TDHCA Programs Texas: My First Texas Home, MCTH & MCC Guide

What is TDHCA?

The Texas Department of Housing and Community Affairs (TDHCA) is a state agency that administers federal HOME funds and state housing programs to expand affordable housing access for Texas residents. TDHCA is one of two Texas state-level DPA agencies (the other is TSAHC), and it runs two of the most-used Texas down payment assistance programs plus its own Mortgage Credit Certificate.

Unlike TSAHC (a self-funded non-profit), TDHCA is a state government agency funded through federal block grants and state appropriations. That means TDHCA programs sometimes have annual funding cycles or geographic restrictions tied to where federal HOME dollars get allocated.

My First Texas Home (MFTH)

My First Texas Home is TDHCA’s flagship program for first-time Texas homebuyers (and qualifying veterans, who skip the first-time-buyer rule). It’s a 30-year fixed-rate mortgage paired with up to 5% of the loan amount in down payment assistance, structured as a deferred second lien.

Eligibility

• First-time buyer status: required, OR no primary residence ownership in the previous 3 years, OR you’re a veteran (DD-214 required — veterans skip the FTHB rule entirely)
• Income: household income at or below TDHCA’s county-specific income limit (typically 80% AMI; HUD-targeted areas allow higher — verify at TDHCA.state.tx.us)
• Credit: minimum 620 FICO
• Property: single-family home, condo, or townhouse used as primary residence in Texas; under TDHCA’s county purchase-price cap
• Education: HUD-approved homebuyer education before closing

How the deferred second lien works

The DPA delivered by MFTH is structured as a deferred second lien. That means:

• No monthly payment on the second lien
• The full second-lien balance is due when you sell, refinance, or pay off the first mortgage
• If you stay in the home long-term, you keep the help (no forgiveness clock, just repayment-at-event)
• Pairs cleanly with FHA, VA, USDA, and conventional first mortgages

The most common pairing: FHA first mortgage + MFTH deferred second + TDHCA MCC tax credit. With this combo, total out-of-pocket at closing often drops below $1,000 for Texas first-time buyers.

My Choice Texas Home (MCTH)

My Choice Texas Home is TDHCA’s parallel program for buyers who don’t qualify for MFTH’s first-time-buyer rule. The structure mirrors MFTH (30-year fixed + up to 5% deferred second lien), but with two important differences.

What MCTH does and doesn’t allow

• ✅ Repeat buyers welcome. No first-time-buyer requirement.
• ✅ Same DPA structure as MFTH — up to 5% as a deferred second lien.
• ✅ Same first-mortgage pairings — FHA, VA, USDA, conventional.
• ✅ Same 620 FICO floor + 80% AMI ceiling as MFTH.
• ❌ Cannot be paired with the TDHCA MCC. If you want a Texas MCC, you need MFTH (TDHCA) or a TSAHC program. MCTH is the only TDHCA program that doesn’t pair with the MCC.

Decision tip: if you’re a repeat buyer who would benefit from a $2,000/year federal tax credit, look at TSAHC’s Homes for Texas Heroes (which pairs cleanly with the TSAHC MCC) before defaulting to MCTH. Eligible Heroes occupations + MCC pairing can be a much stronger long-term outcome.

TDHCA Mortgage Credit Certificate (MCC)

The TDHCA MCC is a federal income tax credit issued at closing under IRC §25. It works the same way as the TSAHC MCC: a federal tax credit on a portion of your annual mortgage interest, up to $2,000 per year per IRS rules, available for the life of the loan.

Pairing rules (this is where TDHCA differs from TSAHC)

• ✅ TDHCA MCC + MFTH: pairs cleanly. Most common TDHCA combo for first-time buyers.
• ❌ TDHCA MCC + MCTH: cannot be paired. Repeat buyers can’t get a TDHCA MCC.
• ❌ TDHCA MCC + TSAHC MCC: never. One MCC per loan, per IRS rules.
• ✅ TDHCA MCC + city/county DPA: generally allowed (program-specific; verify with the city housing department).

Worked example

Same math as the TSAHC MCC: 20% credit rate × annual mortgage interest, capped at $2,000/year per IRS. Your actual benefit is limited by your federal tax liability that year. A CPA can model this for your specific situation.

Pillar body part “tdhca-pairing” not found.

Texas DPA income limits (Area Median Income)

Every Texas down payment assistance program ties eligibility to Area Median Income (AMI) — the median household income for your county, published annually by the U.S. Department of Housing and Urban Development. Income limits are not a single dollar figure; they vary by county, by household size, and by program.

Texas DPA income limit ranges as of 2026:

• TSAHC Home Sweet Texas Home Loan: typically up to 80% AMI for the county
• TSAHC Homes for Texas Heroes: up to 115% AMI in many counties (higher than the standard program)
• TDHCA My First Texas Home: 80% AMI in most counties (HUD-targeted areas higher)
• City DPA programs: typically 80–120% AMI, varies by city

For context: in many Texas metros, 80% AMI for a family of four lands in the $70,000–$95,000 range. Heroes-program 115% AMI can comfortably cross six figures. The exact ceiling for your specific county and household size is published in the official HUD AMI tables.

