Texas DPA First-Time Buyer Requirement: Who Really Counts

Some version of this lands in my inbox constantly. You owned a house before. Maybe you sold it, maybe your ex kept it in the divorce, maybe you still own it and want to move. Then you open a Texas down payment assistance page, see "first-time homebuyer" in the first paragraph, and close the tab.

Don't close the tab yet. In Texas DPA, "first-time buyer" is a legal test with a specific look-back period. It doesn't ask whether you've ever owned a home. Even that test only applies to some programs.

Short answer: it depends on which program

The first-time rule follows the money. Programs funded with tax-exempt mortgage revenue bonds, and anything that comes with a Mortgage Credit Certificate (MCC), have to follow federal tax law, and federal tax law is where the first-time requirement comes from. Programs funded other ways usually don't have to apply it.

As of October 2026, that splits the statewide options like this. TDHCA's My First Texas Home requires first-time status. TDHCA's My Choice Texas Home doesn't. TSAHC's two programs, Home Sweet Texas and Homes for Texas Heroes, require it only if you choose Bond DPA or add an MCC. Choose their Non-Bond DPA without an MCC and the question never comes up.

What does "first-time homebuyer" legally mean in Texas DPA?

The source is Internal Revenue Code Section 143(d)(1), the "3-year requirement." Bond money has to go to borrowers who had no present ownership interest in their principal residence at any time during the three years ending on the date the mortgage is signed. MCCs borrow the same test.

TDHCA puts it in plainer words in its My First Texas Home program matrix (published August 17, 2026). Borrowers and non-purchasing spouses qualify only if they "have not owned and occupied a primary residence during the last three years."

Two words in there matter. Owned and occupied. A rental you bought and never lived in isn't a primary residence. A house you sold four years ago is outside the window. Say you're a nurse in Killeen who sold a home in mid-2023 and has rented since. By the time you sign a new mortgage in late 2026, you've likely cleared three years. "Likely" is doing work in that sentence, though. Pull the actual closing date off your old settlement statement. Don't round from memory, because a few weeks can decide it.

The spouse piece catches people. Under My First Texas Home, a non-purchasing spouse has to pass the test too, even if they're not on the loan. Expect TSAHC to count a spouse the same way on Bond DPA and MCC files. Non-occupying co-signers are treated differently. They aren't subject to the first-time requirement, but they can't be on title and can't live in the home.

Exceptions that count you as first-time anyway

Federal law carves out two big exceptions, and both Texas agencies use them for their bond and MCC options.

Do veterans who owned before still qualify?

Often, yes. TDHCA waives the three-year rule when the borrower or spouse is a qualified veteran, honorably discharged, with a DD-214 to prove it. The catch is that it's a one-time exception. If you've already received a mortgage revenue bond loan using the veteran exemption, you can't use it again.

One nuance trips up military families. TSAHC's Homes for Texas Heroes accepts active-duty service members as heroes, but for the purpose of waiving the three-year rule on Bond DPA or an MCC, active-duty personnel don't count as a "qualified veteran" unless they're also a discharged veteran. Active duty with a recent home? Non-Bond DPA without an MCC is your lane there. I go deeper on this in our VA loan and TSAHC guide.

What is a targeted area for Texas DPA?

A targeted area is a specific census tract, not a city or ZIP code. TDHCA uses the tracts listed in IRS Revenue Procedure 2024-08, which covers census tracts where 70 percent or more of families earn 80 percent or less of the statewide median family income. Buy a home inside one of those tracts and the first-time requirement goes away for My First Texas Home and the bond and MCC options at both agencies.

TDHCA's targeted tract list includes tracts in Bexar, Harris, Dallas, Tarrant, El Paso, Travis and dozens of other counties. You can't eyeball it, though. TDHCA's own instructions are to run the full address through the FFIEC census geocoder, then match both the county and the tract code against the list. Two houses a few blocks apart can land on opposite sides of the line.

A small bonus from TDHCA's August 2026 lender guide: buyers using My First Texas Home as true first-timers sign a Texas Residency Affidavit at closing, but buyers exempt through the veteran or targeted-area route skip that requirement.

Texas DPA programs that require first-time status

As of October 2026, these are the ones where the three-year test applies unless you fit an exception:

• TDHCA My First Texas Home (with or without TDHCA's MCC)
• TDHCA's Mortgage Credit Certificate, including the stand-alone version
• TSAHC Bond DPA under Home Sweet Texas or Homes for Texas Heroes, including its deferred repayable Bond DPA option
• TSAHC Non-Bond DPA when you pair it with an MCC

City programs are their own animal. Many are funded with HUD money and use a slightly different first-time definition. Austin's program, per the city's homebuyer page as of October 2026, offers up to $40,000 for buyers in the full-purpose city limits, caps the sales price at $440,000, and limits income to 80 percent of MFI. The baseline is the familiar one: no home ownership in the last three years. The page also lists "have been displaced or divorced," which reads like the HUD-style exceptions for people who did own, not an extra requirement. Ask the city how it applies to you. Houston's certification form (an older version on the city's site, dated 2020) counts a displaced homemaker who only owned with a spouse, a single parent whose former spouse now owns the old house, and someone who only owned a home not permanently affixed to a foundation. Confirm current terms with the city before you count on any of that. Our San Antonio and Austin guide covers the local side in more detail.

