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First-Time Homebuyer in North Carolina? Apply Today With » Tim Anders Sonya Simpson

For First-Time North Carolina Homebuyers

Save Up to $2,000 a Year on Your Income Taxes

If you are buying your first home, a Mortgage Credit Certificate (MCC) from the North Carolina Housing Finance Agency can put more money in your pocket and make your mortgage payment more affordable.

The MCC allows eligible buyers to take a federal tax credit of a fixed percentage of the mortgage interest they pay annually. It can save you up to $2,000 every year that you occupy your home. The MCC provides a dollar-for-dollar reduction of your federal tax, and is in addition to the mortgage-interest deduction available to all homeowners.

Who Is Eligible?

The MCC is available to first-time homebuyers and veterans who meet our sales price and income limits, and who are purchasing a primary residence. Income limits vary by country and household size. Go to www.nchfa.com for current limits.

How Does the MCC Work?

The MCC is not a mortgage. It is a tax credit that you claim on your federal return. You can get an immediate benefit from the MCC by changing the number of allowances on your Form W-4, filed with your employer, or wait until the end of the year and receive a larger refund when filing your tax return. Either way, the decreased tax liability from the MCC increases your take-home pay.

As an example, suppose you borrow $150,000 at five percent interest. You would pay approximately $7,500 in interest in the first 12 months of your mortgage. With a 30 percent MCC, for example, you could reduce your federal income tax liability by $2,000 for that year, allowing you to reduce your tax withholding by $166 a month.

Over the first 10 years of ownership, depending on the amount you borrow for your home, you could save $20,000 in federal taxes. Like many homeowners, you can also claim an interest deduction on the remaining interest you pay.