The Mortgage Credit Certificate is the tax credit that keeps on giving! Unlike the First Time Home Buyer Tax Credit (www.federalhousingtaxcredit.com), MCC is a Federal Tax Credit that moderate income families can access year after year!

It is offered in most states, but each state operates the credit a little differently. From 1984 until 2007 the MCC was operated by MSHDA (Michigan State Housing Development Authority) in Michigan.

I am excited to announce that MSHDA is rolling out the MCC in Michigan again effective July 13th, 2009!

The MCC is combined with FHA, Conventional, RD, or VA Financing. It is operated by MSHDA in Michigan.

Here's how it works. The MCC is a 20% credit of the interest you pay. The borrower can take the credit every year in one lump sum at tax refund time OR they can take the credit in their monthly paychecks. So, it's like getting a raise once you buy!

Example: $100,000 mortgage X 5.5%= $5,500 in interest. $5,500 X 20% = $1,100 annual tax credit! Taken monthly, this reduces the effective house payment by $91.67 per month.

The MCC also helps borrowers qualify for more. In the example above, the reduction in payment would allow a borrower to qualify for $16,000 more in a home!

There are income limits, but the income limits are broad. For example, in Kent County in Grand Rapids a family can make up to $74,750 and purchase a home with a price up to $224,250. In Kent County in Wyoming, a family of 1-2 can make up to $63,800 or a family of 3 or more can make up to $73,370. In most other Kent County areas a family of 1-2 can make up to $63,800 and a family of 3 or more can make up to $65,000 with a price up to $195,000.

There are times that the tax credit does not work well because unlike the Earned Income Credit and the First Time Homebuyer Tax Credit, it is not considered "refundable". This means a borrower must have a true tax liability to get the money back.

I always recommend you seek professional tax advice, but I am happy to analyze tax returns to see if this will be a good fit for you or your borrower!

To learn more about the MCC, give me a call at (616) 719-4513!