Mortgage Credit Certificate (MCC)
• Eligibility Area – The MCC Program is a federal income tax credit program for first-time homebuyers, or for those who have not owned a home in the last three years, on homes purchased in Bastrop, Blanco, Burnet, Caldwell, Fayette, Hays, Lee, Llano or Williamson Counties.
• Annual Tax Credit – The MCC Program allows homebuyers to take 40% of their annual mortgage interest (up to $2,000) as a federal income tax credit per year. The MCC tax credit may be claimed each year of the mortgage term as long as the property remains the homebuyer’s principal residence, you owe amounts on your home mortgage, and have a tax liability.
• Increased Take Home Pay – The MCC Program is registered with the IRS and REDUCES your federal income taxes and INCREASES your net earnings. This is a great help in qualifying for your first home mortgage by increasing the loan amount you can qualify for AND increases your take home pay. You must have a tax liability to benefit from the annual credit in any given year.
Homebuyer receives $140,000 mortgage at a 30 year fixed rate of 5.00%
First year interest = $6,953.09 x 40% MCC credit = $2,433.58
Maximum MCC first year tax credit = $2,000
• Veteran’s Exception – Veterans who were discharged, other than dishonorably, can qualify for the MCC Program even if they owned a home in the last three years.
• Loans – The MCC may ONLY be used with amortizing, fixed-rate FHA, VA, or conventional loans that are acceptable to Fannie Mae or Freddie Mac. The credit cannot be used in conjunction with a mortgage revenue bond loan.
• Fees – In addition to normal, reasonable and customary closing costs, MCC fees are: 1% Issuance, $100 application and $250 Closing Review Fee
• Required Education – All those named on the Deed/Mortgage must attend Homebuyer Education prior to closing. It must be provided by Frameworks, Business and Community Lenders of Texas (BCL) or another provider acceptable to the issuer and the administrator. Frameworks offers face-to-face training, BCL offers face-to-face training and online training. Buyers may choose the type of training they prefer.
• Recapture Tax – If you sell your home within nine years, you may have to pay a recapture tax. Several conditions can exempt you from the recapture tax. Call your Program Administrator or see your Lender for more details.
• Availability of Funds – Funds are available on a first come first serve basis. If funds are not currently available, please keep checking every few months.