FederalTax Credit

Mortgage Credit Certificate (MCC)

Federal tax credit allowing eligible first-time buyers to claim up to 40% of annual mortgage interest paid - savings every year for the life of the loan.

AssistanceUp to $2,000/yr

Overview

A Mortgage Credit Certificate (MCC) is a federal income tax credit that reduces the federal taxes you owe each year you carry the mortgage. Most Texas first-time buyers (and buyers in targeted census tracts) can request an MCC alongside their loan.

How it works

Your lender issues the MCC at closing along with your mortgage.
Each year you can claim a federal tax credit equal to a percentage of mortgage interest paid (commonly 20-40%, capped at $2,000/year).
The credit lasts the life of the loan as long as the home remains your primary residence.

Application process

1
Take a HUD-approved homebuyer education course
Required by nearly every Texas assistance program. Free or low-cost online. The certificate is good for two years.
2
Get pre-qualified with a participating lender
Not every lender is approved for Mortgage Credit Certificate (MCC). Ask directly: "Are you an approved lender for Mortgage Credit Certificate (MCC)?" before submitting documents.
3
Confirm income, price, and area limits
Limits are set by household size and county. Have recent pay stubs, W-2s, and tax returns ready so the lender can verify in writing.
4
Submit a complete loan + program application
Your lender packages the underlying mortgage application and the program reservation together. Funding is first-come, first-served.
5
Lock your funds and proceed to closing
Once reserved, the assistance is held for a fixed window (typically 60-90 days). Coordinate the inspection, appraisal, and closing inside that window.

Eligibility at a glance

✓First-time buyer (no ownership in the prior 3 years) or buying in a targeted area
✓Within program income and purchase-price limits
✓Owner-occupied primary residence

Frequently asked questions

Does Mortgage Credit Certificate (MCC) require me to be a first-time buyer?▾

Some programs are first-time-buyer only (no ownership in the prior 3 years); others serve repeat buyers within income limits. Confirm the rule with your approved lender before applying.

Can I combine this with other Texas programs?▾

In most cases, yes - one statewide program plus a local city/county program and an MCC tax credit is a common stack. State programs (TDHCA and TSAHC) usually cannot be combined with each other on the same loan.

Is this a grant I never repay, or a second loan?▾

It depends on the program and the option you choose. Many Texas programs offer a grant (never repaid) or a forgivable second lien (forgiven after 5-10 years of owner occupancy). Selling or moving early may trigger partial repayment.

How long does the application take?▾

From lender pre-qualification to closing, typical timelines are 30-60 days when documents are complete. Program reservation must stay active through closing.

Will using this program raise my interest rate?▾

Some assistance programs use a slightly higher base rate to fund the assistance. Compare the total cost with and without the program over your expected holding period before deciding.

Free, no obligation

Learn more about Mortgage Credit Certificate (MCC).

Have a Texas-licensed educator-agent walk you through eligibility, paperwork, and how this program stacks with others. Always free for buyers.

BluebonnetBuyer is an educational platform - not a lender or brokerage. By submitting, you agree to be contacted about your inquiry. We never sell your information.

Official source

Texas State Affordable Housing Corporation (TSAHC). Program details, income limits, and funding availability change. Always confirm current rules at the official program site before applying.

https://www.tsahc.org/homebuyers-renters/mortgage-credit-certs ↗