What does the MCC do?
The MCC reduces the amount of federal income tax paid giving more available income to qualify for a mortgage loan and assist with house payments. The MCC allows 10-50 percent (currently at 30 percent and subject to adjustment) of the mortgage interest paid each year to be used as a “tax credit.” As a Mortgage Credit Certificate holder, you will receive a direct dollar-for-dollar federal income tax reduction. Depending on your circumstances, you may enjoy a savings through increased monthly take home pay or as a year-end tax refund. The MCC may help you qualify for larger home or assist you in qualifying for a mortgage loan when you otherwise would not.
Is the MCC a mortgage?
No, the MCC is not a mortgage, but may be used in conjunction with a first mortgage from a participating lender (except a mortgage revenue bond loan.) Borrowers must qualify using standard credit requirements. Borrowers may also use any down payment assistance and grant programs available through any source acceptable to the lender.
What is the difference between a tax credit and tax deduction?
A mortgage interest deduction differs from a mortgage tax credit. A “tax credit” entitles taxpayers to subtract the amount of the credit from their total federal income tax liability, receiving a dollar for dollar savings.
A “tax deduction” is subtracted from the adjusted gross income before federal income taxes are computed. Therefore, with a deduction, only a percentage of the amount deducted is realized in savings.
MCC Example: | Mortgage Amount: |
$121,000 |
| Mortgage Term: |
30 Years |
| Interest Rate: |
6% |
| Total Interest Paid First Year: |
$7,220 |
| MCC Rate: |
x_30% |
| |
$2,166 |
| Tax Credit: |
$2,000 (max. tax credit) |
How much of a tax credit can be issued under the MCC?
The maximum amount of the tax credit shall not exceed $2,000.00 per year for MCC rates in excess of 20%.
How do I qualify?
Borrower must meet normal mortgage underwriting requirements which demonstrate credit worthiness. There are income and home purchase price requirements in this program.
*Borrowers must be first-time homebuyers who have not owned their principal residence during the last three years.
*This requirement is waived for homes purchased within a targeted area.
What is a targeted area?
Census tract in which seventy percent (70%) or more of the families have an income which is eighty percent (80%) or less of the statewide median family income.
Are there additional costs?
Yes, there is an MCC application fee of $175. The fee is paid at closing and subject to change. This is an administrative fee and is nonrefundable.
Income and Home Purchase Price Limits
Household income may not exceed the following:
| |
Non-Targeted |
Targeted |
1-2 Family Members
|
$75,456 |
$82,920 |
| 3+ Family Members |
$86,774 |
$96,740 |
| New/Existing Home Purchase Price May Not Exceed |
$325,301 |
$397,590 |
Effective July 2016 (Subject to periodic adjustment)
Where can I buy and what type of home can I purchase?
A new or existing single family home (attached or detached), condo, townhome, certain manufactured homes and Plan Unit Development must be within Broward County.
What is HFA policy on lenders’ submitted MCC documents and quality control?
What happens when I move?
If you move in the first full nine years you own the home, make a profit on the sale, and have income that exceeds the allowable income at the time of the sale, you may be subject to recapture. For more information, ask for a recapture brochure.
What's the next step?
- Have a participating lender pre-qualify you for a first mortgage loan and determine if an MCC benefits you.
- Locate a home by using a professional such as a realtor.
- Make an offer for the property.
- Return to your lender and comply with lender requirements.
I already own a home, do I qualify?
No, the MCC must be applied for prior to purchasing your home.
How do I refinance my home if I have an existing MCC?
To refinance your home that has an existing MCC, the following requirements must be meet:
- Must use an approved participating lender
- Must be on the same property listed on the existing MCC
- New loan amount cannot exceed the outstanding balance of the original mortgage loan as of the date of the refinancing.
- You may not refinance:
- Points
- Insurance premiums
- Taxes
- Other closing costs
The reissued MCC will replace the existing MCC and the MCC credit rate will not change.
View Sample Lender Packet
For more information, contact the Housing Finance Authority of Broward County at 954-357-4900 or email nhoward@broward.org
