If you're planning to purchase your first home, the Indiana Housing and Community Development Authority can help you put money back in your wallet or pocketbook with a Homeownership Tax Credit (also known as a federal MortgageCredit Certificate, or MCC).
Here's how the Homeownership Tax Credit works.
- You obtain a mortgage through a participating lender.
- In addition to your mortgage, you will receive a certificate that offers you a federal tax credit of up to $2,000 per year. A tax credit is more valuable than a tax deduction because it lowers your actual tax liability, rather than your taxable income.
- The size of your Homeownership Tax Credit will vary based upon your mortgage amount(see below). On a $90,000 loan, you will receive a credit of 25 percent of the interest that you pay. For example, if your mortgage's annual interest rate is 6 percent, you will pay $5,400 in interest during the first 12 months and will receive a Homeownership Tax Credit worth $1,350. This averages out to approximately $112 per month.
Mortgage Amount Tax Credit Rate
$50,000 or Less 35%
$50,001 - $70,000 30%
$70,001 - $90,000 25%
$90,000 and more 20%
- Income Limits have been raised this year and vary by county. In Kosciusko County the limits are $73,200 for 1 or 2 persons & $85,400 for 3+ persons.
This program was designed to provide the consumer with as much flexibility as possible, since it may be applied to all types of loans (fixed-rate, adjustable rate, conventional, FHA, VA, etc.). Federal law does not allow the mortgage credit certificate to be used in conjunction with a mortgage financed by IHCDA's low-interest 1st HomePlus. But, the mortgage credit certificate can be packaged with other competitive mortgage products, such as zero down payment USDA loans.
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