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Mortgage Credit Certificates – Q & A

Q: What is the Mortgage Credit Certificate program?
A: The Mortgage Credit Certificate program allows first-time home buyers to take advantage of a special federal income tax credit. This program allows buyers credit in qualifying for the tax advantage they’ll receive after they purchase the home.

The amount of the credit is tied to a local formula that every city with an MCC program must follow. An MCC credit, which can total $2,000 or more, reduces the borrower’s federal tax liability by an amount tied to how much one pays in annual mortgage interest. Both the borrower’s income and the purchase price of the home must fall within established guidelines.

To see if your community has an MCC program, call your local housing or redevelopment agency. You also may inquire with your real estate broker or the local association of REALTORSĀ®.


Q: Are there tax credits for first-time home buyers?
A: Many city and county governments offer Mortgage Credit Certificate programs, which allow first-time home buyers to take advantage of a special federal income tax write-off, which makes qualifying for a mortgage loan easier.

Requirements vary from program to program. People wanting to apply should contact their local housing or community development office.

Here is a list of four general requirements to keep in mind:

  • Some credit may be claimed only on your owner-occupied principal residence.
  • There are maximum income limits, which vary by locality and family size.
  • You must be a first-time home buyer, which means you must not have had any kind of ownership interest in a principal residence during the past three years. This restriction may be waived, however, if you are buying property within certain target areas.
  • Allocations must be available. A local MCC program may have to decline new applications when it runs out of funds.

Q: What are the rules for mortgage credit certificates?
A: To qualify for a mortgage credit certificate, both your income and the purchase price of the home must fall within established city guidelines. These guidelines vary by city but generally only permit people who earn an average income or slightly higher than average income.

A limited number of cities have authorized the MCC program. Contact your municipal housing department for more information.

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