Mortgage Credit Certificate

The North Carolina Housing Finance Agency has two great programs for First Time Home Buyers.These programs are the Mortgage Credit Certificate and the Down Payment Assistance Program.

If you qualify for one of these programs and you purchase a home between January 1, 2009 and December 1, 2009, you can ALSO qualify for the $8,000 tax credit just enacted into law in the Federal Economic Stimulus Plan.See my related blog post on the tax credit.

First, who is a First Time Home Buyer?A First Time Home Buyer is someone who has not owned a home in the past three years.This is the same qualifying definition for the $8,000 tax credit.

What is a Mortgage Credit Certificate and Who Qualifies?

A Mortgage Credit Certificate (MCC) is a federal tax credit to assist home buyers with moderate and low incomes.All home owners can claim an itemized deduction for mortgage interest.The MCC takes this a step further. An MCC “reduces your tax liability based on a percentage of the mortgage interest that you pay.

If you qualify for the MCC, you can claim 20% of the interest you pay on your mortgage as a credit on your federal income taxes.You can save up to $2,000 on your taxes.

If you do qualify for the MCC, for 2009, you will be able to combine this with the $8,000 tax credit.This would reduce a buyer’s tax liability by $10,000.

Who Qualifies for an MCC?

Who qualifies for an MCC is based on your income and the price of the home you are purchasing.Household income is defined as the “gross income of the mortgagor and any other person expected to live in the residence who is 18 years of age or older.”

The income and house price limits that apply in Orange, Durham and Chatham Counties are listed below.

MCC Income Limits

1 Person

$61,500

2 Persons

$61,500

3 Persons

$70,500

4 Persons

$70,500

MCC Sales Price Limits

New Home

$220,000

Existing Home

$210,000

Who Qualifies for Down Payment Assistance?

Home buyers that need help with their down payment and closing costs might be able to get down payment assistance – or, in other words, interest-free, deferred second mortgages up to $8,000.The buyer only has to pay $1,000 of their own funds and the load would pay up to $8,000 of the remaining balance.

This program has stricter income limits than the MCC program outlined above.Like the MCC program, it can be used in conjunction with the new $8,000 tax credit on home purchases between January 1, 2009 and December 1, 2009.The down payment assistance, however, can not be used in conjunction with the MCC.This is an either or situation.

The income and house price limits that apply in Orange, Durham and Chatham Counties are listed below.

Down Payment Assistance Income Limits

1 Person

$39,950

2 Persons

$45,650

3 Persons

$51,350

4 Persons

$57,050

Down Payment Assistance Sales Price Limits

New Home

$210,000

Existing Home

$210,000