What is a MCC?

The MCC is a Federal Income Tax Credit program. An MCC provides a double bonus. It increases the loan amount you qualify for and it increases your take-home pay. The MCc entitles you to take a federal income tax credit of 20% of the annual interest you pay on your home mortgage. Because the MCC reduces your federal income taxes and increases your net earnings, it is a great help in qualifying you for your first home mortgage. But it doesn't stop there. The MCC is registered with the IRS, and it continues to decrease your federal income taxes each year for as long as you live in your home.

How to Qualify

• Your household income and the purchase price must not exceed the limits shown below.
• You must not have owned a principal residence in the last three years.
• You must occupy the home.
• You must apply for the MCC through a participating lender, and pay a non-refundable fee of .002 x the loan amount (example, $300,00 loan x .002 = $600 fee).
• You must purchase a single-family Detached Single-Family Home home, condominium or townhouse with the program's boundaries.

San Diego County MCC Program Limits

Program Boundaries

Everywhere throughout the County of San Diego, except the cities of La Mesa and Oceanside, and the City of San Diego.

Recapture Tax

If you sell your home within nine years, you may have to pay a recapture tax. However, several conditions can exempt you from this tax. See the MCC Web site for more information.

How to Apply

• Choose a lender enroled in the MCC program to pre-qualify you for financing and an MCC.
  
• After finding a property and having the seller accept your offer, escrow will be opened.
• Read and sign your MCC application which the lender prepares and send to the MCC program office.
• Once your MCC application is approved the MCC program office issues your lender an MCC Committment and Closing Affidavit.
• Buyer signs the Closing Affidavit with the other closing documents at the end of escrow.
• Buyers will receive MCC document in the mail within 30 days after escrow closing.

Mortgage Financing You Can Use with MCCs

Includes FHA, VA, or conventional loans; 100% financing is acceptable, and the MCC credit applied to both the first and second loans.

Prohibited Loans or Terms

CalHFA, Cal-Vet, Neg-Am, Stated Income loans, Adjustable Rate loans if the rate is subject to change within the first 3 years, Interest-Only fixed loans for less than 5 years, and buyers with debt "back-end" ratio of over 45%

Target Census Tracts

Certain census tracts receive special designation. Applicants who purchase homes in these areas do not have to be first-time home buyers and the income and purchase price limits may be higher.

Note:

The MCC can be used in combination with the Downpayment and Closing Cost Assistance (DCCA) loan available from San Diego County. When used together, the MCC and DCCA provide substantial benefits to low-income buyers in qualifying to purchase a home. Please see the San Diego Housing Commission for more information.

Example:

Let's take a look at an example, using hypothetical financials of the Jones family.

FAMILY INCOME: $6250 per month

LOAN AMOUNT: $350,000

INTEREST RATE: 6.5%

STEP 1 - Determine the first year interst payment by multiplying the loan amount by the interest rate ($350,000 x .065 = $22, 750).

STEP 2 - Determine the Annual Mortgage Credit by multiplying the first year interest payment by 20% of the MCC credit rate: $22,750 x .20 = $4,550.

STEP 3 -Determine Monthly Mortgage Credit by dividing the annual morgtage credit by 12 months: $4550 / 12 = $380 monthly savings.

Adminstrator

The MCC program is administered by the AHA Housing. For more information, call their office at (619) 469-02080 or go to their Web site.