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Get Your MCC

Posted on March 11, 2014 by Ray Williams (NMLS #216267).

Have your heard of the MCC? The Mortgage Credit Certificate. If you haven’t and you are a first time home buyer or a Veteran you need to learn about it.

This tax credit gives you the opportunity to put more money in your pocket. Literally.

Here is an example of how:
Loan = $270,000
Rate = 4.00%
Annual Mortgage Interest = $10,800
20% MCC of annual mortgage interest ($10,800) = $2,160

So with the MCC you would get the tax credit and also tax deductible interest on the remaining interest. Without the MCC you will have $10,800 tax deductible interest. Now let’s say if you were in the 18% tax bracket it would work like this:

W/O MCC
$10,800 x .18 = $1,944 (tax benefit from mortgage interest)

W/ MCC
20% MCC (10,800) = $2,160
$8,640 (remaining interest) @ 18% Tax Bracket = $1,555
Annual Total Tax Benefit w/MCC = $3,715

Consult your tax adviser , we are not able to give tax advice.

Now this is just an example, of course, amounts will vary depending on your loan amount and interest rate, also on the MCC rate (which can vary depending on provider and county). This is something you need to discuss with your lender and your lender has to be approved to provide the MCC.

There have been recent changes in the application fee for the MCC with CHFA. Again, please discuss with your lender for all the details.

If you have any questions please do not hesitate to contact us. We are always happy to help.

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