Mortgage Credit Certificate (MCC) Program

Home ownership is a great source of pride and personal satisfaction.  At Awareness Home Funding we enjoy helping our clients reach this goal.  And with the Mortgage Credit Certificate (MCC) program, we have another tool to assist you. 

The MCC program is a Federal tax credit on the mortgage interest you pay on your home loan over a calendar year.  While this does not reduce your monthly mortgage payment, it is a dollar for dollar reduction from the amount of your Federal Income Tax liability.  To date, for the five states we conduct business, only Michigan and Indiana have this program.  (Kansas does not have this program and Florida stopped the program due to lack of funding.)

The beauty of the program is that it effectively reduces your annual interest rate. 

For example: In Michigan the program offers a full 20% tax credit on the amount of annual interest paid.  On a $100,000 mortgage at 6% interest, the approximate annual interest amount is $6,000 for the first year.  At the full 20% tax credit, $1,200 can be deducted from the amount of Federal Income Tax you owe.  ($6,000 x 20% = $1,200; making your effective interest rate 4.8%) 

The MCC credit remains in effect as long as your home continues to be your principle residence and the original mortgage remains in place.  If you refinance your home loan, sell your home, or purchase a new home as your primary residence, the credit program will end.  For most homeowners who participate in this program, there really is no need to even consider a refinance since their effective rate is already reduced.

 The benefits of this program are significant! 

  • In many areas of Michigan and Indiana, you do not need to be a first time homebuyer to qualify.
  • In Michigan, up to 20% of your mortgage interest can be credited on your Federal tax return.  Plus, the remaining 80% of mortgage interest paid will continue to qualify as an itemized deduction on your Federal tax return. 
  • In Indiana, 20-35% of your mortgage interest can be credited on your Federal tax return dependant upon the size of your mortgage loan amount.  Again, the remaining 65-80% of interest paid will qualify as an itemized deduction on your Federal tax return.
  • Since the MCC is applied after all other credits are subtracted, any unused portion may be carried forward against future Federal Tax returns for up to 3 years.  (See your tax advisor for specific federal credit criteria.)
  • The program is effective for the life of the original mortgage.
  • The program may also be applied to individuals with current non-taxed income, but who have the potential for taxable income in the future.
  • Most mortgage loan programs apply.

Talk to one of our Home Loan Specialists today for how this program can work for you!

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20 Responses to “Mortgage Credit Certificate (MCC) Program”

  1. Remortgage Says:

    thanks for the share.

  2. Common Homeowner Tax Deductions « Awareness Home Funding's Blog Says:

    […] Mortgage Credit Certificate Program  –  The MCC program is a Federal tax credit of up to 20% of the interest you pay on your home loan over a calendar year, and is available in select states.  While this does not reduce your monthly payment, it is a dollar for dollar reduction in the amount of your Federal income tax liability.  In effect, you are lowering your home loan interest rate by a full percent.  The MCC program will remain in effect for as long as your home remains your primary residence and the original home loan remains in place.  Awareness Home Funding is a lender that does help our clients with this program.     […]

  3. Jordan Costaneda Says:

    Thanks for sharing, it’s all so pretty. I used google translator – can you enlighten me please?

  4. AwarenessHomeFunding Says:

    We would love to help Jordan. Where specifically can we provide you more information?

  5. First-time Home Buyers Still have Options « Awareness Home Funding's Blog Says:

    […] Mortgage Credit Certificate (MCC) program is a Federal tax credit on the mortgage interest you pay on your home loan over a calendar year.  […]

  6. Laura Morton Says:

    Thanks for this piece of information.
    If this is a Federal Tax why is it not available for all States?
    What part does the State play?
    As far as I am concerned, any program that will help the consumer is a blessing, and should be made available to all.

    • AwarenessHomeFunding Says:

      Hi Laura,
      We couldn’t agree more with this program being a blessing. While this is available to all, unfortunately not all (meaning states or even lenders) take full advantage of the program. We contacted MSHDA’s office to get their response.

      Q. We know that the MCC program is a Federal tax credit but is this funded by the State? Why don’t all states participate and why doesn’t the Federal government fund its own program?
      A. Funding originates from the Federal Government in the form of bond money from the Treasury. That is why we have to follow IRS regulations on our programs. The state(s) is/are allowed in some areas to set their own rules. All states have the option to participate in this program, many choose not to. When we (Michigan) fund the MCC program, we choose not to “issue bonds” for the Single Family Program (Michigan’s loan program). We then are allowed to use 20 cents on every dollar of bond money for the MCC program. (Michigan actually loses part of that bond money by doing the MCC program.) We also do not make any money on the MCC program (we break even on costs) like we do with our loan program. This is why many states opt not to do the program. When states run low on money, they always cut the programs that do not make money for them.

