MORTGAGE CREDIT CERTIFICATE (MCC)
WHAT IS AN MCC?
The MCC Program offers the first-time homebuyer a federal income tax credit. This tax credit reduces the federal taxes the holder of the certificate pays. It can also help the first-time homebuyer qualify for a loan by allowing a lender to reduce the housing expense ratio by tax savings.
The qualified homebuyer who is awarded an MCC may take an annual credit against their federal income taxes paid on the homebuyer's mortgage. The credit is subtracted dollar-for-dollar from his or her federal income taxes. The qualified buyer is awarded a tax credit of up to 15% with the remaining 85% taken as a deduction from the income in the usual manner.
HOW DO I APPLY?
The County does not make loans. You, the homebuyer, go through the normal process of choosing a realtor, finding a house, condominium, townhouse, mobile home or two unit properties (duplex) and arranging financing with a participating lender. If you and the home you are buying are eligible, the lender fills out the MCC application forms for you, and sends them to the County for review. If approved, the County will then issue an MCC.
After you receive your MCC, you can take the income tax credit every year, as long as you keep the original first mortgage and continue to live in the house as your principal home.
INCOME TAX DETAILS
The MCC reduces the amount of federal income taxes due to the federal government from the homebuyer. If the MCC credit is greater than the homebuyer's tax liability, the IRS will allow the credit to be carried over for the next three years.
You may wish to adjust your federal income tax withholding to receive the MCC benefit monthly. Talk to your payroll department at your place of work. By reducing your monthly withholding, you will have more disposable (after-tax) income for mortgage payments.
WHAT IS THE DIFFERENCE BETWEEN A "TAX CREDIT" AND A "TAX DEDUCTION"?
A tax deduction is subtracted from your adjusted gross income before you calculate your federal income taxes. A tax credit, on the other hand, entitles you, the taxpayer, to subtract the credit from your total federal income tax bill. We are not tax advisors. If you have any questions about how your taxes will be affected, you should contact your tax accountant, or the IRS, at (800)TAX-1040.
Info for Lenders
MCC Program Eligible Areas
MCC Eligibility Requirements