An MCC can be obtained with a variety of First Mortgage Loans, including Conventional, FHA, VA and USDA loans, and coupled with Affordable Housing Programs such as the GSFA Down Payment Assistance Programs. A GSFA MCC Lender will help the homebuyer apply for the MCC at the same time he/she applies for a First Mortgage Loan.
An MCC allows a homeowner to get back a substantial portion of the mortgage interest paid every year.
For the GSFA MCC Program, 20% of the annual mortgage interest paid can be taken as a tax credit. The remaining 80% of mortgage interest paid can still be taken as an itemized tax deduction1.
In general, one must be a First-time Homebuyer to qualify for an MCC. However, there are exceptions, such as if the borrower is a qualified veteran or the home being purchased is located in a federally designated "Targeted Area".
The tax credit can be taken every year, so long as the home remains the borrower's principal residence and they pay interest on the First Mortgage Loan.
In addition, if the homeowner refinances, he/she can apply for a re-issuance of the MCC certificate (RMCC) to continue to file for the annual tax credit for the remaining term of the original purchase loan.
An MCC can help the homebuyer qualify for the initial First Mortgage Loan and may also increase the homebuyer's purchasing power.
Depending on the First Mortgage Loan type, the estimated tax credit can impact "available income", debt-to-income ratio or other eligibility factors. Homebuyers are encouraged to discuss this further with a GSFA MCC Lender.
(1) Program highlights only. Certain restrictions apply on all programs. See a GSFA MCC Lender for complete program guidelines and/or to apply for a GSFA MCC. Homebuyers are also encouraged to consult with a tax advisor regarding the impact of an MCC on their individual tax liability.
(2) First-time Homebuyer is defined as someone who has not owned a primary residence in at least three years. The First-time Homebuyer requirement for the GSFA MCC Program is waived if the homebuyer is purchasing in specific areas called "Targeted Areas" or if he/she is a qualified U.S. veteran.