Texas DPA programs that don't: options for repeat and move-up buyers

TDHCA's programs page is about as blunt as an agency gets about My Choice Texas Home: "you do not have to be a First Time Homebuyer to qualify." Per TDHCA's August 2026 program documents, My Choice also has no purchase price limit and no recapture tax, and it doesn't ask for prior tax returns to verify first-time status. Income limits still apply.

On the TSAHC side, Home Sweet Texas and Homes for Texas Heroes both offer Non-Bond DPA. Take it without an MCC and there's no first-time requirement at all. TSAHC also raised its Non-Bond income limits in July 2026, to 150 percent of area median family income for Home Sweet Texas and 170 percent for Homes for Texas Heroes. The Bond and MCC limits stay lower because of IRS rules. If you're trying to figure out where your household lands, start with Texas DPA income limits by county. Honestly, income knocks out more of the buyers I talk to than ownership history does.

Tricky situations: divorce, inherited property, co-signing, land, manufactured homes

Divorce. For the state bond and MCC programs, the test asks whether you owned and lived in a principal residence in the last three years. Who kept the house afterward doesn't change that. If you lived there 18 months ago, you're inside the window for My First Texas Home. City programs using the HUD definition can be friendlier to single parents and displaced homemakers, as Houston's and Austin's language shows. For statewide help, My Choice and TSAHC Non-Bond without an MCC don't care.

Inherited property. TDHCA's wording is "owned and occupied." A house you inherited and never lived in shouldn't fail that test on its face. Bring the deed and the probate paperwork anyway, and let the compliance review make the call. I'd rather know in week one than at closing.

Co-signing. If you co-signed a relative's mortgage and went on title to a house you never lived in, that's not your principal residence under the plain wording. Same advice. Show the lender the documents.

Land and manufactured homes. Vacant land isn't a residence. Manufactured homes get messier. Houston's form, following HUD's definition, excludes a home not permanently affixed to a foundation. I haven't seen the state bond programs spell that out the same way in their published matrices, so don't assume it carries over. Ask before you build a plan around it.

Do you have to sell your current home first?

For My First Texas Home, if you live in a home you own right now, you're inside the three-year window. Unless you're a qualified veteran using the exemption or buying in a targeted tract, that program is off the table.

For My Choice Texas Home, TDHCA's lender guide says you may currently own a home, as long as the new one becomes your primary residence within 60 days of closing. If your current home was bought with TDHCA DPA, though, any remaining balance has to be paid off on or before closing.

TSAHC's Non-Bond DPA works similarly, with a stricter twist. You can own a home at closing, but if your current home was bought with TSAHC DPA, TSAHC requires you to sell it before using its assistance again.

Either way, the first mortgage still has to qualify you while you own the departure house. FHA, VA, USDA and conventional each have their own rules on that, and those rules sit on top of the DPA rules.

Which bucket are you in?

If neither you nor your spouse has owned and lived in a principal residence in the last three years, you've cleared the first-time requirement. That's not the same as being eligible. Income and price limits, credit, and TSAHC's rules on who else goes on title all still apply. Ask your lender about My First Texas Home, TSAHC with Bond DPA or Non-Bond plus an MCC, and any city program where you're buying.

Owned and lived somewhere within three years? You can usually still reach those same programs if you're an honorably discharged veteran who hasn't used the bond exemption, or if the house you want sits in a qualified targeted tract. Divorced, single parent or displaced homemaker, ask about city programs that use the HUD definition.

If none of that fits, or you own now with no exception, go straight to My Choice Texas Home or TSAHC's Non-Bond DPA without an MCC. Don't burn two weeks applying for My First Texas Home. For a side-by-side of the two agencies, see TDHCA vs. TSAHC.

How do you prove first-time status?

For My First Texas Home, TDHCA's matrix requires three years of IRS transcripts or signed tax return copies for every borrower, including a non-purchasing spouse. Weren't required to file for some of those years? Tell your lender early. TDHCA's lender guide handles non-filers separately, so nobody expects returns that don't exist. You'll also sign a tax-exempt applicant affidavit. Waiving the rule as a veteran? The DD-214 goes in the file. Returns are the paper trail a reviewer can check, so if your situation is unusual (an inherited house, a co-signed loan), have the explanation and documents ready rather than hoping nobody asks.

My Choice Texas Home doesn't require prior tax returns to verify first-time status, which is one less thing to chase.

FAQ

Can a repeat buyer still get the Mortgage Credit Certificate?

Only through an exception. TDHCA describes the MCC as a federal tax credit for first-time buyers and veterans. It's a dollar-for-dollar reduction of federal tax liability, figured as a percentage of the mortgage interest you pay. It's non-refundable, so you need tax liability to use it. You can claim it for the life of the loan while the home stays your principal residence. As of October 2026, TDHCA says the stand-alone option has no minimum credit score and supplies are limited. Details are in TDHCA's MCC explainer.

My spouse owned a house but won't be on the loan. Does that count?

For My First Texas Home, yes. The matrix applies the test to non-purchasing spouses and requires them on title and the deed of trust. Expect the same question on TSAHC Bond DPA and MCC files.

Does the three-year clock run to my application date or my closing date?

The federal statute measures the three years ending on the date the mortgage is executed, which in practice means closing. If you're close to the line, plan the closing date around it.

If you've owned before and aren't sure which bucket you're in, take the Texas DPA qualifier quiz and give me your real ownership dates, including the parts you think disqualify you. I'll tell you which programs are still open and whether the MCC is within reach.