How to Save Money as First-Time Homebuyers

Are you buying your first home? Congratulations! This should be an exciting time in your life; but many first-time homebuyers often feel confused and overwhelmed with the process. The number one source of stress? That hefty price tag that makes your jaw drop. But don’t worry too much — there are several ways for you to save money on your first home purchase.

​The MCC Tax Credit for First-Time Homebuyers

At our CPA firm, Tarpey, Sickler, and Associates, we specialize in helping first-time homebuyers navigate the MCC Tax Credit. This tax perk falls within a federal program but runs on a state-by-state basis. For example, if you’re from Texas, you need to look specifically at the TDHCA MCC because that will determine the tax credit conditions. Be sure to look at your specific state’s program to learn exactly what the incentive is for you.

We know that this process can be a little confusing, so if you work with us, we make sure to walk you through it step-by-step. And in the world of home buying, tax incentives are where you should start when you want to save money.

What is the MCC Tax Credit?

A recent blog post goes into greater detail, but let’s look at what the MCC Tax Credit is and how it helps first-time homebuyers.

To start, it’s a tax credit, which is different from a tax deduction (the other route for home buying tax incentives). This merely means that you can receive up to $2,000 on your tax returns each year throughout the entirety of your home loan. On a 30-year loan, that’s up to $60,000 of savings!

Again, the MCC Tax Credit differs from state-to-state, but how the credit is calculated remains the same. The credit percentage ranges from 10% to 50% and is based on your mortgage’s annual interest. Some states offer 20%, while others 50%. To repeat, be sure to look at your specific states’ program. For Texas, that’s the TDHCA MCC. For California, it’s the CFHA MCC. And, so forth. ​

Other Ways to Save Money as a First-Time Homebuyer

Tax credits and deductions like the MCC Tax Credit should be your go-to strategy for saving money. However, there are other ways to chisel that price down a bit more.

Increase Your Down Payment

The more money you can offer upfront as a down payment, the more you will save throughout your loan. But don’t put all your money down! You want to pay more upfront, but you don’t want to put yourself in a bad financial situation as a result. First, determine a reasonable price you can afford, meaning what you can offer as a down payment and continue to pay on your mortgage over the years. 

Select the Right Mortgage for You

Not all mortgages are created equal, so you should shop around before settling on one. Conventional mortgages offer low rates, but some loan programs might be more beneficial to you and your particular situation. These are FHA loans, USDA loans, and VA loans. Consider all the details (your past, your work, where you want to buy a house, etc.) and compare rates before choosing the right mortgage or loan.

State-By-State Programs

Finally — and as you already know — each state offers a different rate for the MCC Tax Credit. But this tax credit isn’t the only tax incentive or lender program offered by states! Look at your specific location and determine which first-time homebuyer programs can benefit you and your situation.