Texas extends state's home buyer tax credit

Texas is extending its first-time home buyer tax credit program available under its Texas Mortgage Credit Program.

Recently made available by the Texas Department of Housing and Community Affairs, the agency has released $45 million of the $500 million set aside for the program. The credit is designed to make housing affordable for low-to-middle income Texans currently unable to afford relocation costs by offering borrowers a tax liability deduction.

Borrowers can receive a tax credit for up to $2,000 annually, depending on the loan option they choose. The first, an assisted loan option, allows a borrower to receive a 5.74 percent interest rate on a 30-year fixed rate mortgage, along with payment assistance on the down payment and closing costs equaling 5 percent of the principal amount. The second option is an unassisted loan where the borrower receives a 30-year fixed rate mortgage at a 4.99 percent interest rate.

"Despite all the negatives we hear from other states, the fact is that the Texas economy - and the demand for homeownership - both remain quite healthy," said Michael Gerber, executive director of the Texas Department of Housing and Community Affairs.

The tax credit may bolster home sales in Texas just as the federal home buyer tax credit improved sales across the nation during the first half of 2010. The U.S. Commerce Department reported that there was a 32.7 percent drop in U.S. new home sales in May, due to the expiration of the credit.

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