Texas Department of Housing & Community Affairs - Building Homes and Strengthening Communities

TDHCA Lowers Rates on Mortgage Products for First Time Homebuyers with Credit Blemishes

(AUSTIN - 03/28/03) The Texas Department of Housing and Community Affairs in March lowered mortgage interest rates for a homebuyer loan initiative designed for households with slight blemishes on their credit history. The Department’s Texas First Time Homebuyer Program makes these home loans available to eligible households with the backing of Fannie Mae’s Expanded Approval products.

The Department reduced the interest rates for its Expanded Approval Level I and Level II loans to 6.20 percent and 6.50 percent, respectively. TDHCA had initially established these interest rates at 7.20 percent to 7.45 percent. Rates differ between Level I and Level II depending on a variety of credit, income, and employment factors. A down payment assistance grant of up to 4 percent of the mortgage amount is also available for either level through this program.

TDHCA in June 2002 became the first state housing finance agency to offer Fannie Mae’s Expanded Approval products through its tax-exempt mortgage revenue bond program. The Department uses proceeds from the sale of mortgage revenue bonds to generate funds for homebuyer loans.

Through this groundbreaking partnership between TDHCA and Fannie Mae, eligible households with slight credit blemishes may obtain a mortgage loan at a lower rate than they would receive under alternative financing arrangements. The Department will employ Expanded Approval products to reach previously underserved and overcharged borrowers by offering mortgage rates that may be as much as two percentage points lower than alternative subprime mortgage financing.

The popular Texas First Time Homebuyer Program offers very low- to moderate-income households an opportunity to qualify for mortgage loans with monthly payments that might otherwise be out of their reach at current market interest rates. These individuals and families include households earning between 30 percent and 115 percent of the area median family income.

To qualify for the programs, individuals and families must meet certain area income requirements, and may not have owned a home within the past three years. Income requirements vary between regions based on the area median family income, as well as the maximum allowable home purchase price.

For more information on the program, income eligibility, and participating lender status, call the Texas First Time Homebuyer Program toll free hotline at 1-800-792-1119. The hotline is available 24-hours a day, seven days a week. Interested Texans are also encouraged to visit TDHCA’s Texas First Time Homebuyer Program page online at: www.tdhca.state.tx.us/homeownership/fthb.

Households with poor or inadequate credit histories, or who simply want to learn more about the process of purchasing a home, are encouraged to contact TDHCA’s Texas Statewide Homebuyer Education Program at the same toll-free number above. The Department will provide callers with a list of homebuyer education and credit counseling providers in their area of the state.

For more information, contact TDHCA's Center for Housing Research, Planning, and Communications at (512) 475-3976.