*How Will an MCC Cert. Assist My Home Purchase?
Mortgage Credit Certificate Tax Credit Program (MCC)
The MCC Certifcate is a federal tax credit which can reduce potential federal income tax liability. This creates additional net spendable income which borrowers may use toward their monthly mortgage payment. Therefore this increases your purchasing power in the DTI ratio. So this MCC Tax Credit program may enable first-time home buyers to convert a portion of their annual mortgage interest into a direct dollar for dollar tax credit on their U.S. individual income tax returns.
U.S. citizen, permanent resident or other qualified alien
Must be firt-time homebuyer (have not owned a home in 3 years)
Meet credit, income and loan requirements of lender, insurer & CalHFA
Consequently the buyers must live in the home for the entire term of the loan or until the home is sold or refinanced
Exceptions: Home is located in a federally designated targeted area, Qualified veterans pursuant to the Heroes Earning Assistance and Relief Tax Act of 2008
The MCC certificate will raise your purchasing power if your DTI is tight. Give Sheryl Arndt a call to go over the details of this program.
Sales price of the home must be less than the allowable sales price limits
in the county purchase of the home
Five acre maximum size of the property
Single family residence (detached)
Condominium or attached unit PUD allowed
Property must meet the requirements of CalHFA, lender, mortgage insurer/guarantor
Also all properties having a guest house, “granny ” units, “in-law” quarters, and/or separate units containing kitchen facilities are not eligible
The CalHFA MCC Tax Credit program will be available in all areas where an MCC certificate is not currently available. This is done through a CalHFA partnering county at the time the loan is originated.
Documents needed to qualify = Pay stubs, bank statements, employment history, previous tax returns
*An MCC Certificate provides home buyers with a Federal Income Tax Credit based on a percentage of the mortgage interest paid each year.
*The Tax Credit is a dollar-for-dollar reduction against the home buyer’s Federal Tax liability and increases the borrowers purchasing power..
*The Tax Credit may also help Home buyers qualify for the initial purchase of the home. This is because it may be considered more ” qualifying income”.
*Also the MCC certificate is not limited to just First-Time Home buyers if the property purchased is in a “Targeted Area”.