June 10, 2022 | by Anna Orendain
Categories: First Time Buyer, Homeownership, Homes for Texas Heroes
In last week’s blog post, we brought you a wealth of resources and information about the Mortgage Credit Certificate (MCC) program, one of our favorite money-saving hacks. And now that we have the basics covered, we figured it was time to take our readers a little deeper into the details of the MCC program.
This week, we’re reviewing the answers to some of our most frequently asked questions about the MCC. So if you’re looking for clarification on some of the more complex questions regarding this program, check out the information below.
How Do I Apply for a Mortgage Credit Certificate from TSAHC?
To apply for a Mortgage Credit Certificate (MCC), you must work with one of TSAHC’s approved lenders. The lender will help you fill out the application and ensure that you meet all of the requirements. To view a short video about the application process, click here.
Please note that you must apply for the MCC BEFORE you close on your home loan. You cannot apply for the MCC after your loan has closed.
What is the definition of a first-time home buyer?
For purposes of the MCC program, a first-time home buyer is an individual or family that has not owned or had an ownership interest in any principal residence during the last three years. Our down payment assistance program by itself does NOT have a first-time home buyer requirement
I Have a Mortgage Credit Certificate. What Happens if I Sell My Home or Move?
You must live in the home as your primary residence to continue to take the credit. If you move, but decide to keep your home and rent it out, you will not be able to take the credit any longer. You may be subject to Recapture tax if you decide to sell your home within 9 years.
How Do I Obtain a Copy of My Mortgage Credit Certificate?
If you misplace your MCC, your mortgage lender can help you obtain a new copy. Please reach out to them directly for assistance. If you are a lender, you can find instructions on how to download a copy of your borrower's MCC here.
If I Have a Mortgage Credit Certificate, Can I Still Take the Mortgage Interest Tax Deduction on My Tax Return?
If you have a Mortgage Credit Certificate, you can take a tax deduction for any additional interest paid above the value of the tax credit. For example, if you paid a total of $7,500 in mortgage interest in one year, you would be able to take an MCC tax credit of $1,500 (20% of the mortgage interest paid). You would also be able to take an itemized tax deduction for the remaining $6,000 in mortgage interest paid. See how much you can save on taxes with an MCC tax credit using this calculator.
What is the difference between a tax credit and a tax deduction?
A tax credit provides a dollar for dollar reduction of your income tax liability. A tax deduction lowers your taxable income. For example, a $2,000 tax credit reduces your tax bill by $2,000. A $2,000 tax deduction reduces your taxable income by $2,000, but might only reduce your tax bill by $300 to $500, depending on what tax bracket you're in.
OTHER MCC RESOURCES AND OPPORTUNITIES
To round out our celebrations of Homeownership Month, we’ll be releasing a dedicated podcast episode on the MCC as well as a live training for lenders and REALTORS®!
Register here to attend the live training on June 22nd. If you aren’t able to attend, we also offer an on-demand MCC training as well.
If you're looking for additional informational videos about our down payment assistance and Mortgage Credit Certificate options, click here.
On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.