What’s MCC Financing?
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Because states have better credit than people, they can borrow money at low rates. Under Mortgage Credit Certificate (MCC) programs, a state lends money to first-time buyers and low-income buyers (usually) at below-market rates (but at rates which cover the interest cost of floating bond issues) and with little down (say 1 to 5 percent).
MCCs allow you to borrow money and to then write off a portion of the interest, up to 20 percent, as a tax credit. The remaining interest deduction is just a write off.
For example, suppose your interest cost for a year is $5,000 and that 20 percent can be used as a tax credit. On your federal taxes, you would deduct $4,000 as an itemized expense, and you would deduct $1,000 (20 percent of $5,000) from your tax bill. See a tax pro for details.
Speak with local lenders to see if MCC financing is now available — because funding is limited these programs often run out of money quickly.
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