NCHFA (North Carolina Housing Finance Agency) has a mortgage program that can save you thousands of dollars on your income tax. It is called a mortgage credit certificate (MCC) and it is for first time home buyers. The mortgage definition of a first time home buyer is that they have not owned a primary residence in the past three years.
Most people know that you can deduct your mortgage interest from your taxable income to lower your tax liability but how would you like to change part of the deduction to a credit? Well the MCC does exactly that. The MCC converts 30% of your mortgage interest from a deduction to a credit.
Who is eligible?
First time home buyers who are purchasing a home $ 225,000 or less and meet the county income limits may qualify for a MCC. The maximum income limit for a family of two in Wake County is $ 79,000.
How does it work?
Let’s say you are purchasing a home for $ 220,000 and you put 5% down. This would give you a loan amount of $ 209,000. If your interest rate is 3.50%, you would pay $ 7,315 in the first 12 months and 30% is $ 2,194.50. The maximum credit allowed is $ 2,000 per year. Over ten years you could save up to $ 20,000 in federal taxes. The remaining 70% of your mortgage interest is still a tax deduction.
Where to lean more?
Call Shay Campbell a licensed Loan Officer, NMLS# 46083, located in the Triangle area of NC, which includes Raleigh, Cary, Durham, Chapel Hill, Apex, Holly Springs, RTP and the counties of Wake, Durham, Johnston, Chatham and Orange. Shay has over 13 years of originating experience in North Carolina and can assist you with FHA, VA, USDA, NCHFA and conventional loans. He has a special interest in working with first time home buyers. Shay can be contacted at 919-624-8614, shay@shaycampbellmortgage.com or visit his website at shaycampbellmortgage.com.