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Texas has long been an affordable state for homebuyers. Even as home values rise, the Lone Star state is still accessible to entry-level buyers. Median home prices in north Texas cities like Wichita Falls and Amarillo are $115,000 and $163,00, respectively. In the hottest markets, like Austin, median home prices are still reasonable compared with many states, at around $300,000.

Despite affordable home prices, coming up with a down-payment or qualifying for a mortgage can still be challenging for many families.

The Texas Department of Housing and Community Affairs, or TDHCA, has several options for first-time homebuyers to overcome these hurdles. It’s important to note that the people who have not owned a home in at least three years qualify as first-time homebuyers for TDHCA programs.

My First Texas Home (MFTH)

Texas residents who have not owned a home in at least three years are eligible for the My First Texas Home program, or MFTH. The Texas Department of Housing and Community Affairs sponsors this program, which offers low monthly payments as well as down-payment and closing-cost assistance of up to 5 percent of your home loan.

MFTH can be used in conjunction with the Texas Mortgage Credit Certificate program, which helps qualified homeowners reduce their federal tax liability.

To find out if you’re eligible, check the TDHCA mortgage qualifier calculator here. You can also learn more about the program by calling 1-800-792-1119. Find a participating lender near you.

Texas Mortgage Credit Certificate Program

The Texas Mortgage Credit Certificate Program gives homebuyers the opportunity to claim a tax credit for some of their mortgage interest. This is a dollar-for-dollar reduction against their federal tax liability.

To be eligible, applicants must meet income requirements which vary by county. How much you receive depends on whether you’re in a designated targeted area, the total of your income and home purchase price combined and your family size.

Targeted areas are part of a census tract in which 70 percent or more of the families have incomes that are 80 percent or less of the statewide median income or an area of chronic economic distress.

Learn more about today’s mortgage rates.

You can view the combined purchase and price limits here.

The mortgage tax credit is calculated based on 40 percent of the mortgage interest you paid in the current year. As long as the home remains your principal residence, then you can receive the MCC. To maintain eligibility, homeowners may adjust how much tax is withheld on their W-4 by filing a Form 8396 with their tax return.

Eligibility requirements:

  • Applicants must meet home and purchase requirements.
  • The home must be the primary residence.
  • Applicants must not have owned a home within three years prior to applying, unless you’re a military veteran. Veterans are exempt from this rule.
  • All mortgage types are eligible.