If you are lower income and want to become a homeowner, the Mortgage Credit Certificate Program can help you get into a home of your own. The MCC is a tax credit that can help a home buyer afford their mortgage.
What Is A Mortgage Credit Certificate?
If you qualify for an MCC, you can claim up to $2,000 in mortgage interest as a dollar-for-dollar MCC tax credit. Any mortgage interest over the claimed amount can be calculated as an itemized deduction. You must file your own tax return with the appropriate documentation to receive your mortgage interest credit.
An MCC reduces your tax liability and in effect subsidizes part of your monthly mortgage payment. Being eligible for an MCC may help you qualify for a loan. The tax credit is applicable as long as you are paying interest on your mortgage and using the home as your primary residence. If you refinance, the MCC can generally be reissued.
Everyone’s MCC is different. The tax credit is figured by multiplying your mortgage amount by your interest rate and then by an HFA assigned percentage between 10 and 50%. It might sound confusing, but it is simple and your local housing finance agency (HFA) will help you.
What is a Housing Finance Agency?
Every state has a state-chartered HFA. All HFAs are part of the National Council of State Housing Agencies (NCSHA) and work to meet affordable housing needs for each state’s residents. Since organizing in the mid-1980s, HFAs have helped 2.6 million families buy their first home and financed 2.9 million low- and moderate-income apartments.
How Do I Know If I Have A Mortgage Credit Certificate?
If you are interested in a MCC, you must meet the following criteria:
- be first‐time home buyers unless buying in an economically depressed area
- meet the program’s income and purchase price restrictions
- use the home as your primary residence
Note that every state has different income and purchase price requirements. Contact your local HFA for more information.
How to Apply for an MCC Tax Credit
If you qualify for the MCC program, you apply for your MCC through your lender once the purchase contract is signed. If the sale falls through the MCC is usually transferrable. You will have to pay a non-refundable fee.