A mortgage credit certificate in the United States (better known as the MCC) is a certification granted by certain state or municipal government that allows a tax payer to request a credit for part of the mortgage interest earned during a particular year. MCC was developed to help first-time buyers compensate part of their mortgage interest on a new mortgage to help self-buyers qualifying for a mortgage.
Since it is a taxpayer credit and not a taxpayer withholding, mortgage providers often use the estimate amount of the credit on a per-month base as extra revenue to help the prospective lender qualifying for the credit. In general, home buyers wishing to receive an MCC must comply with certain requirements:
MCC credit can be used with conventional/conforming, FHA, USDA and VA home credit. This credit can help a home buyer qualifying for a small "bigger" (more expensive) home. Whilst all home owners can deduct a detailed mortgage interest rate amount, you can go one better with an MCC. As an MCC your income duty is reduced, dollars by dollars, by a percent of the mortgage interest you are paying.
Amount of mortgage credit permitted may vary by state or district issuing the certificate, but is limited to a limit of $2000 per year if your state's interest rates are above 20%, by the IRS. For example, if a home buyer would get an MCC offering a 30% credit on a $200,000 Loan for 30 years at an interest of 6%, the permissible income credit would be calculated as follows (all numbers rounded):
In this example, since the overall loan amount in this example is greater than the IRS $2000 credit line limitation, the home purchaser would specify a loan amount of $2000 in his income statement. Purchasers can still obtain a credit as long as they are living in the home and keep the mortgage.