How Will an MCC Cert. Assist My Home Purchase?
Mortgage Credit Certificate Tax Credit Program (MCC)
First of all this is a federal credit which can reduce potential federal income tax liability, creating additional net spendable income which borrowers may use toward their monthly mortgage payment. This MCC Tax Credit program may enable first time home buyers to convert a portion of their annual mortgage interest into a direct dollar for dollar tax credit on their U.S. individual income tax returns.
U.S. citizen, permanent resident or other qualified alien
The borrower must be first time home buyer (have not owned a home in 3 years)
Meet credit, income and loan requirements of lender, insurer & CalHFA
So borrowers must live in the home for the entire term of the loan, or until the home is sold or refinanced
Exceptions: The home is located in a federally designated targeted area, qualified Veterans pursuant to the Heroes Earning Assistance and Relief Tax Act of 2008
Sales price of the home must be less than the allowable sales price limits in thr county purchase of the home
Five acre maximum size of the property
Single family residence (detached)
Condominium or attached unit PUD allowed
Property must meet the requirements of CalHFA, lender, mortgage insurer/guarantor
Properties having a guest house, “granny ” units, “in-law” quarters, and/or seperate units containing kitchen facilities are not eligible
Eligible Counties – MCC County Resource List
The CalHFA MCC Tax Credit program will be available in all areas where an MCC is not currently available through a CalHFA partnering county at the time the loan is originated.
*An MCC Certificate provides homebuyers with a Federal Income Tax Credit based on a percentage of the mortgage interest paid each year.
*The Tax Credit is a dollar-for-dollar reduction against the homebuyer’s Federal Tax liability.
*The Tax Credit may also help Homebuyers qualify for the initial purchase of the home. So this is considered more ” qualifying income”.
*An MCC is not limited to just First-Time Homebuyers if the property purchased is in a “Targeted Area”.
Documents needed to qualify = Pay stubs, bank statements, employment history, previous tax returns