TSAHC Programs Texas: Home Sweet Texas, Heroes & MCC Guide

What is TSAHC?

The Texas State Affordable Housing Corporation (TSAHC) is a self-sustaining 501(c)(3) non-profit organization chartered by the Texas Legislature in 1994 to help low-to-moderate income Texas homebuyers and renters. TSAHC is one of two state-level Texas DPA agencies (the other is TDHCA), and it runs three of the most-used Texas down payment assistance programs.

TSAHC is funded through bond issuance, lender participation fees, and revenue from program-related operations — not through annual state appropriations. That self-funding model means TSAHC programs are stable year-round (no funding cliffs mid-year, unlike some city programs).

The three TSAHC programs covered in this guide:

Home Sweet Texas Home Loan Program

Home Sweet Texas is TSAHC’s flagship program for low-to-moderate income Texas first-time and repeat buyers. It’s a 30-year fixed-rate mortgage paired with down payment assistance (DPA) of up to 5% of the loan amount, with the structure depending on which first-mortgage type you choose.

Eligibility

• Income: household income at or below 80% of Area Median Income (AMI) for your county and family size (verify at TSAHC.org; AMI tables published annually by HUD)
• Credit: minimum 620 FICO (some lender overlays go higher, but 620 is the program floor)
• First-time buyer status: required, OR you must not have owned a primary residence in the previous 3 years (HUD-targeted areas waive this for everyone)
• Property: single-family home, condo, or townhouse used as a primary residence in Texas; purchase price under TSAHC’s county-specific cap
• Education: HUD-approved homebuyer education course completed before closing

DPA structure (it depends on your first lien)

• FHA, VA, or USDA first mortgage: DPA delivered as a grant — no repayment, no lien, no second-mortgage paperwork. Most common pairing.
• Conventional first mortgage (Freddie Mac HFA Advantage or Fannie Mae HFA Preferred): DPA delivered as a forgivable second lien — forgiven over time if you stay in the home (typically 3 years). If you sell early, the unforgiven balance is repaid at closing.

The DPA covers down payment, closing costs, and prepaid items (escrow). For most Texas first-time buyers using FHA + Home Sweet Texas, total out-of-pocket at closing drops below $1,500 — sometimes under $500 with seller credits or lender credits added on top.

Homes for Texas Heroes Loan Program

Homes for Texas Heroes is TSAHC’s occupation-based program for the Texas workforce that keeps the state running. It uses the same 30-year fixed structure as Home Sweet Texas, but with two big advantages: no first-time-buyer requirement (repeat buyers welcome), and higher income ceilings — up to 115% AMI in many counties (verify at TSAHC.org).

Eligible occupations (per TSAHC, current as of 2026)

• Teachers — full-time classroom teachers, teacher aides, school librarians, school counselors, nurses, and school staff in Texas public school districts (K-12)
• Police officers — full-time peace officers (city, county, state, university, school district) including police, sheriffs, deputies, constables, troopers
• Firefighters and EMS — full-time firefighters, paramedics, and EMTs employed by a Texas city, county, or fire district
• Corrections officers — full-time corrections, probation, parole, and juvenile corrections officers (TDCJ, county jail, federal facility)
• Public security officers — certain public-safety roles like school resource officers
• Veterans — Texas veterans with honorable discharge status (DD-214 required)
• Allied health and nursing — full-time nurses (RN, LVN, etc.) and certain allied health professionals at Texas hospitals and clinics

Why Heroes is a different tier than Home Sweet Texas

• No first-time-buyer rule. Repeat buyers (current or prior homeowners) qualify.
• Higher income ceiling. 115% AMI in most counties (Home Sweet Texas caps at 80%). For a family of four in a major Texas metro, that’s often $115,000–$135,000+ household income.
• Same DPA structure. Up to 5% as grant (FHA/VA/USDA) or forgivable second (conventional).
• MCC pairing allowed. The TSAHC MCC pairs with Heroes for an additional federal tax credit up to $2,000/year (subject to tax liability).

For most eligible Texas Heroes buyers, the Heroes program is the strongest combination of higher income flexibility + no FTHB rule + DPA grant + MCC. Verify the current occupation list and income limits at TSAHC.org before applying.

