Articles

What is the Mortgage Credit Certificate (MCC) Program?
The MCC program is a homebuyer assistance program designed to help lower‐income families afford home ownership. The program allows home buyers to claim a dollar‐for‐dollar tax credit for a portion of mortgage interest paid per year, up to $2,000. The remaining mortgage interest paid may still be calculated as an itemized deduction.

After an MCC is issued, the homeowner receives a tax credit equal to the product of the mortgage amount, the mortgage interest rate, and the “MCC percentage,” a rate the administering Housing Finance Agency (HFA) sets between 10 and 50 percent.

Here is a sample MCC calculation that shows how this works:

$150,000 (mortgage amount) x 4 percent (mortgage interest rate) x 20 percent (MCC percentage)
= $1,200 (eligible credit amount)

Thus, the borrower would be able to claim $1,200 in credit on his or her annual tax return.

To be eligible, individuals must be first‐time home buyers, meet the program’s income and purchase price restrictions, and use the home as his/her primary residence. MCCs generally are subject to the same eligibility and targeted area requirements as Mortgage Revenue Bonds (MRBs).

The MCC program was established by the Deficit Reduction Act of 1984 and modified by the Tax Reform Act of 1986.