A version of this post originally appeared on cruvita.com.
Summer is typically one of the busiest homebuying seasons across the United States, and sales of both new and existing homes have been on a rollercoaster ride for the past few months.
First-time homebuyers face a number of challenges and one of the primary issues is affordability. However, there are a number of unique programs that can help save first-time buyers money. If you’re a first-time homebuyer searching for a new home and wanting to save money, there’s a federal tax credit program that could work for you!
Mortgage Credit Certificates, known commonly as MCCs, are available in many states throughout the country. Through the MCC program, eligible first-time homebuyers can save thousands of dollars by reducing the amount they owe on their federal income tax.
MCCs are typically administered by a state’s housing/development agency, such as the Virginia Housing Development Authority, a self-supporting, not-for-profit organization created by the Commonwealth of Virginia in 1972 to help Virginians attain quality, affordable housing.
You could save thousands:
If you’re eligible, an MCC could reduce the amount of federal income tax you owe, every year that you live in your house! Unlike an income tax deduction, an MCC is a dollar-for-dollar credit against your federal income tax liability.
How an MCC could save you money:•The amount of the credit can vary by state and in Virginia it is equal to 20% of your annual mortgage interest.
•The amount of the remaining deduction also varies by state. In Virginia, the remaining 80% can still be taken as a deduction.
•An MCC is good for the life of your mortgage, for as long as you live in your home.
How to apply for an MCC:
Be sure to ask your lender or Realtor about an MCC when you first apply for your mortgage. You can also contact your state’s housing/development agency to inquire about an MCC. In Virginia, for example, you can find an approved MCC lender and get more information about MCCs at VirginiaMCC.com.
MCCs are a great option for many people, but they may not make the most sense for everyone. State housing/development agencies typically determine whether homebuyers qualify for MCCs under the Internal Revenue Code, but homebuyers must determine for themselves whether an MCC will save them money and how valuable an MCC will be for them over the life of their loan. Remember to talk to your tax advisor to see whether an MCC will save you money and how valuable an MCC will be for you over the life of your loan.
To see if you’re eligible for an MCC, talk to your mortgage lender today and you could be one step closer to owning your first home!