What is a Mortgage Credit Certificate (MCC)? A mortgage credit certificate (MCC) is an affordable housing credit program designed to assist low and moderate income homebuyers.  Mortgages are financed using a conventional or government-insured loan.  All applicants must meet the credit and underwriting criteria set by the participating Lender originating the loan, in addition to the MCC program guidelines.   The borrower may take a tax credit in an amount equal to the annual amount of interest paid on the mortgage loan multiplied by the Mortgage Credit Certificate Rate.

The Mortgage Credit Certificate Rate for the Harris County Program is 30 percent.  For example,  an applicant with a $100,000 mortgage and a 4.0% interest rate could realize the following federal income tax savings (Based upon a 30-year mortgage with equal monthly installments of principal and interest):

Mortgage Amount: $100,000

Interest Rate: 4 percent

Monthly Payment: $400

Total Interest Paid First year: $ 4,800

(Mortgage Credit Rate) x .30

$4,800 x .30 = $1,440

During the first year of the Program, the borrower in above scenario would be eligible for a tax credit of up to $1,440.  The amount of the credit actually claimed on the federal income tax  cannot exceed the amount of federal income taxes due, after other credits and deductions have been taken into account.    Any unused MCC related tax credit can be carried forward up to three years to be applied against future income tax liability.  Additionally, all or a portion of the MCC related tax credit may be subject to recapture if the Residence is sold within nine years of purchase.