With today’s rates, an MCC is even more powerful
The Mortgage Credit Certificate Program (MCC) was created to assist low- and mid-income homebuyers.
The information provided in this ad is for informational and educational purposes only. The details presented may change over time, and individual eligibility and benefits may vary based on personal circumstances and location. No specific results are guaranteed, and not all applicants will qualify for the Mortgage Credit Certificate Program (MCC) or any associated benefits. We recommend consulting a trusted professional for the most current and personalized information related to MCC and its potential advantages. For specific program details and eligibility criteria, please contact a local Academy Loan Officer. Any unused mortgage credit may be subject to rollover for up to three years to reduce future income taxes. Always seek professional guidance, as personal circumstances may differ.
What’s an MCC? It’s a dollar-for-dollar tax credit (not deduction) for anywhere from 10 to 50 percent of your mortgage interest paid throughout the year. The remaining paid mortgage interest can still be claimed if you choose to itemize your tax deductions.
Who does an MCC benefit? Possibly you if you’re a first-time homebuyer with low- to moderate-income.
How an MCC helps low- and mid-income buyers
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.
An MCC may be compatible with down payment assistance
Not only can the Mortgage Credit Certificate Program be used as a tax credit for the length of a mortgage, but it can also be combined with another homebuyer-friendly program: DPA, or down payment assistance. Down payment assistance may also cover closing costs. You can read more about this here.
Ask your local Academy Loan Officer about which DPA programs you might be eligible for.
A homebuyer who qualifies for an MCC might also qualify for down payment assistance. In fact, some DPA programs may only be available to buyers using an MCC. Exactly how an MCC can be combined with down payment assistance may vary by state and program.
You’ll typically be issued an MCC through your mortgage lender, though not all lenders participate in Mortgage Credit Certificate programs. An MCC comes with a one-time fee, charged at closing—check with your county for exact fees. A Mortgage Credit Certificate can’t be obtained after closing on a house.
How do you use an MCC? Once you receive your Mortgage Credit Certificate at closing, you’ll claim your tax credit using this form each year, based on the terms of your program.
What happens if you don’t use all of your tax credit? Any unused mortgage credit can roll over for up to three years, helping to reduce future income taxes.
Could an MCC make homeownership possible?
For homebuyers concerned about higher rates: A tax credit that offsets some of the costs of homeownership can make a big difference. Contact your local Academy Loan Officer to learn more about this program.
The information provided in this ad is for informational and educational purposes only. The details presented may change over time, and individual eligibility and benefits may vary based on personal circumstances and location. No specific results are guaranteed, and not all applicants will qualify for the Mortgage Credit Certificate Program (MCC) or any associated benefits. We recommend consulting a trusted professional for the most current and personalized information related to MCC and its potential advantages. For specific program details and eligibility criteria, please contact a local Academy Loan Officer. Any unused mortgage credit may be subject to rollover for up to three years to reduce future income taxes. Always seek professional guidance, as personal circumstances may differ. MAC2411-2179762.