Indiana Mortgage Credit Certificate for First Time Home Buyers

If you're planning to purchase your first home, the Indiana Housing and Community Development Authority can help you put money back in your wallet or pocketbook with a Homeownership Tax Credit (also known as a federal MortgageCredit Certificate, or MCC).

Here's how the Homeownership Tax Credit works.

• You obtain a mortgage through a participating lender.
• In addition to your mortgage, you will receive a certificate that offers you a federal tax credit of up to $2,000 per year. A tax credit is more valuable than a tax deduction because it lowers your actual tax liability, rather than your taxable income.
• The size of your Homeownership Tax Credit will vary based upon your mortgage amount(see below). On a $90,000 loan, you will receive a credit of 25 percent of the interest that you pay. For example, if your mortgage's annual interest rate is 6 percent, you will pay $5,400 in interest during the first 12 months and will receive a Homeownership Tax Credit worth $1,350. This averages out to approximately $112 per month.

Mortgage Amount Tax Credit Rate

$50,000 or Less 35%

$50,001 - $70,000 30%

$70,001 - $90,000 25%

$90,000 and more 20%

• Income Limits have been raised this year and vary by county. In Kosciusko County the limits are $73,200 for 1 or 2 persons & $85,400 for 3+ persons.

This program was designed to provide the consumer with as much flexibility as possible, since it may be applied to all types of loans (fixed-rate, adjustable rate, conventional, FHA, VA, etc.). Federal law does not allow the mortgage credit certificate to be used in conjunction with a mortgage financed by IHCDA's low-interest 1st HomePlus. But, the mortgage credit certificate can be packaged with other competitive mortgage products, such as zero down payment USDA loans.