What Is a Mortgage Credit Certificate (MCC)?

A Mortgage Credit Certificate (MCC) is a federal tax credit that lets eligible first-time buyers claim a percentage of the annual mortgage interest they pay as a direct credit against their federal income tax — every year for the life of the loan, as long as they keep the home as their primary residence.

In Texas, MCCs are issued by TSAHC (Texas State Affordable Housing Corporation). The credit can be combined with TSAHC's down payment assistance and most loan types (FHA, VA, USDA, Conventional).

The credit equals a percentage of the mortgage interest paid in the year — commonly 20% to 40%, capped at $2,000 per year by federal law. The remaining interest can still be deducted on Schedule A if you itemize.

MCCs are generally limited to first-time buyers (someone who has not owned a principal residence in the past three years) or buyers in federally designated targeted areas. Income and purchase-price limits vary by county and household size; check TSAHC's current limits before applying.

If you sell within 9 years AND your income exceeds adjusted federal limits at the time of sale AND you realize a gain, a portion of the credit may be recaptured at sale via federal tax. Most homeowners pay nothing back, but you should understand the rule before claiming the credit.