      Q. Does the state of Michigan keep reviewing each MCC after the commitment is issued?
      A. Once the MCC is issued, we do not continue to review for compliance. Once a borrower receives the MCC, it is good for the life of the original mortgage, as long as it remains their principal residence. The borrower and lender are required, however, to notify MSHDA if they sell or refinance the MCC-assisted home.

      Q. How does the Recapture Tax Reimbursement program fit into the administration costs?
      A. Michigan really hasn’t had any costs involved with the Recapture Reimbursement program. As far as we know, we have not received any reimbursement requests yet. Recapture only applies if a borrower sells their home within the first 9 years of ownership and realize a gain on their sale, and their income has increased substantially (going over the Federal limits that were in place when they purchased their home). (Recapture numbers are received at closing.) It is very rare when we see anyone pay recapture tax, normally because thier income has not exceeded the limits or, unfortunately today, they did not realize a gain on their sale. Several things have to take place for them to pay recapture tax.

      Q. How can a state run out of funds for this program? Is this what happened to the Michigan program in the past? Florida used to offer the MCC program, but has ended it due to lack of funds.
      A. We normally do not run out of funds. When Michigan shut down the MCC program a couple of years ago, it was due to an executive decision. In the past couple of years Michigan has also experienced not being able to sell our bonds because of lack of investors. No one was buying because of the housing crisis. MSHDA has other sources of funds to fill in gaps, but most are not as cost effective. The state of Michigan has a lot of Federal funded programs. Many programs are a mix of funding. As mentioned before, when states run low on money (like Florida for example), they always cut the programs that do not make money for them. The Federal government cannot fund everything.

      Laura, I think your other underlying question is why other lenders may not offer this program to their clients, even if their state does. Many lenders choose not to participate in the program since it requires extra work by the lender and loan officer with minimal financial benefit for themselves. This is just one more way that Awareness Home Funding is different.

      We recognize the huge benefit this program offers to borrowers and that is why we participate. The needs of our clients come first and that has never let us down. We don’t want a revolving door of faceless borrowers, but a relationship that allows our clients to feel comfortable referring their friends, relatives and co-workers.

      Hopefully we have answered your questions on this one. If your state does not participate in the program contact your senators and representatives and let them know your feelings.

  7. Not all Bones are Worth Barking at « Awareness Home Funding's Blog Says:

    […] The Home Buyers Tax Credit program was a good program that really worked, really helped buyers and really moved home sales.  This last extension just helps very few and was put into affect way too late.  But let’s not leave this post on a down note.  There is still a home buyer’s incentive program in place, one that has been there for some time – the Mortgage Credit Certificate (MCC) program. […]

  8. va mortgage lenders Says:

    This is really a wonderful blog, I discovered your web site researching google for a similar theme and came to this. I couldn’t get to much other data on this blog post, so it was pleasant to locate this one. I will be back again to check out some other posts that you have an additional time.

    • AwarenessHomeFunding Says:

      For as much attention as the Home Buyers Tax Credit program received, it is surprising that more focus is not given to the MCC program. We have been a long fan and let every client that can qualify know. The paperwork is not that complicated and it really benefits our clients. Thanks for visiting!

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  14. 4 Surprising Reasons to Buy Louisville Real Estate Now Says:

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  15. Jenna Says:

    I had no idea about the MCC when I bought my house 1 year ago. Is it too late to apply or can I still apply for this?

    • AwarenessHomeFunding Says:

      @Jenna – Unfortunately you cannot apply after the fact of your recent purchase. It is also unfortunate that many lenders do not use this program. It really is not that hard, just a few more pieces of paper.

  16. Michelle Says:

    I was just approved for the MCC in Illinois. I will get a $2,000 reduction in federal income tax liability. I have a question… I am closing on 7/5. Will I get the entire $2000 reduction? Or only half because I closed in July?


    • AwarenessHomeFunding Says:

      Hi Michelle,
      Thanks for your question. Let me start by saying that since we are not licensed in Illinois, we are not 100% up on how your state structures their MCC program. However, in the states we are licensed in, the MCC credit is a year-end reduction in the amount of interest you have paid over the previous calendar year. This would mean that you would only receive a credit for the portion of the year in which you paid interest. In your case, from July thru December. Again, check with your lender for the specifics of how this would apply to your loan.

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