Texas Mortgage Credit Program

I wanted to take a moment to highlight a program presented by the State of Texas Department of Housing and Community Affairs. It’s called the Texas Mortgage Credit Program. It’s a program that actually allows a tax credit in the amount of a certain percentage of the sales price. There are certain lenders that work with this program. Feel free to contact me if you have additional questions, but here I’ve highlighted some of the major information that you need to know to take advantage of this program!

What is a Mortgage Credit Certificate?
A Mortgage Credit Certificate allows the homebuyer to claim a tax credit for some portion of the mortgage interest paid per year. It is a dollar for dollar reduction against their federal tax liability.

Who is eligible to receive an MCC?
The program is open to those individuals and families who:

  • meet income and home purchase requirements;
  • have not owned a home as primary residence in the past three (3) years;
  • meet the qualifying requirements of the mortgage loan;
  • will use the home as their principal/primary residence.

How much of a tax credit can be issued under the MCC program?
The size of the annual tax credit will be 30% of the annual interest paid on the mortgage loan. However, the maximum amount of the tax credit shall not exceed $2,000 per year. The credit cannot be larger than the annual federal income tax liability, after all other credits and deductions have been taken into account. MCC credits in excess of the current year tax liability may, however, be carried forward for use in the subsequent three years.

MCC Program Criteria / Requirements:
All mortgage loan types are eligible. The mortgage loan, available through a network of participating lenders, must be underwritten according to FHA, VA, USDA/RHS or conventional loan criteria and will be at prevailing market rates. New and existing single family homes, townhouses, condominiums and manufactured housing (with certain restrictions) are eligible properties. Purchase price and income limits, adjusted by household size apply. The homebuyer must also occupy the property as their principal residence.

For more information, please visit http://www.tdhca.state.tx.us/homeownership/fthb/mort_cred_certificate.htm.