Don’t Miss Out On A Mortgage Credit Certificate!

Published On: March 13, 2018|Categories: Home Buyers, Jasper IN Real Estate|Tags: MCC, Mortgage Credit Certificate|

Have you ever heard of a Mortgage Credit Certificate? It’s used to get an annual tax credit to reduce the amount of federal income tax you owe. Key word: Annual. So, if you are a home buyer, this information might be important to you. Don’t be like so many others, kicking yourself around tax time, realizing that you missed your chance. Learn about Mortgage Credit Certificates now, before you purchase your home. Then, talk to your lender about it.

See, an MCC is something you and your lender do as you apply for the mortgage, and it can benefit you in the form of a tax credit each year for the life of your mortgage. Yet, if you fail to act and miss your chance to get an MCC, you can’t just apply for it while you do your annual taxes.

Not all lenders participate, so it might be worth searching for a participating lender. See, you have to get a loan from a participating lender in order to get a MCC. And the participating lender has 30 days after closing to forward the required documents to the IHCDA. Some extensions are granted, but the point is, if you want to try for the annual tax credit, you must discuss this with your lender before you close. Here is an online index of participating lenders serving Dubois County.

Unless the home you will purchase is in a targeted area, only first-time home buyers qualify. Income limits at the time of closing apply, and only FHA, Conventional, VA or USDA Rural Housing financing is eligible.

The tax credit isn’t a little credit either. It’s up to $2,000 annually. The percentage of a tax credit you can get is based on the total amount of the original mortgage.

Annual MCC Tax Credit Rates

Original Mortgage Amount MCC Credit Rate

$50,000 and under 35%
$50,001 – $70,000 30%
$70,001 – $90,000 25%
$90,001 and above 20%

Keep in mind that your credit can’t be greater than your annual federal income tax liability after all other credits and deductions. Also, any itemized deductions for the mortgage interest will be reduced by the amount of the tax credit. But get this: The MCC benefits last for the life of the original mortgage as long as its your principal residence! Plus, if you refinance, it can often be re-issued. Learn more from this online guide issued by the State of Indiana.

Check out this video from the Virginia Housing Development Authority that explains how Mortgage Credit Certificates work, but keep in mind, in Indiana, the certificates are issued by the Indiana Housing & Community Development Authority (IHCDA).

Indiana Home Buyer’s Assistance Programs

Indiana offers multiple programs to help residents get into their own homes. For example, check out Indiana’s Next Home (NH) program, which provides down payment assistance towards either FHA or Conventional financing. Also check out Indiana’s Affordable Home program, which allows first time home buyers to get an FHA loan at a below market interest rate. Plus, check out Indiana’s H2O program which offers grants to help with down payments. Also, remember that for Indiana’s My Home program, you don’t have to be a first-time home buyer.

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