What Is the Mortgage Credit Certificate?

What is a Mortgage Credit Certificate?

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A Mortgage Credit Certificate (referred to as the MCC) is a federal tax credit that allows first-time home buyers to save money each year by receiving a conversion of a percentage of the annual interest paid on their mortgage into a dollar a tax credit. This program was created to assist first-time home buyers to qualify for a home loan by decreasing their tax responsibility. Typically this program is for low- to moderate-income families.

Once this certificate is issued, the homeowner will receive a tax credit that is the equivalent of the mortgage amount, interest on the mortgage, and the percentage rate for the MCC set by the Housing Finance Agency --  which is anywhere between 10 and 50 percent. For example, if the mortgage amount is 300,000, multiplied by the percentage, 5, multiplied by the MCC rate (in this case, 20 percent) – you would qualify for a tax credit of $3,000. Of course, in order to qualify for the tax credit, the home buyer must meet the program’s purchase price restrictions and income restrictions, and they must reside in the home.

What Is Form 8396?

Form 8396 is issued by the Internal Revenue Service (IRS) and used by homebuyers who were issued a Mortgage Credit Certificate (MCC) by a state government, local government, or a qualified MCC program to calculate the mortgage credit for the current year and any tax credits to carry forward for the coming year. 
This Tax form is used by homeowners that would like to request a mortgage interest credit when filing taxes. 

If you would like to learn more about the MCC or form 8396, fill out the form below, and a home loan expert will reach out to you