Mortgage Credit Certificate Program (MCC)


The Mortgage Credit Certificate Program, authorized by Congress in the Tax Reform Act of 1984, provides financial assistance to “First Time Homebuyers” for the purchase of new or existing single family home. In 1985, the State adopted legislation authorizing local agencies, such as Contra Costa County, to make Mortgage Credit Certificates (MCCs) available in California. Contra Costa County MCC authority can be used in all cities as well as the unincorporated areas of the County.

What is an MCC?
The MCC Program is a homebuyer assistance program. The MCC provides qualified first time homebuyers with a federal income tax credit. Income tax credits reduce an individual’s tax payment(s) by an amount equal to the credit. Under the MCC program, the maximum tax credit is equal to 20 percent of the annual interest paid on the borrower’s mortgage. By reducing the borrower’s federal tax liability, the tax credit essentially provides additional income which can be used for mortgage payments.

How does the MCC reduce your taxes?

A borrower with a 5.0 percent fixed rate 30-year mortgage of $250,000 would make @12,500 in interest payments during the first year of the mortgage. Under normal circumstances, the borrower deducts 80 percent of that interest ($10,000 in our example) along with other allowable deductions from his total gross income in order to figure the “adjusted gross income” used to calculate his/her total tax liability.
After the borrower has calculated the total tax liability, under the MCC program, the remaining 20 percent of the interest ($2,500 in our example) is also deducted from his/her total tax liability. The borrower may consider adjusting his/her federal income tax withholding (W-4) so as to benefit on a monthly basis for the MCC. By taking this action, the borrower will have more disposable income to make mortgage payments.

Purchase Price and Income Limits

New and Resale Home Purchas Limit $665,088
Household Income Limit $110,760 (1&2 person) $129,220 (3+ person)