Mortgage Credit Certificate: Can I Qualify?

The Mortgage Credit Certificate (MCC) reduces the amount of federal income tax you pay, thus giving you more available income to qualify for a mortgage loan and assist you with house payments.

The Mortgage Credit Certificate Program was authorized by Congress in the 1984 Tax Reform Act as a means of providing housing assistance to families of low and moderate income. The Hawaii Housing Finance and Development Corporation (HHFDC) is an Issuer of Mortgage Credit Certificates.

How does it work?

  • 20% of your annual mortgage interest will be a direct federal tax credit, resulting in a dollar-for-dollar reduction of your annual federal income tax liability.  The remaining 80% of your annual mortgage interest will continue to qualify as an itemized tax deduction.
  • The amount of your mortgage credit cannot exceed the amount of your annual federal income tax liability.  Unused mortgage credit can be carried forward for three years to offset future income tax liability.
  • The MMC will remain in effect for the life of your mortgage loan, so long as the home remains your principal residence.

What are the limitations?

  • MCCs are only available through participating lenders. Contact us to find out who they are.
  • MCCs can not be used in conjunction with a Hula Mae loan.
  • Income and purchase limits apply. Contact us for current limitations.

What are the requirements?

  • Home must be your principal residence.  If it stops being your principal residence your MCC will automatically be revoked.
  • You cannot have an ownership interest in a principal residence at any time in the last three years.
  • The mortgage loan must be a new loan.  Exceptions apply for construction loans or temporary financing of 24 months or less.
  • You may be subject to a recapture tax if you (1) sell your home within three years of purchase, (2) sell your home at a gain, and (3) income increases above a specified level.


About the Author

Brandon Lau grew up in Kailua and currently resides in Honolulu with his wife Andee and children Caylah, Elijah, and David. His eighteen years in real estate led him to become a Partner at ChaneyBrooks Choice Advisors. Over the past 10 years he has developed the team and systems that has created a high level of service and value for his clients.

What differentiates Brandon and his team is his consultative approach to real estate. He advises clients with relevant data and expert insight to help them make the best choices in real estate. Good choices in planning for long term dispositions, negotiating for the best price or knowing when not to pursue an investment are ways his consultative services will give you an advantage in the marketplace. His bottom line is providing service with the utmost integrity and expertise.