Definition
MCC (Mortgage Credit Certificate) is a federal tax credit allowing first-time homebuyers to claim a portion of mortgage interest paid as a tax credit annually. A typical MCC provides $2,000+ annually in tax relief through an HFA program.
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MCCs are federal tax credits available to first-time homebuyers through state HFAs. A typical MCC allows 15-20% of mortgage interest paid to be claimed as a tax credit annually, reducing federal income tax owed. MCCs are particularly valuable for borrowers with higher incomes and larger mortgages. To qualify, borrowers typically must be first-time buyers, meet income limits, and purchase a home within specified price limits. MCCs must be used with HFA mortgages, and have limited availability due to federal caps. An MCC worth $2,000 annually reduces federal tax liability by $2,000.
Pro Tip
MCCs are often underutilized; if available through your state HFA, they provide valuable annual tax savings alongside mortgage interest deduction.
Example
A first-time buyer receives an MCC allowing her to claim $2,000 annually from mortgage interest; this reduces her federal tax liability by $2,000 each year.