TSAHC Mortgage Credit Certificate (MCC)

The TSAHC MCC is a federal income tax credit issued at closing under IRC §25. Unlike a tax deduction (which reduces your taxable income), a tax credit reduces your federal tax bill dollar-for-dollar. The MCC is one of the most-used pairing tools in Texas DPA.

How the math works

The TSAHC MCC entitles the borrower to a credit equal to 20% of annual mortgage interest paid, capped at $2,000 per year per IRS rules (verify at IRS.gov). The remaining 80% of interest stays available as a regular itemized mortgage interest deduction on Schedule A.

Worked example

Let’s say you have a $250,000 FHA loan at 7.0% in year 1. Annual mortgage interest is approximately $17,400.

• 20% credit rate × $17,400 = $3,480 (theoretical credit)
• IRS $2,000 cap kicks in
• Federal tax credit: $2,000 (assuming sufficient federal tax liability)
• Remaining 80% of interest ($13,920) still deductible on Schedule A

Critical caveat: the credit is limited by your federal tax liability. If you owe $1,200 in federal tax that year, your MCC benefit caps at $1,200, not $2,000. A CPA can model this for your specific situation.

Mechanics

• Issued at closing — cannot be added later
• Available for the life of the loan
• Refinance reissuance possible (TSAHC will reissue a new MCC if you refi, with conditions)
• One MCC per loan — cannot pair TSAHC MCC with TDHCA MCC
• Pairs with TSAHC Home Sweet Texas Home, Homes for Texas Heroes, and most other DPA structures

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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.

TSAHC eligibility: complete breakdown

Eligibility for TSAHC programs depends on six factors. The exact thresholds are published annually by TSAHC and HUD — verify at TSAHC.org before applying.

1. Income

• Home Sweet Texas Home Loan: up to 80% AMI for your county and family size (varies by county; HUD AMI tables)
• Homes for Texas Heroes: up to 115% AMI in many counties (higher than the standard program)
• HUD-targeted census tracts allow higher income limits across both programs

2. Credit score

• Minimum 620 FICO for TSAHC programs (program floor; lender overlays may push higher)
• Some lenders accept lower with manual underwriting (case-by-case)

3. First-time buyer status

• Home Sweet Texas Home: required (or no primary residence ownership in the previous 3 years)
• Homes for Texas Heroes: NOT required — repeat buyers welcome
• HUD-targeted census tracts waive the FTHB requirement on both programs

4. Property type

• Single-family home, condo, or townhouse
• Must be used as the buyer’s primary residence
• Located in Texas
• Under TSAHC’s county-specific purchase price cap (varies by county)

5. Homebuyer education

• HUD-approved homebuyer education course completed before closing
• Online ($75–$99) or in-person (often free through HUD-approved counseling agencies)
• Certificate must be uploaded to lender file before clear-to-close

6. Heroes occupation (Heroes program only)

• Full-time employment in an eligible Heroes occupation (teachers, police, firefighters, EMS, corrections, school staff, nurses, allied health, veterans)
• Employer verification letter on letterhead at application
• Verify the current eligible occupation list at TSAHC.org

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.

TSAHC and the federal recapture tax

The federal recapture tax under IRC §143 is the most-misunderstood part of TSAHC’s 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 TSAHC borrowers never trigger all three.

TSAHC’s reimbursement program

Even when recapture does apply, TSAHC runs a reimbursement program: borrowers who get hit with recapture tax can apply to TSAHC for reimbursement of the federal tax owed. Save your closing documents and contact TSAHC 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 TSAHC programs

TSAHC programs are not applied for directly through TSAHC. They’re applied for through a TSAHC-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 TSAHC programs.
2. Pre-qualify. The lender pulls credit, verifies income, and confirms which TSAHC program(s) you qualify for given your county, occupation, and household details.
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 TSAHC requirements (single-family, condo, or townhouse used as primary residence in Texas, under the county price cap).
5. Submit full mortgage application. Lender uploads the application package to TSAHC’s lender portal for program approval.
6. Underwriting + appraisal. Standard mortgage underwriting plus TSAHC program review (typically 2–3 weeks).
7. Clear-to-close + closing. Sign final docs, receive keys. DPA funds are disbursed at closing as either a grant or forgivable second lien per the program structure.

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