Mortgage Credit Certificate

Homebuyers who have not owned a home in the past three years are eligible to claim the Mortgage Credit Certificate and receive a dollar-for-dollar reduction against their federal tax liability for 20% of their yearly mortgage interest payments.

First-Time Buyers: Save Thousands Off Federal Income Tax with MCC

The MCC program saves first-time buyers thousands of dollars off their tax bill over the life of the loan.

Let’s say John Buyer borrowed $200,000 to buy a home at an interest rate of 5.000%. Through the first year of the loan, John Buyer’s paid $10,000 worth of mortgage interest. The MCC program covers 20% of the mortgage interest, and that $2,000 goes to reducing taxable income.

The MCC works in tandem with the popular Mortgage Interest Deduction (MID) to increase homebuyer tax savings. Consider this example from the California Housing Finance Agency (CHFA):

MCC Graphic (1)

As discussed, Joe Buyer receives a $2,000 MCC tax credit. Here is how that credit works with the MID reduction:

MCC Graphic (2)

Using just the Mortgage Interest Deduction, Joe Buyer would owe $6,000 from income taxes. Using both the Mortgage Credit Certificate and the Mortgage Interest Deduction, Joe Buyer owes $4,300. This is an annual tax savings of $1,700.

The chart illustrates how MCC and MID work together. The $2,000 MCC credit is subtracted from the eligible Interest Deduction (20% off total income), which drops the deduction from $10,000 to $8,000 (to avoid “double counting”). The $2,000 MCC is subtracted from the final tax bill: a $1,700 savings.

Another perk: during mortgage qualification, the $1,700 tax savings can be added back into the buyer’s gross monthly income. Joe Buyer can now afford more home!

The MCC works with most popular loan programs, including conventional, FHA, VA, USDA, FHA, and ARM products.


  • Save thousands on federal income tax bill.
  • Increase qualifying income for home loan.
  • Increase disposable income!
  • Works with most loan programs.


MCC qualification may be restricted by location, buyer income, and purchase price.

Buyer qualifications:

  • First-time buyer: Haven’t owned a home for three years (also referred to as “first-time buyer”).
  • Maximum family income: $57,360 ($71,700 for 3+ contributing persons)
  • Education: Must complete 8-hour buyer education course either online or in person by licensed counseling center (in San Luis Obispo: People’s Self Help Housing, 3533 Empleo Street)

Property qualifications:

  • Sales Price: $634,615 (San Luis Obispo County)
  • Size: 5 Acre Max
  • Residential homes: must be owner-occupied. Eligible properties include single-family detached, duplexes, town homes, condominiums, and manufactured homes with some restrictions.
  • NOT ELIGIBLE: properties with a guest house, “granny” units, “in-law” quarters, and/or separate units containing kitchen facilities.

“Targeted Areas”

The CHFA grants exemptions from income and property restrictions in low-income “targeted areas” to promote economic development. The sole “targeted area” in San Luis Obispo County is the 109.01 census tract, which is roughly to the east of Highway 1/Santa Rosa and North of Highway 101. Boulevard.

Step 1. Get Pre-Approved.

How Does Pre-Approval Work?

Getting pre-approved is as easy as 1-2-3!

1. Create an Account

Creating an account is fast, easy, secure and FREE! Your account enables you to easily modify your loan application and view the status of your loan anytime day or night.

2. Submit Information

When you register for a Loan Center account, you can submit a loan application online and the sensitive information that you provide will be transmitted securely.

3. Get Pre-Approved

Kick your feet up while we crunch the numbers. Pre-approval can be done very quickly if you provide a complete and accurate loan application and supporting documentation.

You have questions? We have answers.
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