The First Time Homebuyer Federal Tax Credit / Mortgage Credit Certificate (MCC) Program is a dollar-for dollar tax credit for first time, low income homebuyers. The certificate is issued by ADFA and allows qualifying, taxpaying homebuyers to claim a tax credit up to 50 percent of the mortgage interest paid per year, capped at $2,000 annually.

How do I qualify for an MCC?

  1. Must be a first time homebuyer
  2. Household income cannot exceed maximum limits. For income limits click here.
  3. Purchase Price of home not above $250,000.
  4. Home must be the primary residence.
  • An MCC is not part of the financing package to purchase a home. It is an incentive for a first time homebuyer to purchase a home.

  • Eligible types of loans: fixed rate and fully amortizing loans.

  • Ineligible to be used with a "HomeToOwn" (Tax-Exempt Mortgage Revenue Bond and or Mortgage Backed Securities Program)

  • 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 the credit.

  •  To take immediate advantage of the MCC tax credit, the borrower may go to their employer and adjust their Form W-4 to reflect the anticipated amount of the credit. That will lower the borrowers federal tax withholdings and increase the monthly take home pay.

  •  “Recapture Tax” may apply if the borrower sells the house within the first nine years. We estimate that about 96% of borrowers will not be subject to “recapture tax."   

    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 the benefits of an MCC.

Single Family Staff available to assist you: