Depending on your annual income, you may be qualified for a mortgage interest credit. Mortgage interest credit is a mortgage assistance program that allows home buyers to claim a dollar-for-dollar tax credit. This tax credit can be up to $2,000 for a portion of their mortgage interest.

Up Next: What Is Discretionary Income?

To get their tax credits, is it the borrower’s responsibility to fill out and submit the correct form to the IRS each year. The Mortgage Credit Certificate Tax Credit will vary considerably depending on the MCC Program, state, county, or city and the amount of the homebuyer’s loan, their interest rate and the term of the loan.

If you are a first-time homebuyer interested in mortgage interest credit, here is what you need to know:

Designed To Help Lower- To Moderate-Income Earners

Mortgage Interest CreditMortgage interest credit is designed to help lower- to moderate-income earners make their monthly payments more affordable for as long as they own the home. Borrower criteria include:

  • Income & sales price limits, which vary by state
  • Must be a first-time homebuyer
  • Must use the home as the primary residence
  • Must take homeownership education courses, which vary by state

If a borrower is not a first-time homebuyer, they may still be able to qualify if they purchased in an area designated economically distressed.

You Will Need A Mortgage Credit Certificate

A mortgage credit certificate is needed to gain mortgage interest credit. This certificate is issued with the originating lender after the purchase contract has been signed but before the time of closing. When done beforehand, it may help borrowers get approved since their tax liability has been lowered.

When applying for a mortgage credit certificate, borrowers will have to pay a non-refundable fee.

Mortgage Interest Credit Programs Are State & Local Issued

These programs are issued by state and local Housing Financing Agencies (HFA). Since each program varies by state, borrowers need to research the program in the state in which they wish to purchase a property. Work closely with a trusted lender to understand the program and its requirements.


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The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.