In celebration of Homeownership Month, the District of Columbia Housing Finance Agency (DCHFA) is bringing back the Mortgage Credit Certificate (MCC). Originally launched in 2016, the MCC program was widely popular among D.C. homebuyers, and DCHFA is thrilled to bring this valuable resource back to aspiring homeowners. An MCC provides qualified borrowers the ability to claim a federal tax credit of 20 percent of the mortgage interest paid during a calendar year. The remaining 80 percent of mortgage interest paid for that year may still be claimed as a tax deduction.
Claiming 20 percent as a tax credit rather than a deduction allows the homeowner to receive more cash in their pocket. Homebuyers can purchase an MCC through the IRS in order to take advantage of this added purchasing power. The MCC must be purchased at the time of closing on the home and cannot be obtained post-closing.
Borrowers who wish to purchase an MCC must be a first-time homeowner. They cannot have had ownership interest in a principal residence within the most recent three-year period, with the exception of residences purchased in a targeted area or if the borrower is a veteran utilizing a one-time exemption. The maximum borrower income limit is $154,800 (or $180,600 for a family of three or more). The maximum loan amount is $647,200.
Many homebuyers in the past have purchased an MCC when using programs like DCHFA’s flagship homeownership program, DC Open Doors. DCHFA launched DC Open Doors in May 2013 to create more affordable financing options for prospective homebuyers in the District of Columbia. The program offers deferred repayable loans for a homebuyer’s minimum down payment requirement in addition to below-market interest rates for first trust mortgages for the purchase of a home in the District of Columbia. One of the major perks of the DC Open Doors program is that the borrower does not have to be a resident of the District to apply. As long as the home is purchased in Washington, D.C., then the buyer will meet the program guidelines
Many residents seeking to purchase a home also utilize the Home Purchase Assistance Program (HPAP), which is a program DCHFA administers on behalf of the D.C. Department of Housing and Community Development (DHCD). In contrast to DC Open Doors, the applicant must be a resident of the District of Columbia to qualify for HPAP.
The Agency also has a down payment assistance program reserved for D.C. government employees, DC4ME. DHCD has a program called the Employer-Assisted Housing Program (EAHP), but employees of independent agencies and other government organizations do not qualify. DCHFA saw this as an opportunity to create a program which would allow more people who work for the District to be able to live in the city, too. DC4ME is similar to DC Open Doors, but the borrower must be a first-time homebuyer; he or she cannot have owned a property even if it is sold before closing on a DC4ME loan.
These programs provide residents with the down payment assistance needed to get over the hurdles to homeownership. And then the MCC comes in and allows the homeowner to make money back. Since the programs have similar guidelines, it is simple for residents to apply for and stack these assistance programs maximizing the funds toward their home purchase.
Learn more about the Mortgage Credit Certificate here
DC Open Doors, DC4ME and HPAP only scratch the surface of what programs are available to help D.C. residents achieve their dreams of homeownership. The first step in the homebuying process should be finding a trusted lender, one that will help homebuyers figure out which financial assistance programs will get them the best deal for their unique situation. DCHFA has a list of approved lenders it works with regularly. The list is a great place to start when searching for a lender who has been trained and approved to provide mortgages through these programs. The list can be found at www.dchfa.org/homeownership/find-a-lender.
An even better way to meet and test out lenders is to attend one of DCHFA’s homeownership seminars. The Agency hosts in-person informational sessions on the first and third Wednesday of each month at DCHFA’s office in Shaw. The events are free to attend, and they give residents a chance to meet with various lenders and realtors who know the programs, know the market, and ultimately know the city very well. DCHFA’s Business Development Manager Bill Milko invites a different DC Open Doors-approved lender to speak at each of these seminars, and that lender brings with him or her a realtor they trust.
The lenders who present at these seminars are some of the top-performing lenders in the DMV. DCHFA invites them because they are knowledgeable about the real estate market and all of the programs offered by the agency. These lenders know how to tailor the best loan package based on their clients’ individual needs. There’s time at the end of each seminar for residents to ask the lenders and realtors questions and get more information on how to begin the loan application process.
Residents can attend more than one seminar to get a feel for different lenders and see whom might be a good fit to work with during their homebuying journey. The Agency looks forward to meeting residents in-person again, as the info sessions are the first step in educating future homeowners on where to begin the process of purchasing a home in the District. Everyone is encouraged to join the Agency’s team on the first and third Wednesday at 6:00 p.m. A list of all upcoming events can be found at https://www.eventbrite.com/o/dc-housing-finance-agency-12222540039.
