As a first-time homeowner, you’re probably on the hunt for ways to save money. Lucky for you, purchasing a home is not only an excellent investment, it also stimulates the economy. As a result, the government offers numerous first-time homebuyer programs that incentivize the process. These programs keep money in your pocket! Although finding these incentives in each state takes a bit of time and research, we hope this article will get you on the right track.
MCC Tax Credit
At our online CPA firm, we specialize in the MCC tax credit program. Although this is a federal initiative, each state manages its own MCC tax credit, meaning that those who live in California may not receive the same benefit as those in New York or Montana. Each state program follows the same idea but uses different percentages to determine the overall credit.
A Percentage of Your Mortgage Interest
The MCC tax credit is one of the best first-time homebuyer programs because it reimburses a percentage of the interest you pay on your mortgage. What percentage? Well, that depends on where you live. Each state offers a different rate, somewhere between 10%-50%. However, there is a cap — the maximum tax credit you can receive each year is $2,000. But that annual perk is redeemable for the entirety of your loan. So on a 30-year loan, you can save up to $60,000. Not bad!
First-Time Homebuyer Programs in Each State
Now that you have a general idea of how the MCC tax credit works, it’s time to dive into your state. Remember, each state determines the percentage of your benefit differently, so you need to comply with the program where you live.
How do you find the MCC tax credit program in your state? Start with a simple Google search. Let’s say you’re a first-time homeowner in Texas. All you need to do is search something like “MCC program Texas.” Those buying homes in Texas will work with the TDHCA MCC, which stands for the Texas Department of Housing and Community Affairs. This organization manages the MCC program in Texas, so you’ll use the TDHCA MCC to determine your tax credit. (Other organizations also work with the MCC, such as the Texas State Affordable Housing Corporation (TSAHC).)
First-Time Homebuyer State Search
Another helpful search term is “[name of state] first-time homebuyer programs.” So, if you live in Texas, you can search “Texas first-time homebuyer programs” and find other options to save money as a first-time homeowner. You’ll probably find yourself looking at TSAHC again (keep in mind that TDHCA MCC is only for the MCC program).
In Texas, the TSAHC offers housing grants for first-time homeowners, plus other programs with a broader range of eligibility (teachers, social service providers, low-income buyers, etc.). You'll find these type of programs in any state, whether you live here in Pennsylvania, or in New York, Oregon, Louisiana... These programs have different benefits than the MCC tax credit and also differ from place to place.
Some examples of the benefits included in these types of state-run programs are:
Each state offers many different programs that supply these types of benefits to eligible homebuyers. You don’t necessarily need to be a first-time homeowner to participate, but some are strictly for those purchasing their first home. You just have to do a little research and sift through the internet to find which initiatives are offered in your part of the country!
If you don’t have time to research, Nerd Wallet offers a great resource that breaks down different first-time homebuyers programs in each state. If you have any questions about the MCC tax credit program or other helpful initiatives where you live, you can always contact our CPA firm. We’re always here to help!