Senior Mortgage Advisor & VA Loan Specialist

June 4, 202614 min readExpert

VA LoansFHA LoansFirst-Time Buyer Programs

TEXAS HOMEBUYER GUIDE 2026

Texas First-Time Homebuyer Programs 2026 — Get Up to 5% Down Payment + $2,000/Year Tax Credit

Texas offers stacked assistance: 5% DPA grant, zero-interest down payment loans, and the MCC tax credit worth up to $2,000 off your federal taxes every year — for the entire life of your loan.

Up to 5%

Max DPA

$2,000/yr

MCC Tax Credit

620+

Min Credit Score

✅ Yes (TSAHC)

True Grants

Check Texas Programs You Qualify For →

Why Texas Is One of the Best States to Buy Your First Home

Texas has a median home price of $285,000 in 2026 — dramatically more affordable than California, New York, or Florida. Combined with no state income tax and strong job growth in Austin, Dallas, Houston, and San Antonio, Texas is America's top destination for first-time buyers moving from expensive states.

The state has two main agencies running assistance programs: TDHCA (Texas Department of Housing and Community Affairs) and TSAHC (Texas State Affordable Housing Corporation). Understanding which fits your situation means the difference between a grant you never repay and a loan you do.

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TX Median Home Price

$285,000

Statewide 2026 median

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Max 5% DPA on Median

$14,250

Down payment covered

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MCC Tax Savings

$60,000+

Over 30-year loan life

All Texas First-Time Homebuyer Programs 2026

Program	Max Assistance	Min Credit	Income Limit	Best For
TDHCA My First Texas Home	Up to 5% of loan amount	620+	80% AMI (varies by city)	First-time buyers needing down payment + closing cost help
Texas MCC (Mortgage Credit Certificate)	20–30% of annual mortgage interest	620+	80% AMI	Tax savers — up to $2,000 off federal taxes every year you own
My Choice Texas Home	Up to 5% of loan amount	620+	80% AMI	Repeat buyers — no first-time buyer requirement
TSAHC Home Sweet Texas	Up to 5% of loan amount	620+	80–115% AMI	Moderate-income buyers — grant option means no repayment
TSAHC Homes for Texas Heroes	Up to 5% of loan amount	620+	80–115% AMI	Teachers, firefighters, police, nurses, veterans — extra rate benefits
SETH 5 Star Program	Up to 6% of loan amount	620+	80–115% AMI	SE Texas region — highest grant % in the state

Income limits vary by metro area. SETH program available in Southeast Texas counties only. Verify at TDHCA.state.tx.us and TSAHC.org.

🏆 The Texas MCC: The Tax Credit Most Buyers Don't Know About

The Mortgage Credit Certificate (MCC) is the most underused first-time buyer benefit in Texas. It's not a loan, not a grant — it's a direct federal income tax credit that reduces what you owe the IRS every year for the entire life of your mortgage.

MCC Math: $280,000 Loan at 7% Rate

Year 1 Interest Paid

$19,527

MCC Credit (20% rate)

$2,000

Capped at $2,000/yr

30-Year Total Savings

$60,000

Direct tax reduction

⚠️ Critical: The MCC must be applied for at or before closing. It cannot be added after. Many lenders forget to mention it — ask your lender specifically: "Are you submitting an MCC application with my TDHCA loan?" You claim it annually on IRS Form 8396.

MCC Stacking Strategy

Layer your MCC with TDHCA's 5% DPA second mortgage. On a $280K loan: $14,000 DPA (covers down payment) + $2,000/yr MCC tax credit for 30 years = $74,000 in total assistance value — from two programs that work together.

City-Level Programs (Stack on Top of State Assistance)

Houston

Up to $30,000

Houston Homebuyer Assistance (HHO)

Type: Deferred forgivable loan

For buyers under 80% AMI in Houston city limits. Forgiven after 5 years if you stay.

Dallas

Up to $60,000

Dallas Homebuyer Assistance (DHAP)

Type: Deferred loan (5–15 yr)

One of the most generous city programs in TX. Income and price limits apply. cityofDallas.net/housing.

San Antonio

Up to $12,000

NHSA Homebuyer Assistance

Type: Forgivable grant

Through Neighborhood Housing Services SA. Must be at or below 80% AMI.

Austin

Up to $40,000

Austin Down Payment Assistance

Type: Deferred zero-interest loan

For buyers under 80% MFI in Austin. Competitive — check austintexas.gov/housing.

How to Apply for Texas First-Time Buyer Programs

Step 1: Verify Eligibility

Confirm you meet income limits for your city (80% AMI), haven't owned a home in 3 years (or qualify as veteran/targeted area), and have a credit score of at least 620.

