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What to know about the Texas Mortgage Credit Program

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I came across an article that referenced the Texas Mortgage Credit Program. Not having heard of the program that has been in effect since at least January I had to find out what this “credit” was. So after some research I was quickly lead to The Texas Department of Housing and Community Affairs (TDHCA) website.

The TDHCA released $45 million in mortgage credit certificate authority through the new Texas Mortgage Credit Program. Residents of Texas can participate in the program that is designed to make ownership of a new and or existing homes more affordable. By providing a dollar for dollar reduction of a borrower’s tax liability (not to exceed $2,000 annually) the program was created for individuals and families with moderate income, especially first time home buyers.

The credit authority will allow the Department to provide tax credits on approximately $150 million worth of mortgage loans, which it estimates will help approximately 1,000 eligible households purchase a home of their own once they complete a certified homebuyer education class. Michael Gerber the TDHCA Executive Director stated “Despite all the negatives we hear from other states, the fact is that the Texas economy – and the demand for home ownership – both remain quite healthy,”. “And TDHCA wants to help them achieve their dreams through safe, reliable home buyer lending products offered through the state, coupled with responsible home buyer education.”

A Mortgage Credit Certificate allows you the home buyer to claim a tax credit for some portion of the mortgage interest paid per year. Note: The Mortgage Interest Credit (MCC) is a non-refundable tax credit, therefore, the Home buyer MUST have tax liability in order to take advantage of the tax credit. All mortgage loan types are eligible. The mortgage loan, available through a network of participating lenders, must be underwritten according to FHA, VA, USDA/RHS or conventional loan criteria and will be at prevailing market rates.

New and existing single family homes, townhouses, condominiums and manufactured housing (with certain restrictions) are eligible properties. Purchase price and income limits, adjusted by household size apply. The home buyer must also occupy the property as their principal residence. Here is an example of what a mortgage credit certificate might look like:
MCC Example Mortgage Amount: $121,000.00
Interest Rate: 6.0%
Total Interest Paid First year: $ 7,260.00
Mortgage Credit Certificate Rate: X .30
Tax Credit Amount: $2,178.00
$2,000 (max)

Chairman of the Board of Texas Association of Realtors Dwight Hale stated,“We’ve worked with TDHCA since 2004 to promote affordable and sustainable paths to home ownership in Texas,” “TDHCA’s MCC program represents one of those viable paths for Texans, which we wholeheartedly endorse.”

Click here for link to the Texas Down Payment Assistance Program


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