More than 4000 moderate-income North Carolinians will be able to buy their first home as the result of the North Carolina Housing Finance Agency's new Mortgage Credit Certificate (MCC) program.
Mortgage Credit Certificates reduce the amount of federal income tax that qualified homebuyers pay by providing a dollar-for dollar reduction of tax liability. For example,
eligible homebuyers whose qualifying housing debt-to-income ratio is 28% or less for conventional loans (38% or less for FHA loans) will receive a federal income tax credit equal to 15% of the mortgage interest that they have paid, and the remaining 85% of their mortgage interest continues to qualify as an itemized tax deduction. A 25% tax credit is also available for homebuyers with higher debt-to-income ratios.
To qualify, a borrower must be a first-time homebuyer or not have owned a home as a principal residence during the past three years. The MCC Program also sets limits on household assets according to the borrower's age, and borrowers must not exceed certain household income and home price limits which vary on a county-by-county basis.
MCCs are available with conventional fixed-rate loans, adjustable rate loans, FHA-insured loans, VA-guaranteed loans and privately insured loans through 372 lending institutions statewide. A 5275 nonrefundable processing fee is charged for an MCC, but it can be paid by any party in the mortgage transaction.
A brochure giving complete information about the MCC Program can be obtained by writing NCHFA, PO. Box 28066, Raleigh, NC 27611.