Mortgage Credit Certificate (MCC) Program

Updated: April 28, 2022
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    What is the Mortgage Credit Certificate (MCC) program? Many states offer an MCC program through state housing finance agencies, state-level Departments of Veterans Affairs, and similar agencies.

    These entities are usually non-profits, not-for-profits, or government entities responsible for helping low to moderate income state residents find affordable housing. They also provide help for qualifying veterans, currently serving military members, and qualifying surviving spouses of those who have died as a result of military service.

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    A Network Of State Agencies Mortgage Credit Certificate (MCC) Program

    For well over half a century, state Housing Finance Agencies (HFAs) have been an important part of American real estate transactions.

    Owning a home isn’t just for those who earn six figures a year. State housing finance agencies and government-backed mortgage loans make home ownership attainable for far more Americans including those who fit into low-income and moderate-income tax brackets.

    There is a national organization that acts as an advocacy group for these state agencies. The National Council of State Housing Agencies (NCSHA) describes itself on the official site as a “nonprofit, nonpartisan organization created to advance, through advocacy and education, the efforts of the nation’s state HFAs and their partners” to offer affordable housing to those who qualify.

    This agency isn’t just about supporting the HFAs themselves–the NCSHA official site includes resources for future homeowners looking for these resources in their home state. This is a good place to begin looking for mortgage help in your housing market.

    You can also have a look at the state HFAs individually (see below). You’ll find Mortgage Credit Certificate program options at most of the state-level FHAs as well as other help for low to moderate-income borrowers.

    What Is A Mortgage Credit Certificate Program?

    There are many different types of housing assistance options available to borrowers in most states–low-interest mortgages, down payment grants, and help with closing costs.

    A Mortgage Credit Certificate program is essentially a dollar-for-dollar federal tax credit for a percentage of the borrower’s mortgage interest paid each year up to a capped amount (listed at $2,000 on the NCSHA official site for FY 2020, but limits may change). On top of this benefit, the borrower’s remaining mortgage interest not subject to the tax credit “may still be calculated as an itemized deduction,” according to NCSHA.

    The MCC program exists thanks to the federal law known as the Deficit Reduction Act of 1984. It was further developed via the federal Tax Reform Act of 1986.

    Who Is Eligible

    Rules may vary from state to state, but in general first‐time home buyers are favored. The definition of a first-time buyer will vary from state to state but in general you may find that if you have had no ownership interest in property for a specified length of time (three to seven years typically, depending on the state) you qualify as a first-time buyer even if you have owned a home in the past.

    Some states forego the first-time buyer requirement if you are a qualifying veteran or if you are buying within certain targeted zones.

    In general, purchase price restrictions, income limits, and the requirement that the home be a primary residence will apply. Income caps and price limits may be waived for purchases in certain zones or for certain applicants depending on the state.

    How It Works

    Borrowers who qualify for the MCC must apply for it via the state agency administering the program. Once approved, the homeowner qualifies for a tax credit equal to “the product of the mortgage amount, the mortgage interest rate, and the MCC percentage,” which is described as a rate the administering Housing Finance Agency (HFA) sets (typically between 10 and 50 percent according to NSCHA.)

    The guidelines for such tax credits (and other IRS rules) are always subject to change, consult for the most current year’s guidance or consult a tax professional.

    Where To Apply

    You’ll need to explore the Housing Finance Agency official site in the state where you plan to purchase your home to see what MCC options you have (see the list below).

    Things To Remember

    • Federal tax code changes frequently. You can contact a local tax professional to determine what changes may apply to you in this context for state and federal taxation.
    • State Housing Finance Agencies may require you to be a state resident for a minimum amount of time unless that state’s law includes provisions for military members and their families who have been assigned there from another state.
    • Some state residency requirements do not feature exceptions. A good example of this is the requirements most agencies have that the home purchase be made within state lines.
    • Some programs may have limited availability and some may run out of funding before the fiscal year ends. Whether this applies for your MCC needs or not will depend on the state agency.
    • MCC may be administered alongside or in tandem with other homeowner assistance programs. Be sure to ask your agency what other options are open to you.

    Housing Finance Agencies By State

    About The AuthorJoe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News

    Written by Team