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Mortgage Credit Certificate Program

The Program that Keeps on Giving

Homeownership comes with many perks. The Iowa Finance Authority is proud to exclusively offer home buyers one of the best – the Mortgage Credit Certificate (MCC) program.

This program allows buyers to save up to $2,000 on their federal taxes, every year for the life of their mortgage, as long as the property remains their primary residence.

Homeowners must have a tax liability to use the credit. For homeowners with a tax liability in a given year, the credit may be carried forward for up to three years. The MCC may be reissued upon refinance and may be transferable upon sale under certain conditions if reissued by IFA in accordance with program requirements.

Funding for the program is limited. The MCCs will be provided on a first-come, first-served basis. The MCC may be combined with IFA down payment and closing cost assistance programs, with the exception of FirstHome.

Summary

The Mortgage Credit Certificate (MCC) program allows buyers to save up to $2,000 on their federal taxes, every year for the life of their mortgage. 

Tax Credits

The program awards a tax credit valued at 50% of the annual mortgage interest paid and is available annually as long as the home remains the home buyer’s primary residence. Homeowners are encouraged to consult a tax professional to calculate their credit through the Mortgage Credit Certificate.

Example: A home buyer qualifies for a mortgage loan of $100,000 at a fixed interest rate of 4.0%. Interest paid in year 1 = $3,968, x50%, year 1 credit
= $1,984.

Homeowners are encouraged to consult a tax professional to calculate their credit through the Mortgage Credit Certificate.

Reissuable Upon Refinance

The MCC may be reissued upon refinance and may be transferable upon sale under certain conditions if reissued by IFA in accordance with program requirement.

Eligibility Requirements

  • Household Income Limit Varies by county and ranges from $76,900-$114,840 for a household of up to two. See resources below for income limits.
  • Home Purchase Price Limit $283,000–may be up to $346,000 in targeted areas—use the eligibility checker below to determine if the home is located in one of the targeted areas.
  • Real Estate History Must be a first-time home buyer. A first-time home buyer is defined as not owning a primary residence in the last three years.
    OR
    Be a military member with discharge of other than dishonorable and not previously used a mortgage revenue bond program such as FirstHome to finance a home purchase.
    OR
    Purchase a home in a Targeted Area (please use the eligibility quick check tool to determine if you're purchasing in a Targeted Area).
  • Occupancy The home must be occupied by the buyer as a primary residence within 60 days of closing.

Eligible Financing

  • To be eligible for the Mortgage Credit Certificate program, the home buyer must be financing a new purchase of an eligible property through an IFA participating lender.
  • Financing Requirements Financing must be through IFA’s Homes for Iowans program or another fixed-rate mortgage offered by an IFA participating lender
  • Financing Restrictions Financing cannot be through IFA’s FirstHome program, an adjustable rate mortgage (ARM) or balloon mortgage, closed by a lender that is not an IFA participating lender, for a property in which the applicant has any prior ownership interest, or closed prior to receiving a written commitment from IFA.

Application Process

  • Contact IFA participating lender Interested home buyers must apply for this financing by contacting an IFA participating lender. A borrower application fee must be paid prior to review if the applicant is not using an IFA mortgage. No application fee is required with an IFA mortgage.
  • Written Commitment Issued Once preliminary eligibility has been determined, IFA will issue a written commitment to the lender. The lender must obtain the commitment from IFA prior to closing to obtain the MCC.
  • Loan Closing Upon loan closing, the lender uploads final eligibility documents to IFA.
  • After Closing IFA confirms eligibility and sends the MCC to the home buyer and lender after closing.
  • Homeowner should consult a tax professional to calculate their federal tax credit.

Quick Facts

  • Homeowners must have a tax liability to use the credit.
  • For homeowners with a tax liability in a given year, the credit may be carried forward for up to three years.
  • The MCC may be reissued upon refinance and may be transferable upon sale under certain conditions if reissued by IFA in accordance with program requirements.
  • Funding for the program is limited. The MCCs will be provided on a first-come, first-served basis.
  • The MCC may be combined with IFA down payment and closing cost assistance programs, with the exception of FirstHome.
  • Find a Lender Get started on your Homes for Iowans Application by finding a lender. Find a Lender

Available Funds

To view the current allocation total in real time please go to Lender Online and be sure to click update.

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Recapture Tax & Fine Print

Details

Borrowers who buy their homes using the FirstHome or FirstHome Plus Homebuyer Programs may be subject to recapture tax.

Borrowers repay the government a portion of their gain on the sale of their home, depending on (1) whether there is a gain on the sale, (2) the household income at the time of sale, and (3) if the sale occurs within nine years of buying the home. Recapture Tax is paid directly to the IRS when filing taxes for the year in which the home is sold.

Nothing in the Recapture Tax provisions should prevent borrowers from using IFA's FirstHome or FirstHome Plus Homebuyer Programs.

For IFA FirstHome or FirstHome Plus Loans closed on or after November 14, 2011, if you are required to pay a Recapture Tax to the Internal Revenue Service (IRS), IFA will reimburse you for the actual amount of the Recapture Tax paid to the IRS. Please consult the IRS or a tax professional with any Federal Recapture Tax questions.

Bullet Point

Must be a first-time home buyer (Defined as not owning your primary residence in the last three years). OR Be a military veteran with discharge of other than dishonorable and not previously used a mortgage revenue bond program such as FirstHome previously to finance a home purchase. OR Purchase a home in a Targeted Area (please use the eligibility quick check tool to determine if you're purchasing in a Targeted Area).

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For cases where borrower has no credit score, non-traditional credit documentation allowed in accordance with agency guidelines for the loan type.

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These are minimum requirements; a higher credit score, a lower debt to income ratio, or a down payment greater than 3% may be required in some circumstances. Follow agency guidelines for loan type.