TDHCA eligibility: complete breakdown

Eligibility for TDHCA programs depends on six factors. Verify the current thresholds at TDHCA.state.tx.us before applying.

1. Income

• MFTH and MCTH: typically up to 80% AMI for your county and family size (HUD AMI tables)
• HUD-targeted census tracts allow higher income limits

2. Credit score

• Minimum 620 FICO for both MFTH and MCTH
• Lender overlays may push the effective minimum to 640 or 660

3. First-time buyer status

• MFTH: required (or no primary residence ownership in the previous 3 years), with one exception — veterans skip the FTHB rule entirely
• MCTH: NOT required — repeat buyers welcome (but no MCC pairing allowed)
• HUD-targeted census tracts waive the FTHB rule

4. Property type

• Single-family home, condo, or townhouse used as primary residence in Texas
• Under TDHCA’s county-specific purchase price cap

5. Homebuyer education

• HUD-approved homebuyer education course completed before closing
• Certificate uploaded to lender file before clear-to-close

6. Texas residency at closing

• The property must be located in Texas and used as your primary residence
• Out-of-state buyers can apply, but the property must be in Texas

HUD homebuyer education: required for Texas DPA

Most Texas down payment assistance programs require completion of an approved homebuyer education course before closing. Courses run 6–8 hours and cover budgeting, mortgage basics, the Texas closing process, post-purchase home maintenance, and how to avoid foreclosure.

Two main paths:

• Online courses — Framework Homeownership and eHome America are the most common ($75–$99). Self-paced, typically completable in one sitting.
• HUD-approved counseling agencies — in-person classes, often free. Find a list at HUD’s Find a Counselor tool.

Save the certificate — your loan officer needs it before clear-to-close.

TDHCA and the federal recapture tax

TDHCA programs are subject to the same federal recapture tax under IRC §143 as TSAHC programs. The honest version: a recapture tax can apply only when three conditions all happen:

1. You sell the home within 9 years of the original purchase
2. Your household income at the time of sale exceeds the program’s adjusted qualifying income limit for your county and family size
3. You realize a capital gain on the sale

If any one of those three conditions doesn’t happen, no recapture is owed. Most TDHCA borrowers never trigger all three.

TDHCA’s reimbursement program

Like TSAHC, TDHCA runs a reimbursement program for borrowers who do trigger recapture. Eligible borrowers can apply to TDHCA for reimbursement of the federal recapture tax owed. Save your closing documents and contact TDHCA before filing the year you sell.

This is general information, not tax advice. Talk to a CPA before you sell if you think recapture might apply.

How to apply for TDHCA programs

TDHCA programs are not applied for directly through TDHCA. They’re applied for through a TDHCA-approved participating lender. Here’s the typical flow:

1. Get matched to a participating lender. ShopDPA connects you with a Texas loan officer in our partner network whose lender works with TDHCA programs.
2. Pre-qualify. The lender pulls credit, verifies income, and confirms which TDHCA program(s) you qualify for given your county, household details, and FTHB status.
3. Complete HUD-approved homebuyer education. Online (Framework, eHome America) or in-person through a HUD-approved counseling agency. Save the certificate.
4. Find a home + sign a purchase contract. Standard process with a real estate agent. Make sure the property meets TDHCA requirements (single-family, condo, or townhouse used as primary residence in Texas, under the county price cap).
5. Submit full mortgage application. Lender uploads to TDHCA’s lender portal for program approval.
6. Underwriting + appraisal. Standard mortgage underwriting plus TDHCA program review (typically 2–3 weeks).
7. Clear-to-close + closing. Sign final docs, receive keys. DPA is recorded as a deferred second lien at closing.

Total timeline: typically 30–45 days from purchase contract to keys, similar to a standard mortgage close.

Texas DPA required documents checklist

Bring these documents to your first appointment with the loan officer to move from intake to pre-qualification quickly:

• Photo ID — driver’s license or state ID
• Income — last 2 pay stubs, last 2 W-2s, last 2 years of federal tax returns (1040 + all schedules)
• Self-employment (if applicable) — last 2 years business tax returns + YTD profit & loss statement
• Assets — last 2 months of bank statements (all accounts), most-recent 401(k) / IRA / brokerage statements
• Large deposits — letter of explanation + paper trail for any deposit over ~$500 not from payroll
• VA buyers — DD-214 (or current Statement of Service for active duty), Certificate of Eligibility (your LO can pull)
• Heroes program — current employer verification letter on letterhead
• Homebuyer counseling certificate — from your HUD-approved course
• Purchase contract (once selected) — fully executed sales contract from your real estate agent