First Time Homebuyer Programs at TDHCA and TSAHC

Both the Texas Department of Housing and Community Affairs and Texas State Affordable Housing Corporation operate First Time Homebuyer Programs using funds from the state bond ceiling. TxLIHIS has recently completed an analysis of these programs.  We found some differences in the programs, although the differences are not large and may reflect the different focuses of the programs operated by each entity.  While detailed tables and maps are available in our report here, these facts are of note:

Household Size: TSAHC makes about half (51%) of its loans to single-person households, vs TDHCA’s 37%.  Conversely, TDHCA makes about 37% of its loans to households of three or more, vs. 25% TSAHC’s activities.  This likely reflects the loan programs run by TSAHC that target certain professions (such as firefighters and teachers) with a population that may consist of smaller, younger households than the state as a whole.

Income: TDHCA serves a higher percentage of Low and Very Low Income households (52%) than TSAHC (34%), when adjusted for household size and area median income.  TSAHC actually has a slightly lower average household income across their statewide portfolio, but the smaller household size and a slightly-less urban portfolio means these household have a higher income compared to an adjusted AMFI.

Geography: While both have statewide coverage, TDHCA has a slightly higher percentage of their loan activity in SW Houston, Austin and the Rio Grande valley and TSAHC has a slightly higher percentage of their loan activity in the panhandle and SE Houston.

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Interest Rates: The interest rates of the two programs are largely comparable when adjusted for Down Payment Assistance amounts (DPA).   From 2005 to 2009, the interest rate of a loan with 5% DPA

was slightly lower under TDHCA’s program than under TSAHC’s.  In 2010 TSAHC shifted to a 3% DPA program.  This resulted in slightly lower interest rate for the TSAHC loans than those available under TDHCA’s program, which remained at the greater DPA amount.

TSAHC’s unassisted program (i.e. 0% DPA) uses Mortgage Credit Certificates in which TSAHC uses its bond authority to allow qualified borrowers to claim tax credits on their private market loans.  TDHCA does not track the interest rate of borrowers in their MCC program, but their non-MCC unassisted program rates have roughly tracked that obtained by borrowers in TSAHC’s MCC program—slightly higher in 2009 and 2010, slightly lower in 2011.

Annual Volume: TDHCA has more bond authority than TSAHC, and has a comparatively larger program.  While the exact multiple varies by year, from 2006-2010, TDHCA served roughly 2.6X the number of households as TSAHC.

Summary: TDHCA serves a slightly lower income population (when adjusted for AMFI and household size), more families with children, and has a slight relative focus in certain urban areas of the state compared to TSAHC.  Nevertheless, these differences are not major and may be explained by the nature of the activities the legislature has charged these entities to administer with these funds.