The Mortgage Credit Certificate (MCC) Program provides qualified borrowers a federal income tax credit based on a percentage of their annual mortgage interest expense.
An MCC is a mortgage interest tax credit that reduces the amount of federal income taxes you pay every year. Lower income individuals and individuals purchasing properties in targeted areas are eligible to participate however the borrower must be a first-time homebuyer.
Borrowers apply for the program through their local housing commission and apply for their mortgage with traditional lenders such as the bank, mortgage bank, or mortgage broker.An applicant’s household gross income cannot exceed the MCC income limit. An applicant must meet credit score, income and mortgage requirements of the lender and complete a HUD-certified homebuyer education course prior to loan closing. The sales price of the property must be less than the maximum mortgage credit certificate purchase price in the county in which you are purchasing the property.
Single family properties including detached homes, condominiums or townhouses are all eligible for the mortgage credit certificate program. This process helps first-time homebuyers qualify for a loan because it reduces the tax liabilities below what they would pay otherwise.
With a mortgage credit certificate, lenders subtract the tax credit from your monthly debt expense which improves your debt-to-income ratio and enables you to spend more on total monthly housing expenses, including your mortgage payment. First-time home buyers qualify for a tax credit that is equal to 30% of the mortgage interest that you pay each year when you own your home and has the potential to save you more money the longer you remain in your home. One of the main benefits of the program is that the tax credit is deducted from your total monthly debt expense to calculate the debt-to-income ratio that is used to determine what size mortgage you can afford.
Please call us today at 817-484-0212 to speak to us about our mortgage credit certificates.