What is it?
A Pennsylvania Housing Mortgage Credit Certificate (MCC) allows a homebuyer to claim a tax credit for 50% of the mortgage interest paid per year, capped at $2,000 annually. It is a dollar-for-dollar reduction against your federal tax liability. In other words, you may get up to 50% of the interest you paid back—in the form of a tax credit.
Who is Eligible?
This program is open to individuals and families who:
- Are first time homebuyers (have not owned their primary residence within the past three years);
- First time homebuyer requirement is waived for eligible veterans.
- Meet income and home purchase price limits;
- Meet the qualifying requirements of a PHFA mortgage loan;
- Will use the home as their primary residence.
Does it expire?
The MCC will expire if the home is sold or is no longer used as your primary residence. That means a tax credit for the life of the loan as long as you pay your mortgage and occupy the home. If the loan is refinanced, the Mortgage Credit Certificate may be able to be reissued with the approval of the PHFA.
How much of a tax credit can be claimed?
The size of your annual tax credit will be 50% of the annual interest you paid on the mortgage loan (up to a max of $2,000). The credit cannot be larger that your federal income tax liability, after all other credits and deductions have been taken into account. In other words, you will be able to take up to 50% of the interest you paid as an MCC credit and the balance as a standard deduction on schedule A of your tax return.
$120,000 (mortgage amount)
x 4.5% (mortgage interest rate)
x 50% (MCC percentage)
= $2,700 (capped annually at $2,000 maximum eligible tax credit amount)
Is there a fee to get an MCC?
No. PHFA will issue the certificate and administer it for the life of the loan at no additional cost to you.
How to Apply?
Visit a PHFA/MCC Participating lender to see if you qualify for a PHFA mortgage and the MCC program.
Tom Corbett, Governor • Brian A. Hudson Sr, PHFA Executive Director