The Mortgage Credit Certificate Program is an assistance program that lets qualifying (typically, first-time) homebuyers redirect their federal tax dollars toward the purchase of a new home. The program was introduced in 1984 as part of the Deficit Reduction Act, intended to help homebuyers of low- and moderate-income. Nearly 70 percent of MCC borrowers earn at or below their state’s median income.*
Participating in the Mortgage Credit Certificate Program reduces federal tax liability—by up to $2,000 per year. A homebuyer can claim this money as additional income to help qualify for the purchase of a house.*
A homebuyer can then use this saved tax money to make a larger monthly payment on a home they wouldn’t have been able to afford otherwise. This is because an MCC is a dollar-for-dollar tax credit, not a deduction. Meaning, if a homebuyer files their tax returns and owes $0 to the IRS, the IRS will write them a check for the MCC amount.
An MCC is also good for the life of a mortgage, as long as you keep your home as your primary residence. Income/purchase limits and other conditions may apply.
You’ll only be issued an MCC on a purchase loan when buying a house. Fixed-Rate Loans typically work with an MCC, including FHA, USDA, VA, and Conventional Mortgages. If you have an MCC and choose to refinance, many programs may permit you to reapply for a new Mortgage Credit Certificate for your refinanced mortgage.*
An MCC has some restrictions—namely, a recapture tax. While the risk of incurring the recapture tax is slim, an MCC subsidy may have to be paid back in part if you sell your home within nine years, sell at a profit, and see a significant income increase.* However, some states, like Michigan, offer an IRS Recapture Tax Reimbursement program.