Texas Mortgage Credit Certificate: A Fall Tool as Buyers Gain Leverage

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Texas buyers heading into fall are getting two things at once: more room to negotiate and more expensive borrowing. A Texas mortgage credit certificate (MCC) is one lesser-known tool that may help eligible first-time buyers offset part of that cost. In September 2026, the Texas State Affordable Housing Corporation (TSAHC) announced it is implementing a 2026 MCC program, which provides qualifying buyers with an annual federal income tax credit tied to the mortgage interest they pay.

TL;DR:

  • Texas home prices were flat year over year in July, and the typical seller price cut was $13,000, so buyers have some room to negotiate.
  • NAR reported on October 1 that mortgage rates are at their highest level in nearly three years, and that more sellers are cutting prices.
  • A TSAHC mortgage credit certificate gives eligible first-time buyers a yearly federal tax credit based on the mortgage interest they pay.
  • TSAHC says its MCC is paired with its down payment assistance programs, and income, purchase price and first-time buyer rules apply.
  • Before you shop, check your eligibility, gather three years of tax returns, and compare the total cost of every loan offer, not just one number.
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Table of Contents

What Do the Latest Texas Housing Numbers Show?

The Texas Real Estate Research Center at Texas A&M published its September 2026 Texas Housing Insight, which covers July data. It describes a market that held up well despite high mortgage rates and economic uncertainty.

  • Sales: Texas recorded 32,306 closed sales in July, up 2.2% from the same month last year.
  • Prices: The statewide median sales price was $339,000, unchanged from last year.
  • Seller price cuts: The median price cut was $13,000, equal to 3.6% of the initial listing price.
  • Supply: Active inventory stood at 5.5 months, and homes that sold spent an average of 63 days on the market.

Balance scale weighing a house against a price tag with a down arrow, illustrating Texas buyers' negotiating room from seller price cuts

Local conditions differ. The report shows July sales up 11.7% in Austin and down 1.5% in Dallas-Fort Worth. It also notes that July was the first month in the past 12 in which Houston prices did not fall year over year. San Antonio’s inventory stood at a 6.2-month supply, compared with 4.6 months in Dallas-Fort Worth. The researchers expect higher financing costs to be the main headwind for the market in the months ahead.

Why Are Buyers Gaining Leverage This Fall?

In an October 1, 2026 article, the National Association of Realtors reported that mortgage rates are at their highest level in nearly three years, according to Freddie Mac’s weekly survey. It also cited the Mortgage Bankers Association, which said purchase applications fell 5% from the prior week and 14% year over year. These are national figures, not Texas-only figures.

The same article says the share of active listings with a price reduction rose to 20.8% in September, the highest September reading since 2018, based on Realtor.com data. Realtor.com’s chief economist, Danielle Hale, said that well-prepared buyers will likely “find more choices, less competition and greater room to negotiate.”

Because the headline rate is only part of the picture, NAR passes along several tips from Realtor.com economists:

  • Work on your credit if you have time to do so before buying.
  • Look at different down payment levels, because putting 20% down can eliminate mortgage insurance.
  • Get more than one loan offer, since lenders can differ meaningfully.
  • Compare the full cost of a loan, including mortgage insurance, closing costs, and any discount points, not just the advertised interest rate.

Realtor.com also suggests that buyers rate-proof their budgets by testing both the high and low ends of a realistic range.

What Is a Texas Mortgage Credit Certificate?

According to TSAHC, a mortgage credit certificate is designed to help people better afford homeownership. It provides first-time homebuyers with an annual federal income tax credit. The credit equals the certificate’s credit rate multiplied by the mortgage interest the holder pays each year, for as long as the home remains their principal residence.

A few rules from TSAHC’s notice are worth knowing up front:

  • You apply through a participating lender when you buy and get your mortgage.
  • An MCC cannot be issued with a refinance of an existing mortgage.
  • You must intend to occupy the home as your principal residence within 60 days of the MCC being issued, and the MCC will be revoked if you stop occupying it.
  • Applicants pay a compliance fee plus an MCC issuance fee.
  • If you sell within nine years, you may be required to return all or part of the credit to the IRS.

Whether a credit makes sense for you depends on your own tax situation, so talk with a tax professional before relying on it.

Who May Qualify for a Texas Mortgage Credit Certificate?

TSAHC’s notice lists the basic criteria. Purchasers generally need to meet an income limit set as a share of area median family income: 100% for households of two or fewer and 115% for households of three or more. Certain Texas teachers, school staff, firefighters, peace officers, corrections officers, EMS personnel, and veterans are covered under the same limits. Federal law also caps the purchase price of homes financed under the program.

You also generally cannot have owned your principal residence during the three years before you get the mortgage. TSAHC’s program guidelines include exceptions for qualified veterans and for homes in targeted areas. Lenders verify this requirement, typically by reviewing your federal tax returns for the prior three years.

Limits vary by county and change over time, so use TSAHC’s eligibility tools or a participating lender to see current numbers for your area. TDHCA, the state housing department, also publishes a combined income and purchase price limits table for its My First Texas Home and Texas Mortgage Credit Certificate programs (limits effective July 13, 2026).

How Does an MCC Fit With FHA and Down Payment Help?

TSAHC’s homebuyer FAQ states that, until further notice, its MCC can only be used in conjunction with its down payment assistance and No-DPA programs. The same FAQ lists FHA, VA, and USDA loans among the loan types for those programs. Program credit score, debt-to-income, and fee rules apply, and they can change, so confirm the current requirements with a participating lender before you count on any benefit.

Calendar next to a house and key, illustrating a fall planning timeline for a Texas mortgage credit certificate and home purchase

An FHA loan is the mortgage; an MCC is a separate tax credit tied to the interest you pay on it. If you want background on how those pieces connect, see our guides to Texas first-time homebuyer programs and down payment assistance programs.

Fall Checklist for Texas Buyers

  1. Check eligibility first. Confirm whether you meet the first-time buyer, income, and purchase price rules for your county.
  2. Gather your documents. Plan on federal tax returns for the past three years, plus the usual pay and bank records a lender requests.
  3. Ask lenders the right questions. Ask whether they participate in the program you are interested in, and request each offer in writing.
  4. Compare total costs. Look at mortgage insurance, closing costs, points and program fees together, as NAR’s sources recommend.
  5. Use your leverage. Ask your agent about price cuts and seller concessions on the homes you like, and budget for a range of financing outcomes.

For more on what to expect at the closing table, read our breakdown of Texas closing costs.

— Gerry Nicodemus

Get a Personalized Review

Every buyer’s situation is different. If you are considering an FHA loan, down payment assistance, or a first-time buyer program in Texas, call (281) 801-6965 to discuss your options with a mortgage professional. You can also review our FHA loan requirements to see where you stand today.

Last verified: October 2, 2026. Program rules, limits, and market data change often. Check each source for the latest details.

This article is general information, not tax, legal, or financial advice, and it is not a commitment to lend or an offer of credit. Loan approval, program participation, and terms are subject to underwriting, program guidelines, and eligibility. Consult a qualified tax or financial professional about your own circumstances before acting on anything here.

The Texas Mortgage Pros is not affiliated with, endorsed by, or sponsored by HUD, FHA, TSAHC, TDHCA, Texas A&M, the Texas Real Estate Research Center, NAR, Texas REALTORS, Realtor.com, Freddie Mac, or any other organization named in this article. Third-party names are used only to cite their published information.

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