Step 2: Complete Homebuyer Education

TDHCA and TSAHC require an approved homebuyer education course. HUD-approved online options: Framework ($75), eHome ($99). Get your certificate — you'll need it before closing.

Step 3: Choose Your Program: TDHCA or TSAHC

TDHCA (My First Texas Home) is the state agency. TSAHC offers both deferred loans and outright grants. TSAHC Home Sweet Texas and Heroes program offer grant options — meaning zero repayment. Your income and occupation determine the best fit.

Step 4: Find a Participating Lender

Both TDHCA and TSAHC have lender search tools. Ask specifically about the MCC program — it is offered separately and many lenders forget to mention it. Layer the MCC with your DPA for maximum benefit.

Step 5: Apply for MCC Separately

The Texas MCC must be applied for at or before closing. It's not automatic — your lender must submit the MCC application to TDHCA. The MCC gives you 20–30% of your annual mortgage interest as a direct federal tax credit (max $2,000/year for life of the loan).

Step 6: Close and Claim Your Tax Credit

After closing, file IRS Form 8396 each year to claim your MCC tax credit. Over 10 years at $2,000/year = $20,000 in real tax savings on top of your DPA grant.

TSAHC Homes for Texas Heroes — Extra Benefits for Community Workers

If you work in one of these occupations, you qualify for the Heroes program rate — typically 0.25–0.5% below the standard TSAHC rate, on top of the 5% DPA grant:

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Teachers

Pre-K through 12th grade

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Firefighters

Career and volunteer

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Law Enforcement

Police, sheriff, DPS

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Nurses & Allied Health

RNs, LVNs, paramedics

⚖️

Corrections Officers

State and county jails

🎖️

Veterans

Any branch, any era

Check Texas Heroes Eligibility →

Get pre-approved and claim your Texas DPA + MCC today

Compare TDHCA and TSAHC-approved lenders. Ask every lender about the MCC — most forget to mention it.

Compare Texas Lenders →

Texas buyer? FHA + TDHCA DPA + MCC = the ultimate first-time buyer stack.

Get FHA pre-approved in 24 hrs — required before any TDHCA program can be initiated.

Get Texas FHA Pre-Approval →

Frequently Asked Questions

What is the TDHCA My First Texas Home program?▼

My First Texas Home is Texas's primary down payment assistance program. TDHCA provides a second mortgage equal to up to 5% of your loan amount at 0% interest with no monthly payments — deferred for 30 years or until you sell/refinance. Example: $280,000 loan → $14,000 DPA. You use this as your down payment, meaning you can buy with near-zero cash.

What is the Texas MCC and how much can I save?▼

The Texas Mortgage Credit Certificate converts a percentage of your mortgage interest into a direct federal income tax credit. TDHCA sets the credit rate at 20–30% of annual interest paid. Example: $280,000 loan at 7%, paying ~$19,600 interest year one. At 20% MCC rate = $3,920 potential credit but capped at $2,000/year. Over 30 years that's up to $60,000 in tax savings — on top of your DPA.

What is the difference between TDHCA and TSAHC programs?▼

TDHCA (Texas Department of Housing and Community Affairs) is the state agency — their programs have stricter income limits (80% AMI) but include the powerful MCC tax credit. TSAHC (Texas State Affordable Housing Corporation) targets specific groups (heroes, moderate income) and offers both DPA loans AND outright grants that never have to be repaid. Many buyers qualify for both — check both agencies.

Do I need to be a first-time homebuyer in Texas?▼

My First Texas Home and the TSAHC Heroes program require first-time buyer status (no ownership in last 3 years) unless buying in a federally designated "targeted area." My Choice Texas Home and TSAHC Home Sweet Texas have NO first-time buyer requirement — available to any buyer meeting income and price limits.

What are the Texas first-time buyer income limits?▼

Income limits for most programs are 80% of Area Median Income, which varies by metro area. 2026 estimates (4-person household): Austin ~$77,600; Dallas ~$74,400; Houston ~$68,240; San Antonio ~$66,400. TSAHC programs allow up to 115% AMI for some products. Verify current limits at TDHCA.state.tx.us.

Can Texas Heroes get extra benefits?▼

Yes — the TSAHC Homes for Texas Heroes program gives teachers, firefighters, law enforcement officers, EMS, corrections officers, veterans, and nurses access to the same 5% DPA plus a below-market first mortgage rate. The Heroes mortgage rate is typically 0.25–0.5% lower than the standard TSAHC rate, saving $40–80/month on a $280K loan.

Don't Leave $74,000 on the Table

Texas first-time buyers who stack DPA + MCC collect up to $74,000 in lifetime assistance. Most buyers don't know about the MCC — now you do.

Find TDHCA/TSAHC Lenders →Compare Texas Mortgage Rates →

About the Author

Sarah Mitchell