How a Mortgage Credit Certificate can help you buy a home

sub urban neighborhood house

You may be eligible for a federal income tax credit to help you purchase a home if you are a first time, low or moderate income homebuyer. We invite you to look through our program to learn about the features and eligibility requirements.

What is a Mortgage Credit Certificate (MCC)?

A Mortgage Credit Certificate provides eligible, first-time homebuyers with a federal income tax credit based on a specified percentage of the annual interest paid on a mortgage.  The tax credit is a dollar-for-dollar reduction to the homebuyer’s potential federal income tax liability that increases the household income available to qualify for a home mortgage and to make monthly mortgage payments.

With an MCC you can:

  • Receive a dollar-for-dollar tax credit which reduces your potential federal income tax liability
  • Save money and increase the amount of your disposable income available to purchase a home
  • More easily qualify for a higher first mortgage
  • Take advantage of the tax credit every year for the life of the original first mortgage
  • ​Reapply for a Reissued Mortgage Credit Certificate (RMCC) when you refinance your mortgage

Program Requirements

  • Be a first-time homebuyer which is defined as someone who has not had an ownership interest in a principal residence at any time during the past 3 years. (EXCEPTION: This requirement does not apply to someone purchasing a home in a targeted area.)
  • Occupy the home as your principal residence
  • Applicants must be within the income limits below (there are target and non-target areas)
  • ​Purchase an eligible home in the City of Los Angeles   

Size of Household

Income Limits

 

15% Tax Credit

20% Tax Credit

 

Non-Target Area

Targeted Area*

1-2 person(s)

$99,600

$99,600

3 or more

$116,200

$116,200

Purchase Price Limits

Non-Target Area

Target Area

Existing Housing

$596,978

$729,640

New Construction              

$596,978

$729,640

* For a list of targeted census tracts click here or for a census tract map click here 

  • Purchase a one unit, single family residence, townhome, or condominium within the purchase price limits above
  • ​There is an application fee of $150

Example of How this Program Works

Mr. Jones qualified for a first mortgage loan of $200,000 at a fixed interest rate of 5.00% for 30 years.  He purchased a home in a non-targeted area which qualifies him for an MCC tax credit of 15%.

The mortgage interest tax credit amount will be determined as follows:

  • $200,000 x 5.00% = $10,000 (estimated first year’s mortgage interest)
  • 15% (MCC tax credit percentage) x $10,000 = $1,500 (Year 1 MCC value)
  • $1,500 / 12 months = $125 (MCC monthly value available to qualify for a larger first mortgage)
  • ​$10,000 - $1,500 = $8,500 (mortgage interest still eligible for the standard mortgage interest tax deduction)

By adding the MCC monthly value of $125 to the maximum available monthly income for the first mortgage, Mr. Jones qualifies for a higher first mortgage; therefore, the MCC increases Mr. Jones’ purchasing power.

How to Apply

Please contact one of our Participating Lenders to get pre-qualified for a first mortgage and City Mortgage Credit Certificate or call (213) 808-8800 for more information.