The way the US Tax code is written, each home owner is allowed to deduct part of their mortgage interest on their tax returns. For first time home buyers in North Carolina, there’s a program that allows you to take an additional tax credit! The Mortgage Tax Credit program is available to anyone who is currently living in North Carolina, has not owned a primary residence for the past three years – and meets the income and sales price restrictions for the county you are buying a home in.
Through the Mortgage Tax Credit (MCC) Program, you can receive a tax credit equal to 30% of the mortgage interest paid on your loan annually. There’s an additional incentive for those who are purchasing a newly constructed home. With the current Mortgage Tax Credit program, the W-4 is changed for the borrowers, allowing them to bring home more money in each paycheck. The paperwork for this is done prior to closing on your loan – so it you purchased a home last year (for instance) and your mortgage lender didn’t offer the NCHFA Program, unfortunately, you are out of luck 🙁
Up to $2000 annually ( or roughly $167 a month) is added to your paycheck as a dollar for dollar reduction of your federal tax liability. The remaining 70% of the interest you pay on your mortgage during the year is still a tax deduction on April 15th! (remember that there’s a little different schedule for those buying a new home in NC).
You don’t HAVE to take the Mortgage Tax Credit income on a monthly basis – you can do an annual filing with your tax return – but most of the folks we help, go ahead and get the money on a monthly basis.
The additional Mortgage Tax Credit income helps first time home buyers in North Carolina qualify for a little higher mortgage payment, and the ability to purchase a little larger home! The Mortgage Credit Certificate (MCC) program in North Carolina is not offered by many mortgage companies – so be sure to ASK.
The Mortgage Tax Credit can be used with a FHA Home Loan in North Carolina. This program only requires a 3.5% down payment – and has the most flexible credit score requirements available. The MCC can also be used with a VA Home Loan program for Veterans, and the USDA Home Loan program in NC , both of which have no down payment requirements.
Here are the MCC program income limits for major cities in North Carolina, if the area you are interested in is not listed, please call us – we’re more than happy to help you find out if you qualify for the Mortgage Tax Credit. The MCC Income Limits do vary based upon the County you are buying a home in.(Most of the MCC Income Limits are near the bottom of the page)
Wilmington NC MCC Income Limits
Greenville NC MCC Income Limits
Rocky Mount NC MCC Income Limits
Pinehurst NC MCC Income Limits
Although there are different income qualifications for the program – the NCHFA also offers a 3% grant program to help with down payment or to cover closing costs. The first time home buyer program is designed for those who live in North Carolina, and have not owned a primary residence for the past three years!
If you want to buy a house – and you need a mortgage loan, or if you have more questions about: how the Mortgage tax Credit works – please call Steve and Eleanor Thorne Or leave us a comment below, we try to answer all questions 
919-649-5058.
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My loan has was sent off Friday to the USDA. Is it to late for the lender to gibe me the MCC?
If your lender offers MCC, it is typically sent to NC Housing after USDA Home Loan approval. The paperwork would need to be submitted now, the Seller has information they must complete. Most companies would tell you that it is too late to add MCC to your loan file at this point – having a Seller that is willing to wait a bit longer, could make the difference. You are welcome to call us 919 649 5058 and we can go over your specifics.
Hello Eleanor
I am interested in qualifying for both components of the MCC. I have not owned a home since December of 2010. I am hoping to find a broker who is comfortable with technology driven contact (I travel for business) familiar with the area because I am interested in purchasing a short sale.
Thanks for contacting us! We work with many Agents who are familiar with “e-signature” Contracts – and we have done loans for people who only “virtually” went through the house before they purchased them! At your convenience, please call us at 919 649 5058. We will want to talk with you about your taxable income, but it sounds like you would benefit from these programs!
Hi. My family and I live overseas but have no residence. We have never owned a home. We rented for several years after college until we went abroad in 2008. We return for the summer and winter holidays. We bought some land in North Carolina and want to build a home. I am interested in the tax credit and the USDA no money down mortgages. We file for Foreign Earned Income Exclusion. Does this disqualify us for either of these programs to have a home built on our land? That home would be our primary residence — in the US.
Please help. Thanks!
Jarred, if you’ve owned the land for more than one year, then you get to take the equity in the land as a down payment, and you wouldn’t need to go USDA. We have to show work History and you will need to have credit in the US. USDA does not allow greater than a 30 day gap in employment. The Foreign Earned Income Exclusion is likely to cause a problem with MCC, however that’s the least complicated part of your situation 🙂
I got a second mortgage on my house. Can this credit be applied to it also or just the first mortgage?
No, it will not work with your situation, so sorry.
Hello there! You two have been the most knowledgeable in my search regarding the MCC, so I’m hoping you can answer my question.
I started using an accountant last year for my 2016 taxes since I had a child and become a homeowner…I was terrified I’d screw something up if I continued doing them myself. I was the first person the accountant ever had with a MCC so after reviewing my paperwork and doing some googling he was able to complete the task. He did ask that I double check there’s nothing else I’d be receiving annually regarding my MCC…
To my knowledge all I’ll need every year to annually file on my tax return is the Mortgage Credit Certificate I received from NCHFA upon closing, correct? That houses all the relevant information he’ll need every year to collect the income on Form 8396?
Thank you for any insight or knowledge you have to offer! It’s greatly appreciated.
So sorry for the delay. You are correct, that’s all the CPA will need – and you complete 8396. Congratulations on your home!!