First-Time Homebuyers Can Save Thousands with Mortgage Credit Certificate Program
LITTLE ROCK, NOVEMBER 22, 2016 - How would you like to lower your Federal income taxes by as much as $2,000 per year? On Thursday, November 17, a first-time homebuyer program extended into 2017 by the Arkansas Development Finance Authority (ADFA) Board of Directors can do just that.
If you are first-time homebuyer or veteran in Arkansas and earn a modest income, (In Pulaski County for example, no more than $63,400 for a family of two, or $72,910 for a family of three or more.) and you buy a house valued at less than $250,000, then you can receive a First Time Homebuyer Federal Tax Credit or Mortgage Credit Certificate (MCC). This means you will get a straight write-off on what you would otherwise owe in Federal income taxes - amounting to 50% of your annual mortgage interest payments up to a ceiling of $2,000 a year. A person receiving an MCC will get the tax benefit – potentially saving thousands of dollars over the life of the loan – for as long as they live in their home.
“If someone out there is currently unsure about buying their first home, this is a program I hope they find out about and ask their real estate agent or mortgage banker about,” said ADFA President Aaron Burkes “This program offers substantial federal tax savings on top of already historically low interest rates.”
Here’s an example. On a $150,000 mortgage with an interest rate of 3.75%, you might pay $5,625 in interest the first year. The MCC would allow you to take a federal income tax credit of $2,000 (max allowed) for that year. Note that you can still claim a mortgage interest deduction for the remaining amount of the mortgage.
You don’t have to wait until tax time to reap the benefits of an MCC! Once you calculate your annual tax credit, you can revise your W-4 with your employer to reduce the amount of federal taxes withheld from your pay check. That $2,000 tax credit could then translate into an additional $166.66 in your monthly paycheck–money you can put toward your mortgage!
You may be eligible for a Mortgage Credit Certificate if:
- You are a first-time home buyer (not owned a home in past three years).
- Your income falls within certain income limits, determined by county (for income limits click here).
- You are a military veteran.
- Purchase price does not exceed $250,000.
- You occupy the home as your principal residence.
- You use an ADFA approved lender. (click here for a list of participating lenders)
For more information about the First Time Homebuyer Federal Tax Credit / Mortgage Credit Certificate (MCC) Program go to http://adfa.arkansas.gov/adfa-first-time-homebuyer-federal-tax-credit-mortgage-credit-certificate-mcc-program .
Public Information Officer
Posted on Tue, November 22, 2016
by Derrick Rose filed under