A new mortgage loan program, the Mortgage Credit Certificate (MCC), has expanded purchasing power designed specifically for first-time homebuyers and U.S. veterans.
Beginning in early March, the Colorado Housing and Finance Authority (CHFA) renewed the MCC tax credit for qualified buyers for 20% of the interest paid on the mortgage, as dollar for dollar credit on the buyer’s tax return. This program is limited to Colorado qualified veterans and first-time home buyers who have not owned in three years – and the funding is limited so applying quickly is the best strategy to receive this credit.
Participants can still take advantage of the traditional mortgage deduction – deducting the interest paid on the home mortgage – and in this case involves deducting 80% of the interest payments to lower the adjusted gross income and then also receiving a dollar for dollar credit on the other 20%.
A select number of mortgage loan lenders in the state of Colorado are able to offer this mortgage loan option for veterans and first-time home buyers. To see how it works, take, for example, a loan amount of $225,000 with estimated interest payments in one full year of $10,000. With this new credit, the home buyer would be eligible for a tax credit of 20% of the $10,000, providing $2,000 in a dollar for dollar credit on income taxes. Dividing that benefit across the entire year, that’s the equivalent of $166.67 per month savings, every year! Sample 1040 Tax Forms are available to see how this tax credit applies to a given scenario.
By Catherine Eusea, First California Mortgage – Northern Colorado
Catherine Eusea, NMLS 237244, area manager for First California Mortgage in Northern Colorado, has over 15 years of experience in home mortgage lending. She can be reached by e-mail at [email protected] or by calling 970.372.4957. Visit firstcal.net/eusea.com