Frequently Asked Questions

Our frequently asked questions are below. If you don't find the answer you are looking for, call us at 1-800-792-1119 and we will be glad to help.

• What is the First Time Homebuyer Program?
• Who is eligible for the program?
• What type of home can I buy?
• How do I apply for the funds?
• How do I know if I qualify for a Texas First Time Homebuyer Program?
• Is this a free program, or are there any costs involved?
• How long does the mortgage process typically take?
• What comprises a monthly mortgage payment?
• Are funds available for down payment and closing cost assistance?
• What is recapture tax?
• Can I rent my home obtained under this program?
  

What is the First Time Homebuyer Program?
The First Time Homebuyer Program is a program offered by the state of Texas to help Texans buy their first home. The program provides low-interest rate home loans for eligible families and individuals through the sale of tax-exempt mortgage revenue bonds. top

Who is eligible for the program?
Homebuyers who have not owned a home within the past three years, who meet program income guidelines and do not exceed the program purchase price limits are eligible to apply for a loan under this program. top

What type of home can I buy?
Any new or existing home in the state of Texas that does not exceed the maximum purchase price limits of the program. Manufactured homes are allowable if the home is permanently affixed to a foundation and meet FHA guidelines. All homes purchased under this program must meet certain quality standards. top

How do I apply for the funds?
TDHCA does not actually loan you the money. The mortgage loan funds are available through a network of participating lenders located throughout the state. If you experience difficulty with one of the participating lenders, please contact us at 1-800-792-1119. top

How do I know if I qualify for a Texas First Time Homebuyer Program?
A participating lender will determine your ability to repay a 30-year mortgage loan by reviewing your employment and income information, total monthly debt obligations and your past experience with credit along with information about the value of the property you want to buy. These lenders will pre-qualify you so that you will know the approximate price range of homes to shop for. The lender will complete all necessary paperwork for loan approval and assist in the coordination of loan closing with your Realtor and closing agent. It’s a good idea to get pre-qualified by one of the participating lenders prior to shopping for a home. If you do not qualify for a loan due to credit problems, visit Help for Texans to locate a certified consumer credit counseling provider in your area. top

Is this a free program, or are there any costs involved?
As with most mortgage loans, there are fees (closing costs) associated with this program. TDHCA does, however, limit the fees participating lenders may charge to help minimize your costs of closing the loan. top

How long does the mortgage process typically take?
In general, the mortgage process takes between 45 to 60 days from the time of application to closing. This time frame is dependent upon a number of factors including the individual lender’s process and any potential qualifying issues. top

What comprises a monthly mortgage payment?
Your monthly mortgage payment includes a payment to the principal balance of your loan, the interest payment, and your escrow payment (monthly payments collected to pay your hazard insurance, mortgage insurance, flood insurance, if applicable, and property taxes.) This is commonly referred to as P.I.T.I. (principal, interest, taxes and insurance.) top

Are funds available for down payment and closing cost assistance?
Yes. As with most mortgage loans, a minimum down payment is required. TDHCA usually has funds available for use in conjunction with select mortgage revenue bond programs. The funds are available exclusively to lower income homebuyers. To see if you qualify, contact one of the participating lenders. top

What is recapture tax?
Homebuyers that receive a loan through the First Time Homebuyer Program may be subject to a Federal Recapture Tax.

If you:

(1) sell your home within nine years;

(2) earn significantly more income than when you bought the home; and

(3) gain or profit from the sale of the home, you may be subject to recapture tax.

All three of these criteria must be met. In reality, most borrowers will not have to pay any recapture tax. For others, the amount will be minimal. The tax will never exceed one-half of the gain on the sale of the home or 6.25 percent of original mortgage, whichever is less. It is suggested that potential buyers contact a tax advisor or the Internal Revenue Service for moreinformation concerning the possibility of the payment of a Recapture Tax. top

Can I rent my home obtained under this program?
No, you may not rent a home obtained under this program. The home must be your primary residence. top