Mortgage Credit Certificate (MCC)
The Mortgage Credit Certificate Program was authorized by Congress in the 1984 Tax Reform Act as a means of providing housing assistance to families of low and moderate income. The Hawaii Housing Finance and Development Corporation (HHFDC) is an issuer of Mortgage Credit Certificates.
The Mortgage Credit Certificate (MCC) reduces the amount of federal income tax you pay, thus giving you more available income to qualify for a mortgage loan and assist you with mortgage payments. The MCC is available to home buyers who meet household income and home purchase price limits established for the MCC Program as well as federal eligibility regulations.
The MCC credit takes the mortgage interest you pay per year and gives you a credit for 20% of the annual interest. The remaining 80% can be taken as the normal tax deduction. The credit can also be used to help qualify for your mortgage as it can be quantified into a monthly amount and counted towards you income. (Please consult your loan originator and/or CPA for advice)
How Long Does the MCC Last?
The MCC will remain in effect for the life of your mortgage loan, so
long as the home remains your principal residence. The amount of
your annual mortgage credit will be calculated on the basis of 20%
of the total interest paid on your mortgage loan for that year.
What are the Requirements?
• The home you buy must be used as your principal residence
after you obtain your mortgage. If it stops being your principal
residence, your MCC will be automatically revoked and you will
no longer be entitled to claim the mortgage credit.
• You cannot have an ownership interest in a principal residence at
any time in the last three years.
• The mortgage loan must be a new loan. (Purchase, not refinance)
• The federal government considers the MCC tax credit to be a
subsidy. As such, you may be subject to federal “recapture tax”
if (1) you sell your home within nine years of purchase, (2) you
sell your home at a gain, and (3) your income increases above a
specified level. (The amount of income you are allowed to make increases each year in the first 9 years)
• A $25 Application Fee and a fee of $400 will be charged for the
processing of your MCC application. Loans must be closed within
90 days of issuance of a MCC Conditional Commitment.
* Consult with an mortgage loan originator at a participating lender to obtain the current MCC guidelines.