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Mortgage Credit Certificate: A Tax Break and a Helping Hand for Low-Income Homebuyers

A mortgage credit certificate (MCC) is a tax credit for first-time homebuyers that is typically worth around $2,000. Here's how to get one.

May 25, 2022
May 25, 2022
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Buying a house is a big expense. But for some first-time homebuyers, there’s light at the end of the tunnel. It comes in the form of a mortgage credit certificate (MCCs), a tax credit typically worth $2,000 that can be applied to your tax return each year.

MCCs are an income-based benefit that not only gives you a break on your tax bill but may also be used toward qualifying for a mortgage.

What's in this Article?

What is a mortgage credit certificate?
How does a mortgage credit certificate work?
Frequently asked questions
Key takeaways

What is a mortgage credit certificate?

A mortgage credit certificate (MCC) is a tax credit first-time homebuyers can use to lower their annual taxes. Offered by state and county housing finance agencies (HFAs), most MCCs award homebuyers up to $2,000, though amounts may vary.

You can use your MCC tax credit every year that you own the home and live in it as your primary residence.

An MCC can also help you qualify for a home loan or get preapproved* for a higher loan amount. Your lender can use the amount of your MCC toward your qualifying income, which can help low-income homebuyers reach the required debt-to-income ratio (DTI)** of their loan program.

If your state or county HFA allows, you may be able to use the MCC toward your qualifying income and as an annual tax credit.

So, if you qualify for a $2,000 MCC, your lender could apply $166 a month toward your qualifying income ($2,000 divided by 12 months). And you would be able to claim the tax credit each year as well, lowering your income tax bill by $2,000 annually.

How does a mortgage credit certificate work?

Each mortgage credit certificate program works a little differently based on the housing finance agency that offers it. Here are some basic eligibility guidelines and processes you should be aware of.


First-time homebuyers may be eligible for a mortgage credit certificate. That includes those who have never owned a home and those who have not owned a home in the past three years.

Eligibility depends on the MCC programs offered where you live.

HFAs in most states offer at least one MCC program, though not all states do. And you must meet the income and purchase price limits set by the HFA overseeing the MCC program.

Each HFA has its own rules about how the MCC may be used as well. Some allow you to use the MCC as a tax credit and toward your qualifying income, while others only allow you to use it as a tax credit.

And some HFAs have restrictions on the types of loans with which an MCC may be used. Some allow an MCC to be used with any type of mortgage loan. Others state they can only be used in combination with the HFA’s mortgage offerings. And others don’t allow you to combine MCCs with HFA loans or assistance at all.

You cannot apply for an MCC after you’ve closed on your home. You must request the MCC prior to closing.

If you own the home for several months and then put in the request, it will be denied because you’re already a homeowner. MCCs are for first-time homebuyers only.

You can research MCCs and eligibility guidelines before you get preapproved for a loan, but you can also ask your lender whether they know of any programs in your state or county.

You can find a list of state housing finance agencies here.

Work with your lender

Typically, you do not need to deal with the HFAs as the homebuyer. Your lender will put in a request with the HFA on your behalf, and you will sign the necessary documents at your loan closing. After you close, the HFA will send out an MCC package to you.

File the MCC with your annual tax return

Keep in mind that the HFA will not help you file the MCC as part of your tax return. You must provide your tax preparer with the necessary documentation each year in order to claim the credit.

Do you get a mortgage credit certificate every year?

You are eligible for the mortgage credit tax every year as long as the home is still your primary residence. If you rent out the home and buy another property, you will no longer be eligible for the credit.

If you refinance your mortgage, you may be able to get your MCC reissued, though it depends on where you live. Some HFAs will reissue MCCs after a refinance, while others only apply it to your original mortgage loan.

Mortgage credit certificate FAQs

Do I lose my MCC if I refinance?

It depends on the housing finance agency that issued the MCC. Some will reissue the MCC after you refinance, while others will only give MCCs when you close on your original mortgage.

How long does a mortgage credit certificate last?

You can use your mortgage credit certificate every year that you own the home and live in it as your primary residence. In some cases, you need to retain the original loan.

How does an MCC work?

Mortgage credit certificates are tax credits that can be applied to your federal income tax return, reducing your tax bill each year. Some housing finance agencies allow lenders to apply the MCC to your qualifying income for a mortgage as well, which can help you get approved or increase the amount you’re able to borrow.

The bottom line

Mortgage credit certificates can put homeownership within reach for low-income, first-time homebuyers. MCCs also give them a break come tax time – and who couldn’t use the extra cash, especially those first few years in a new home?

You can look up your state housing finance agency to find out about MCCs in your area, or your lender can tell you what’s available and whether you qualify.

Key Takeaways

  • Mortgage credit certificates may provide low-income homebuyers with a $2,000 annual tax credit
  • Mortgage credit certificates may also be used toward a homebuyer’s qualifying income, depending on their local MCC program
  • You can use the MCC tax credit every year as long as you own the home and it is your primary residence

This article does not constitute tax advice. Please consult a tax advisor regarding your specific situation.*Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal. **Debt-to-income (DTI) ratio is monthly debt/expenses divided by gross monthly income.

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