Can A VHDA MCC Help You Buy Your First Home



This question is becoming more and more commont in the Virginia real estate space.

Since the certificate program started in May of 2015, VHDA has seen an increase in the demand for Mortgage Credit Certificate*.

This is a credit that will be applied to a customers federal income tax liability every single year that they own the home. The credit is equal to 20% of mortgage interest paid during each calendar year.

The video below will give you an example of how you will benefit from a VHDA MCC.

For more information on the VHDA MCC contact a VHDA loan officer at 757-287-4098.

The borrower will need to have a federal tax liability in order to use the credit. Any unused portion can be carried over for up to 3 years.

To qualify for the VHDA MCC you must have not had an ownership interest in a home for a period of at least 3 years, must use the MCC in the purchase only of a primary residence.

The MCC is not available in a refinance transaction. If a loan with an MCC is refinances the MCC will not be re-issued.

The Mortgage Credit Certificate is not limited to FHA loans, VA loans, or conventional loans. Nor does it have to be a loan through the VHDA. They will issue the certificate even if they are not he lender.  This a unique characteristic of this specific VHDA home loan.

The Virginia Housing Development Administration has some standard limitations for their loan products and the MCC is no exception. Listed below are some things that you will need to be aware of when looking at a mortgage credit certificate as an option.

  • There are income limitations with the VHDA MCC and this will include all borrowers on the the loan and any other person taking title to the home.
  • The sales price limitation would be equal to the greater of the sales price, loan amount, or acquisition cost.
  • Must be owner occupied, single family residence. Can not be used for investment property.
  • 2 acre limit unless waiver granted.
  • Manufactured homes must be permanently attached to real estate.

Refer to the VHDA Income, Sales Price, & Loan Limit charts here.

There will be an administration fee assessed by VHDA in the amount of $750. This will be waived if the MCC is issued in conjunction with a VHDA loan.

**  For more specific tax advice, please consult a qualified tax adviser of the potential benefits of the MCC.

*  Certain restrictions apply.  Not available in all areas.  Please contact your PrimeLending loan officer for more details.

1  PrimeLending is not authorized to give tax advice.  Please consult your tax adviser for tax advice for your specific situation.

About the author 

Jimmy Sgambelluri

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