Galveston County MCC Programs
Down Payment Assistance
Galveston County MCC
Location Served: Galveston County, TX
Provider: Texas Department of Housing and Community Affairs
Approved Lender: New American Funding – (512) 524-8077
The Mortgage Credit Certificate (MCC) Program was created by the Texas Department of Housing and Community Affairs in order to assist low to moderate income families in purchasing a home, especially those that are first time homebuyers.
What is a Mortgage Credit Certificate?
With a Mortgage Credit Certificate, homebuyers can claim a tax credit for a portion of their paid annual mortgage interest. It is a dollar for dollar reducation against their federal tax liability.
Note: Because the Mortgage Interest Credit (MIC) is a non-refundable tax credit, the homebuyer MUST have tax liability to benefit from the tax credit.
The Mortgage Credit Certificate (MCC) Program is available to those individuals and families who:
- Meet the income and home purchase requirements
- Are first time homebuyers or have not owned a home as primary residence in the past three (3) years;
- Meet the all of the qualifying requirements of the actual mortgage loan
- Will use the home as their principal/primary residence
Please Note: The MCC is not to be used in connection with the refinancing of an existing loan. Also, homebuyers who are purchasing a home in a targeted Areas do not have to meet the first time homebuyer requirement and will usually have increased income and purchase price limits.
The Texas Veteran’s Mortgage Credit Program is intended to give the military veterans, who have served our country, a chance to save. The Texas Veteran’s MCC program gives those who have protected our American Dream a chance to finally live it. This program is identical to the basic Texas Mortgage Credit Certificate Program except for the fact that it is solely for veterans who have served in active duty, were honorably discharged as proved by a Form DD-214 and have not previously had a mortgage financed through a mortgage revenue bond program. Veterans must still meet the applicable acquisition and purchase price limit requirements of a non-targeted area; however, they are exempt from the first-time homebuyer requirement.
Those that qualify for the Galveston County MCC Program will receive an annual tax credit equivalent to 35% of their annual interest paid on the mortgage loan, but cannot exceed $2,000. After all other credits and deductions have been taken into account, the credit may not be larger than the annual federal income tax liability. However, MCC credits that are larger than the current year tax liability may be carried forward for use in the next three consecutive years.
MCCs are issued directly to qualifying Applicants who are then able each year to take a tax credit equal to a specified percentage of the interest paid on their mortgage not to exceed $2,000. The Mortgage Credit Certificate Rate is 35 percent. Thus, an Applicant with a $121,000.00 mortgage (30 year fixed with equal monthly installments of principal and interest) would realize the following savings:
||Total Interest Paid First year
||Mortgage Credit Certificate Rate
||Tax Credit Amount:
During the first year of the Program, this Applicant would be entitled to a tax credit of $2,000.00. Based upon such entitlement, he or she would be able to file in advance a revised W-4 withholding form taking into consideration this tax credit and have approximately $167.00 per month in additional disposable income. Additionally, taxpayers who file itemized returns may take a deduction for their mortgage interest paid each year, less an amount equal to the tax credit taken. (In the above example, the additional interest deduction would be $5,872.50.00 less $2,000.00, or $3,872.50)
All mortgage loan types qualify for the Galveston County Mortgage Credit Certificate Program. Mortgage loans are available through a network of participating lenders, but must be underwritten according to USDA/RHS, VA, FHA or conventional loan criteria. The mortgage loan must also be at prevailing market rates. Eligible properties include: new and existing, single-family homes, condominiums, townhouses and manufactured housing (specific restrictions apply). The purchase price of the home, household income limits and household size will apply. Lastly, the applicant must use the property as his/her principal / primary residence.
A mortgage interest deduction differs from a mortgage tax credit in a number of ways. For example, all homebuyers, regardless of income, may take a mortgage interest deduction, whereas mortgage tax credits are available only to holders of MCCs.
Each year, the mortgage tax credit will be 35% of the total interest paid that year, up to $2,000. The benefits from the Mortgage Credit Certificate will be in effect for the duration of the mortgage loan. However, if the resident does not continue to use the property as his/her primary / principal residence, the benefits will cease to exist. In order to maintain the MCC the homebuyer can adjust their withholdings on their W-4 form with their employer and must file IRS Form 8396 with their federal income tax return. The form can be obtained from the IRS web site at www.irs.gov.
In accordance with program guidelines, the Texas Mortgage Credit Program has funds set aside for targeted area loans. Targeted Areas are areas of chronic economic distress or areas in which 70% or more of the families have incomes that are equivalent to 80% or less of the statewide median income. Homebuyers purchasing properties located in Targeted Areas are exempt from the first time homebuyer requirement and their purchase price and income limits are generally higher. For a list of Targeted Area census tracts identified by county, please refer to the following list. Your lender or realtor should be able to verify whether the property you are considering for purchase is located within a Targeted Area census tract.
To take advantage of the Galveston County MCC Program, homebuyers must complete a pre-purchase homebuyer education course before the specified closing date. Those who wish to complete the homebuyer education course online are permitted to do so. Please note: your Certificate of Completion is required.
In addition to the regular closing costs associated with the loan, there is a $75 MCC Commitment Fee (non refundable) and, upon closing, a MCC Issuance Fee of 1% of the loan amount, due upon closing.
If TDHCA issued your MCC you will need to fill out the refinancing application. Upon review of the information, TDHCA will reissue you a new certificate.
If you have lost or misplaced your MCC, please contact TDHCA at 512-475-3993 for a replacement certificate. A $50.00 fee is required for this service.