The Mortgage Credit Certificate Program allows qualifying first-time homeowners to claim a federal tax credit of up to 20 percent of their annual mortgage interest paid. Pretty neat!
Following is the reprint of the information provided by the Washington State Housing Finance Commission:
Federal Income Tax Credit for Homebuyers
MCCs are not mortgages… they are tax credits that put extra cash in your pocket each month, so that you can more easily afford a house payment, which means fewer tax dollars will be withheld from your regular paycheck, increasing your take-home pay.
How do I apply?
Applications are accepted on a first-come, first-served basis by a statewide network of lenders. Your lender will establish all underwriting criteria, including interest rate, down payment requirement, term, fees, points, and closing costs. Your lender will submit your loan application and notify you as to whether your application is accepted. It is strongly recommended that you contact a tax professional before applying for an MCC in order to determine the potential benefits an MCC may provide for your specific tax situation.
Who are the Participating Lenders?
Bank of America | Cobalt Mortgage | Cornerstone Mortgage Company | Eagle Home Mortgage | Evergreen Home Loans | First Rate Mortgage | Golf Savings Bank | Guild Mortgage | HomeStreet Bank | Integra Pacific Mortgage | Metlife Home Loans | Mortgage Advisory Group | Prime Lending | Seattle Metropolitan Credit Union | Sierra Pacific Mortgage | Wallick & Volk | Wells Fargo Home Mortgage
What are the loan types?
MCCs are available with fixed or adjustable rate conventional conforming (i.e., Fannie Mae or Freddie Mac saleable), FHA, VA, Rural Development mortgages. The Commission’s House Key State Bond Program is not available for use with the MCC Program.
What are the fees?
The nonrefundable MCC fee is $650 and it is collected at the time of loan closing.
What are the program guidelines?
As with any program, there are qualifying rules and regulations. MCC eligibility requirements include:
New Loans Only
The MCC is available with new purchase loans only. Refinances are not accepted, unless you are replacing some type of short-term bridge financing with a term of 24 months or less.
Income Limits
Borrowers must not exceed these Maximum Annual Income Limits:
| County | Non-Targeted 1-2 Persons |
Non-Targeted 3+ Persons |
Targeted 1-2 Persons |
Targeted 3+ Persons |
| Island | $75,000 | $87,000 | $90,000 | $95,000 |
| Pierce/San Juan | $75,000 | $87,000 | $75,000 | $87,000 |
| King/Snohomish | $90,000 | $97,000 | $90,000 | $97,000 |
| All other counties | $65,000 | $75,000 | $75,000 | $75,000 |
Acquisition Cost Limits
Borrowers must meet these property acquisition cost limits. Acquisition cost limits of a single-family residence must not exceed the following:
| COUNTY | Non-Targeted | Targeted |
| Clark/Island | $330,000 | $360,000 |
| Jefferson/Pierce/Snohomish | $370,000 | $395,000 |
| King/San Juan | $450,000 | $475,000 |
| Kitsap/Whatcom | $300,000 | $335,000 |
| Skagit | $285,000 | n/a |
| All Other Counties | $235,000 | $285,000 |
Eligible Properties
Single-family existing homes, new construction, manufactured homes (permanently) affixed or on leased land), and homes located on Native American trust land, located in both Targeted Areas and Non-Targeted Areas. Check the Commission’s website Targeted Areas page to see if the property is in a Targeted Area. Note: Not all counties have Targeted Areas.
Business Use Limits
No more than 15% of the residence may be used for trade or business purposes.
Owner Occupancy
The MCC is valid for the life of the loan, so long as you remain the owner-occupant of the residence.
Homebuyer Education
You must complete a Commission sponsored homebuyer education course providing you with the steps to buying your home.
Recapture Tax
A recapture tax may apply only in the event that – you sell your home in the first nine years,
and – your income has increased significantly, and – you have a substantial gain on the sale.
IRS Form 8828 explains how the tax is calculated.
What happens if I refinance my loan? What happens to my current MCC?
If you refinance your property, the MCC may be reissued if completed within one year of refinance and if you qualify under the program guidelines. The amount on the reissued MCC cannot exceed the outstanding balance of the mortgage prior to refinancing and the certificate credit rate cannot exceed the certificate credit rate specified in the existing certificate. Further restriction apply.
A $375.00 non-refundable application fee must be included in a reissuance request.
If you have questions about the Mortgage Credit Certificate (MCC) Program, please email the Brooks & Heinze Team at info@propertyinseattle.com or email the Washington State Housing Finance Commission at askusHO@wshfc.org.
Kerstin G. Brooks
Brooks & Heinze Team
Cell: 206.276.5827
Email: kerstinbrooks@earthlink.net
Kerstin G. Brooks, Broker 