Mortgage Credit Certificates (MCC)

Written By
Paul Tracy
Updated November 4, 2020

What are Mortgage Credit Certificates (MCC)?

Mortgage credit certificates (MCC) are issued by state or local governments and allow some taxpayers to receive a tax credit for the interest paid on a mortgage.

How Do Mortgage Credit Certificates (MCC) Work?

A borrower pays a specific amount of interest over the course of a mortgage. Some of this interest may be tax deductible provided that buyer meets certain income requirements. In addition, some borrowers may qualify for MCCs if they meets certain conditions pertaining to previous homeownership, income, purchase price and whether or not the home is the primary residence.

The broker or lender sometimes considers the estimated tax credit amount as "additional income" in order to help them qualify for the mortgage. For example, let's say a borrower paid $800 in interest during a given year and qualifies for a 30% mortgage credit certificate. Because of the credit, the borrower will pay taxes on less of his income ($800 x 30% = $240). This $240 savings can be considered extra income when qualifying for a loan.

Why Do Mortgage Credit Certificates (MCC) Matter?

Mortgage credit certificates are issued as part of state-run initiatives meant to promote more affordable homeownership. The mortgage credit certificates reduce taxes for first-time buyers and help bring them closer to qualifying for a mortgage. However, there are some instances where state or local governments allow additional homebuyers to qualify for MCCs who would not otherwise given the opportunity. This is usually in cases of natural disasters where the government wants to stimulate redevelopment as quickly as possible.

Activate your free account to unlock our most valuable savings and money-making tips
  • 100% FREE
  • Exclusive money-making tips before we post them to the live site
  • Weekly insights and analysis from our financial experts
  • Free Report - 25 Ways to Save Hundreds on Your Monthly Expenses
  • Free Report - Eliminate Credit Card Debt with these 10 Simple Tricks
Ask an Expert
All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Mortgage Credit Certificates (MCC).
Be the first to ask a question

If you have a question about Mortgage Credit Certificates (MCC), then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

If you have a question about Mortgage Credit Certificates (MCC), then please ask Paul.

Ask a question Read more from Paul
Paul Tracy - profile
Ask an Expert about Mortgage Credit Certificates (MCC)

By submitting this form you agree with our Privacy Policy

Don't Know a Financial Term?
Search our library of 4,000+ terms