The Mortgage Credit Certificate Program, authorized by Congress in 1984, provides financial assistance to first-time homebuyers for the purchase of single-family homes, townhomes, and condominiums. The Santa Clara County MCC tax credit reduces the federal income taxes of qualified Borrowers purchasing qualified homes; thus having the effect of a mortgage subsidy. The current tax credit rate is up to 15%. (This is in addition to deducting 85% of the interest and is a dollar for dollar credit. MCC effectively reduces the costs of homeownership after tax benefits by about 11%)
The MCC will reduce the amount of federal income taxes otherwise due to the federal government from the Borrower; however, the mortgage tax credit cannot be claimed as a refund. MCC Borrowers may consider adjusting their federal income tax withholdings so as to benefit on a monthly basis from the MCC.
Borrowers are encouraged to go through the "normal homebuying process" in which the Borrower would contact a real estate agent or broker to search for a home. The borrower then applies for a mortgage loan from a Participating Lender or Broker who is trained to answer all of the borrower's questions about the MCC Program. The lender will determine if the borrower is eligible for an MCC, based on the preliminary indications of income, purchase price, prior home ownership, location of residence to be purchased and potential tax liability. If the Borrower meets the County MCC guidelines, the Lender directs the Borrower to sign the initial application documents. The Borrower remits the non-refundable application fee of $275 to the lender. Of that fee, $200 is submitted by check to the County of Santa Clara with the intial phase of the MCC application.
Maximum Purchase Price Levels (aka Acquisition Cost)
The maximum purchase price of the property in Santa Clara County is $450,000
for existing and $500,000 for new units. The maximum purchase price
includes all amounts paid, either in cash or in kind, by the purchaser (or
by a related party for the benefit of the purchaser), real estate commissions
paid by the buyer, the cost of any upgrades with respect to any new
construction, and the capitalized value of any ground rent (if applicable).
Types of Property
New and previously owned condominiums, townhomes, and single family residences
are all acceptable. Multiple family units such as apartment complexes, duplexes,
or fourplexes are not eligible. Mobile homes are also eligible; however,
they must meet federal MCC guidelines.
First-Time Buyer(s) Only
A "first-time buyer" is a person who has not had an ownership interest in
a "principal residence" within the last three years. Applicants who have
cosigned a loan for someone else within the last three years but never occupied
the property as their "principal residence" are still eligible first-time
buyers. Landlords who have owned one or more rental properties but who never
occupied any owned dwelling as a primary residence are also eligible. A divorced
spouse must wait three years from the date that the property last owned by the
couple ceased to be the couple's principal residence before he/she can qualify
as a "first-time buyer."
| An MCC cannot be issued to a homeowner who is..... |
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Lenders are advised that the County will not reserve MCCs for any borrower until a completed MCC application is submitted and staff will not consider any incomplete application. MCC Applications will be processed on a first-come, first serve basis only. Please do not fax over MCC applications, as they will not be considered; only those sent by mail or dropped off in person. County staff also expects that the City of San Jose will be the first to run out of funding, with the smaller cities to follow. If the County cannot issue a commitment right away the application will be placed on a waiting list and will be processed only if other deals fall though.