a federal mortgage subsidy such as an MCC.16Internal Revenue Service. Instructions for Form 8828 – Recapture of Federal Mortgage Subsidy The recapture amount is based on 6.25% of the highest outstanding federally subsidized loan balance, adjusted by how long you held the property and whether your income at sale has risen above certain thresholds. TDHCA has stated its staff cannot calculate the exact recapture amount, so involve a tax professional if you’re selling within that nine-year window.17Texas Department of Housing and Community Affairs. Understanding Recapture Tax Refinancing alone doesn’t trigger recapture, though refinancing within the first four years causes the IRS to treat the original loan as fully repaid on the refinance date for holding-period purposes, which can affect the math if you later sell inside the nine years.