Interest back.Every single year.
An MCC turns 15% of the mortgage interest paid each year into a federal tax credit, dollar for dollar against taxes owed. This page shows what that looks like on a real-size loan and the rules that decide how much of it a buyer actually keeps.
Our comparative assessment: cash saved 40%, ease 25%, speed 15%, fewer strings 20%. Full rankings
A Mortgage Credit Certificate is issued through a state program and lets the buyer claim 15% of the mortgage interest paid each year as a federal tax credit. A credit reduces the tax bill itself, not just taxable income. In Texas it comes from TSAHC (paired with its first lien) or TDHCA (combined with My First Texas Home, or standalone with an outside first lien). It is for first-time buyers, with exemptions for qualified veterans and targeted areas.
Who qualifies.
- First-time buyers (no home ownership in the last 3 years under TSAHC).
- Exempt from the first-time rule: qualified veterans (TSAHC excludes active duty; TDHCA requires an honorable discharge with a DD-214) and buyers in targeted areas or tracts.
- TSAHC MCC: paired with TSAHC's No DPA option or non-bond DPA. Not standalone and not with Bond DPA.
- TDHCA MCC: combined with My First Texas Home, or standalone with an outside first lien. Income and price limits match My First Texas Home.
- TDHCA standalone MCC has no minimum credit score set by the program.
How it works.
Choose the issuer
TSAHC (with a TSAHC first lien) or TDHCA (combo with My First Texas Home or standalone). The issuer sets the fee and the first lien options.
Apply through the lender
The MCC is arranged through the TSAHC participating lender or TDHCA approved lender as part of the mortgage.
Pay the issuance fee
TSAHC $400 (waived for Heroes using non-bond DPA plus the MCC). TDHCA $400 combo or $1,000 standalone, both waived for military.
Claim the credit each tax year
The credit is 15% of the mortgage interest paid that year, claimed on the federal tax return.
Carry forward what is not used
The credit cannot exceed the tax owed. Unused credit carries forward up to 3 years.
Example: year-one credit on a $337,750 loan
Example only. 7.25% matches the TSAHC No DPA government rate on the October 9, 2026 rate sheet; rates change daily. Interest is the sum of the interest portion of the first 12 payments on a standard 30-year amortizing loan (monthly P&I $2,304.05). Interest falls slowly each year as the balance drops, so the credit does too. The $2,500 tax bill is hypothetical. MCC is a federal tax credit; Albert is not a tax advisor, and a CPA or tax professional confirms how it applies.
The packet includes the official TSAHC and TDHCA MCC links, a side-by-side of fees and eligibility, and a match with a vetted lender who issues MCCs.
What works
- A credit cuts the tax bill dollar for dollar, which is worth more than a deduction of the same amount.
- TSAHC says its MCCs do not have a $2,000 cap.
- Unused credit carries forward 3 years.
- Stacks with TSAHC non-bond DPA or TDHCA My First Texas Home assistance.
- Fee waivers: Heroes (TSAHC, with non-bond DPA) and military (TDHCA).
What it costs you
- The credit cannot exceed tax liability. A buyer with a small tax bill uses less of it each year.
- Recapture tax can apply on a sale within 9 years.
- First-time buyers only, except qualified veterans and targeted areas.
- Fees: $400 (TSAHC or TDHCA combo) or $1,000 (TDHCA standalone) unless waived.
- TSAHC's MCC does not work with its Bond DPA.
The part nobody explains.
The credit is based on interest paid, so it is largest in the early years when most of each payment is interest. In the example, year one is about $3,657.
Tax liability is the ceiling. A buyer whose federal tax is lower than the credit carries the difference forward for up to 3 years.
Recapture is narrower than it sounds. It applies only on a sale within 9 years, is capped at the lesser of 50% of the gain or a formula amount, and does not apply with no gain, income that did not rise enough, or a sale due to death or divorce.
TDHCA's standalone MCC works with an outside first lien, which lets a first-time buyer keep a lender of choice and still get the credit, for a $1,000 fee (waived for military).
Choosing the No DPA option plus the MCC means the lowest rate on the TSAHC sheet and a yearly credit, instead of up-front cash at a higher rate.
Get the packet.
The official links are not on this page on purpose. They come in one email, organized, with what to do with each one and in what order.
- The packet includes the official TSAHC and TDHCA MCC links, a side-by-side of fees and eligibility, and a match with a vetted lender who issues MCCs.
- Every official link for this program, plus the links for every guide you explored here
- A match with a Texava-vetted lender who closes this program
- A direct reply from Albert in English or Spanish
Where should I send it?
Your packet is on its way.
Every guide you explore before you leave gets added to the next packet. Keep reading below.
Programs stack.
Heroes using non-bond DPA plus the MCC pay no $400 MCC fee.
Texas / TDHCA / First-time buyers6.4My First Texas HomeThe TDHCA combo pairs the MCC with My First Texas Home for $400 (waived for military).
Texas / TSAHC / Any profession6.8Home Sweet TexasFirst-time buyers can add the MCC to the No DPA or non-bond options.
Side by side.
The Texava Score weighs what matters to a buyer: cash saved 40%, ease to qualify 25%, speed and paperwork 15%, fewer strings 20%.
Asked most.
Is the MCC a deduction or a credit?+
A federal tax credit equal to 15% of the mortgage interest paid that year. It reduces the tax owed directly. Albert is not a tax advisor; a tax professional confirms how it applies to each return.
Is there a $2,000 cap?+
TSAHC says its MCCs do not have a $2,000 cap. The credit still cannot exceed the buyer's tax liability.
What happens to credit I cannot use?+
Unused credit carries forward for 3 years.
When does recapture tax apply?+
It may apply on a sale within 9 years. It is the lesser of 50% of the gain or a formula amount. It does not apply with no gain, if income did not rise enough, on a sale after year 9, or on a sale due to death or divorce.
What is the difference between the TSAHC and TDHCA MCC?+
TSAHC's must pair with its No DPA or non-bond DPA first lien and costs $400 (waived for Heroes using non-bond DPA). TDHCA's combines with My First Texas Home for $400 or stands alone with an outside first lien for $1,000, both waived for military.
Do I have to be a first-time buyer?+
Yes, unless the buyer is a qualified veteran or buys in a targeted area or tract.
The value compounds.
Up to 5% of the loan for Texas heroes
Read nextMy First Texas Home2% to 5% DPA for first-time buyers