Pennsylvania Mortgage Credit Certificate

Pennsylvania Housing Finance Agency

Pa Source for MCC tax credits

First time home buyers, veterans and other targeted buyers  can obtain a mortgage credit certificate (MCC) by borrowing for a new home via a lender registered with the Pennsylvania Housing Finance Agency(PHFA).  PHFA issues the mortgage credit certificate (MCC).
PHFA participating lenders registry link is here. A PHFA lender can help you obtain a home loan from all available home loan programs plus get your own mortgage credit certificate (MCC) at closing on your home loan if your qualified to receive an MCC.

The Pennsylvania MCC tax credits range from 20% to 50% of mortgage interest incurred annually.  Size of loan determines percentage.  $2,000 is annual tax credit limit you can claim on your personal tax return.  PHFA MCC Information is linked here. The MCC percentage is 50% up to $100,000 mortgage, 40% $100,000 to $150,000, 30% 150,001 to $200,000 and 20% for $200,000 plus mortgages.  This is your tax credit percentage times your mortgage interest on annual form 1098 equals your tax credit or $2,000 whichever is lower.

The PHFA income limits and home purchase amount limits are listed here.  Most Pennsylvania first time buyers will have income below these limits and home purchases below the maximum amount.  PHFA MCCs can not be issued unless a PHFA loan is obtained for the first time home buyer or active military or veteran homebuyer.  The PHFA loan programs include assistance to move the 20% downpayment to lower affordable amounts.  Houses purchased in designated HUD economically disadvantaged census tracts do not require the homeowner to be in a special class as long as the buyer meets the income and housing costs limits they can qualify for a mortgage credit certificate (MCC). A complete MCC application for PHFA is linked here.

When I questioned a bank mortgage lender on the PHFA approved list she said Pennsylvania mortgage credit certificates are great but some borrowers are looking for lower interest rates that PHFA first time home loans provide.  She also stated several of her fellow lenders try to get most every borrower qualified for Pennsylvania mortgage credit certificates from PHFA .  A $2,000 per year extra federal refund equals a 2% savings on a $100,000 home loan.  The lender I spoke to said borrowers were saving 1/8th to 1/4 percent on their mortgage to forgo a MCC.  The math doesn’t add up on that decision.  Hopefully more first time buyers will choose the Pennsylvania MCC tax credit benefit when the math for MCC tax credits work in their favor to overall cost less per month for their home loan.