The Arkansas Development Finance Authority created its Mortgage Credit Certificate Progam for the residents of Arkansas, to help make homeownership of new and existing homes more affordable for individuals and families with low to moderate income, especially first-time homebuyers.

The ADFA MCC is "FREE" to qualified applicants using one of ADFA's first mortgage loan products.

What is an MCC?

It is a dollar-for-dollar tax credit for first-time, low-to-moderate income homebuyers. The certificate is issued by ADFA  and allows qualifying, taxpaying homebuyers to claim a tax credit of up to 50 percent of the mortgage interest paid per year, capped at $2,000 annually. The credit may be claimed for the life of the loan as long as the home is their primary residence.  

How do I qualify for an MCC?

  1. Must be applied for prior to closing your home loan.
  2. Must be a first-time homebuyer, a veteran or veteran's spouse, or purchasing a home in a targeted county.
  3. Household income cannot exceed maximum limits. For income limits click here.
  4. Purchase price of a home cannot exceed $250,000
  5. Home must be the primary residence.
  6. Must use an ADFA approved lender.  Click here for a list of participating lenders.

ADFA MCC is not part of the financing package to purchase a home.  It is an incentive for first-time homebuyers to help them purchase a home.

Eligible types of loans:

When using an ADFA MCC with a participating lender's first mortgage product, an issuance fee of .5% of the loan amount will be charged.

All loans using an ADFA MCC must be fixed rate and fully amortizing.

The borrower claims the credit when they file their Form 1040 tax return annually.  They may itemize deductions and use Form 8396 "Mortgage Interest Credit" to claim credit.

The borrower can receive immediate benefit from the MCC Program by going to their employer and filing a revised W-4 Federal Tax Withholding Form to increase their exemptions.  This will reduce the Federal tax withholdings and increase the borrower's monthly take-home pay.

Sample MCC Calculation:

Note:  We recommend that borrowers seek the advice of a qualified tax preparer when deciding whether or not to take advantage of an MCC.

"Recapture Tax" may apply if the borrower sells the house within the first 9 years.  We estimate 96% of borrowers will not be subject to "recapture tax".

Single Family Staff available to assist you:

Dean Norman - Single Family Loan Underwriter - 501-682-5935
Virginia Wright - Single Family Loan Underwriter - 501-682-5923 
Denise Wells - Assistant Single Family Program Manager - 501-682-5466
Derrick Rose - Public Information and Outreach - 501-682-5904
Andrew Branch, VP of Housing - 501-682-5860  

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