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  • texasThe Texas Mortgage Credit Program was created especially for first-time Texas homebuyers of low and moderate income to assist them to become homeowners of new or existing homes.

    If you are a first-time homebuyer, that is to say that for the last 3 years you have not owned a home as your primary residence. If your income and the purchase price of the property is within the maximum allowed by the program and you are going to use the home as your primary residence then you are eligible to receive a Mortgage Credit Certificate (MCC).An MCC qualifies homebuyers to claim a dollar for dollar reduction on their federal tax liability for mortgage interest paid each year.

    The size of the yearly tax credit will be 30% of the annual interest paid on the mortgage loan. The maximum amount of tax credit can not be more than $2,000.00 dollars per year. For example a person with a $121,000.00 mortgage and a 6.0% interest rate would normally pay $7,260.00 interest for the first year. But with the 30% reduction rate of the MCC which comes to $2,178.00 the buyer would get a $2000 (the maximum) mortgage credit which means that instead of paying $7,260.00 interest he or she would pay $5,260.00 A saving of $2,000.00 every year.

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    This will last as long as the mortgage is outstanding and the borrower uses the home as the primary residence. The homebuyer must adjust the W-4 form with their employer and file the IRS form 8396 when they do their income tax return. The forms are available on the IRS website. It must be noted however that the MCC does not apply to the refinancing of an existing loan with the exception of the Qualified
    Subprime loan originally financed through an Adjustable Rate Mortgage (a mortgage loan that stipulates the interest rate will be adjusted at a future date, usually 1,3 or 5 years)and that was financed after 2001 and before 2008 and the borrower must meet the Federal Housing Administration Hope for Homeowners Guidelines. The Texas Mortgage Credit Program has higher income and purchase price limits in certain cases and the first time homeowner requirement can be waived too if for example the new property is located in a targeted area.

    A targeted area is an area of chronic economic distress. To check whether or not your new residence falls in a targeted area you can look at the list of targeted areas on the website by county under Targeted Areas Census Tracts. Disaster areas benefit from these exceptions too. In any case, prior to the purchase buyers are required to complete the homebuyers education course by certified providers. Lists of providers are available on the website also.

    The State of Texas hopes that this program will help many citizens of Texas become homeowners, in this
    way strengthening the community.

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