The Mortgage Credit Certificate program
This program is used with the Step Up program or any other 30-year, fixed-rate mortgage. It gives a federal tax credit based on interest paid each year.
Requirements for a Mortgage Credit Certificate
The amount of mortgage credit allowed varies depending on the state or local government that issues the certificates, but is capped at a maximum of $2000 per year if your State's rate is over 20%,by the IRS. As an example, if a homebuyer were to receive an MCC that offers a 30% credit on a $200,000 loan for 30 years with a rate of 6%, the allowable tax credit would be figured as follows (all numbers rounded):
Because the total credit in this example exceeds the IRS limit of $2000, the homebuyer would report a $2000 credit on their tax return. The buyer may continue to receive a tax credit for as long as they live in the home and retain the mortgage.
This information is a summary only and not to be used to make financial decisions. Contact an experienced local lender for full and current information
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