What’s a mortgage credit certificate?

One of the program's with Minnesota Housing is a mortgage credit certificate.  This allows the homeowner to get a mortgage tax credit on your tax return.  For some people it may save you money every year.

How does it work? MN Housing's program will allow you to buy a home and get a MCC (Mortgage Credit Certificate) for a tax break.  The program allows you to claim 35% of the mortgage interest you pay each year as a federal income tax credit, saving you up to $2000/year.  To be eligible you must be a first time home buyer, qualify for a home mortgage, meet the income guidelines and have a federal tax liability.

You can save money with a MCC.  For example, if you have a $175,000 mortgage at 4.375% interest, you may be able to save up to $44,000 over the life of your mortgage.  If you do not have any federal tax liability, you will not save any money.  You can use the MCC for up to 30 years, or until you sell your home, move or refinance.  If you refinance, you may be able to have the MCC reissued if the new mortgage will qualify.

With a MCC, you can use the money you save to help you qualify for a new home.  If you are saving $2000/year, we would increase your income by a monthly amount of about $166 (depending on your tax credit) to help you qualify for a home.  If you don't need the extra money to qualify, it is still an extra tax benefit.  

If you have a small mortgage, an MCC help.  For some, the interest you pay may not be enough to allow you to itemize your taxes and the MCC will still allow you to get an interest credit.  You can still using the remaining interest you pay as a deduction if you itemize on your taxes.

If you have questions on this or if you are not sure if it will save you  money, you may want to consult your CPA.  They will be able to give you more information on the program and how much money it would save you.  There is also information available on MN Housing's website.  Their website is www.mnhousing.gov. This program may help you qualify for the home you want!

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants, Inc, An Equal Housing Lender, NMLS#150953 - Email - Website


Written By

Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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