What are mortgage credit certificates?

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A mortgage credit certificate, or MCC, makes it easier for eligible buyers to qualify for a mortgage loan. Offered by many city and county governments, they allow first-time buyers to take advantage of a special federal income tax write-off.

Under MCC programs, the lender can reduce the housing expense ratio – the percentage of gross monthly income applied toward housing expenses – by the amount of the tax savings. Normally, lenders reject loans if the housing expense ratio is too high.

Program requirements for MCCs vary, although most adhere to the following guidelines:

The buyer must live in the home being purchased with an MCC-assisted mortgage.

Total household income cannot exceed certain limits.

The buyer cannot have owned a principal residence within the past three years. This restriction may be waived if a property is purchased within a certain targeted area.

The purchase price must fall within an established limit.

More information is available by calling your local housing or redevelopment agency, or contacting your real estate agent.