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The MCC program is an amazing homebuyer assistance program designed to help families afford homeownership. The program allows homebuyers to claim a dollar-for-dollar tax credit for a portion of mortgage interest paid per year, up to $2,500. Some even provide a $2000 grant on top of the MCC. The remaining mortgage interest paid may still be calculated as an itemized deduction.
After an MCC is issued, the homeowner receives a tax credit equal to the product of the mortgage amount, the mortgage interest rate, and the “MCC percentage,” a rate the administering Housing Finance Agency (HFA) sets.
Here is a sample MCC calculation that shows how this works: $250,000 (mortgage amount) x 5 percent (mortgage interest rate) x 20 percent (MCC percentage) = $2,500 (eligible credit amount)
Thus, the borrower would be able to claim $2,500 in credit on his or her annual tax return and a deduction of the remaining interest paid for the year.
To be eligible, individuals must be first-time homebuyers, meet the program’s income and purchase price restrictions, and use the home as his/her primary residence. This is key, as you cannot get an MCC on a second home or investment property. Please contact our preferred lender, Shane Davis, here in order to see if you qualify. www.shanedavishomeloans.com
The MCC program was established by the Deficit Reduction Act of 1984 and modified by the Tax Reform Act of 1986.
Who Administers the Mortgage Credit Certificate Program?
State and local HFAs administer the MCC program. There are two main HFAs in Texas that administer the MCC. Your loan officer must be approved by the HFA in order to obtain the MCC. Give Shane a ring at 214-403-7718 to qualify.
Who Does the Mortgage Credit Certificate Program Serve?
The MCC program serves low to moderate income borrowers, first-time homebuyers who earn no more than the greater of their statewide or area median income. 68 percent of MCC borrowers in 2020 earned the area median income or below. They are also an effective tool for helping minority households purchase a home. 29 percent of MCC borrowers in 2020 were minorities, and 35 percent were female heads of household.
Twenty-eight (28) State HFAs issued 22,298 MCCs in 2020 alone. Since the inception of the program, state HFAs have issued nearly 370,000 MCCs.
