When buying a home in Washington, D.C. you should work with a lender familiar with Mortgage Credit Certificates (MCC’s) and who is participating in the MCC Program. A Mortgage Credit Certificate allows eligible borrowers to claim a Federal Tax Credit of 20% of the mortgage interest paid on the mortgage during each calendar year. The remaining 80 percent of the mortgage interest paid for that year may still be claimed as a tax deduction.
You can click here to get an overview of the program and to determine if you live in a targeted area. Some of the basics are listed below:
Borrower must be a first-time homebuyer. 3-year rule applies except for residences purchased in a Targeted Area or Veterans utilizing a one-time exception.
There are income limits
You must include all of your household income in the below maximum MCC income limits:
- Non-targeted* Area Family of 2 or less $132,360
- Non-targeted Area Family of 3 or more $154,420
- Targeted Area Family of 2 or less $132,360
- Targeted Area Family of 3 or more $154,420
Program is only available in certain areas
*A “targeted” area is identified as an area where 70 percent of the families who live there earn an income that is 80 percent or less than the statewide median income.
Income limits and maximum sales price will vary based upon household size and location of property. The sales price limits (single-family home only) are below:
- Non-targeted Area $585,713
- Targeted Area $715, 872
Property types allowed:
Single Family residences only (no 2-4 unit or co-ops). This includes detached homes, townhomes, and condominiums.
Lenders who have knowledge of this program and are an approved lender for the program are a big benefit to eligible homebuyers. You should also pick a lender that is well reviewed. Also look for someone who is responsive and is committed to providing you with lots of education and transparency.