The purpose of the Mountaineer Mortgage Credit Certificate Program is to reduce the housing expense for homeowners through a federal tax credit (Tax Credit), by reducing the federal income tax liability of homeowners.

Amount of Tax Credit

The annual Tax Credit is equal to a percentage or Credit Rate, of the annual interest paid or accrued on the mortgage loan for the residence. The Credit Rate is based on the amount of the mortgage loan as follows:

If the Credit Rate exceeds 20%, then the Maximum Annual Amount of the Tax Credit is limited to $2,000.

The Tax Credit amount which can be claimed each year cannot exceed the homeowner’s annual federal income tax liability after applying all other credits and deductions. The itemized deduction for mortgage interest must be reduced by the amount of Tax Credit. Annual unused Tax Credits can be carried forward three years for tax purposes. To be able to claim this Tax Credit, the homeowner must have received an MCC from the Housing Development Fund. The Tax Credit is a dollar-for-dollar reduction of the homeowner’s federal income tax liability.

Tax Credit Period

The Tax Credit can be taken each year for the life of the mortgage loan, as long as the eligible residence remains the principal residence of the homeowner.

Example of an MCC Credit Amount:

Amount of Mortgage Loan: $75,000
Interest Rate & Term: 6.25% for 30 years
First Year’s Interest: $4,687
First Year’s Credit Amount: 35% x $4,687 = $1,641

Eligible Home Buyers

Home buyers must occupy the residence as their principal and permanent residence must have a family income at or below the income for a family of its size in the county in which the residence being purchased is located. Home buyers purchasing a residence in non-targeted counties cannot have owned a principal residence during the three-year period prior to the date on which the MCC is issued.

Eligible Residences

Eligible Residences are limited to single-family homes, suitable for occupancy by only one family, including, condominiums, co-op units, or manufactured homes (including single and double wide mobile homes) located in West Virginia. The residence can be a new never-occupied residence or an existing, previously-occupied residence. Up to 15% of total square feet living space of the residence can be used in trade or business. Residences used as an investment property or as a recreational or second home, do not qualify.

Purchase Price Limit

The acquisition cost of the residence, new or existing, cannot exceed the applicable purchase price limit for the county in which it is located. See your lender for more information.

Mortgage Loans

The Tax Credit can be used with any fixed rate or adjustable rate mortgage loan but cannot be used with mortgage loans funded by tax-exempt bonds, or with mortgage loans which refinance existing mortgage loans (except construction loans), or with mortgage loans where mortgage interest is paid to a person related to the home buyers. Home buyers may choose any lender; however, the lender must be willing to sign the MCC Closing Certificate. Each lender will set the interest rate, loan term, down payment requirements, fees, closing costs, and other terms depending on the type of mortgage loan.

Lender Reporting

The lender is required by the Internal Revenue Service to submit reports annually during the period in which mortgage credit certificates are issued and to retain records regarding each MCC for six years. The Housing Development Fund will prepare and provide these reports for the lender’s submission.

Reservation

The lender should contact Housing Development Fund to acquire access to the reservation system on the Fund’s Web site. The lender must register the applicant for a MCC before submitting the actual application forms. Once a home buyer is registered to apply for an MCC and is accepted, the Housing Development Fund will reserve that MCC authority for a period of 90 days.

How to Apply

No later than 10 days before the mortgage loan closing, home buyers should submit the following documents to the Housing Development Fund:

• Application Certification;
• Seller Certification;
• Previous three years’ federal tax returns ( if the residence is located in a non-targeted area); and
• The appropriate application fee.

The Housing Development Fund will review these documents and notify the home buyers that the application is approved or rejected. The MCC must be approved, and an approval letter received by the home buyers from the Housing Development Fund.

The Closing Certificate and a second Recapture Notice must be signed and sent to the Housing Development Fund. The Housing Development Fund will then review these documents and, if approved, will issue the MCC. As required by the IRS Code, if these documents are not signed at the loan closing, the Housing Development Fund will not be able to issue the MCC.

Fees

An application fee of $250 (subject to change) is to be submitted with the all of the executed certifications and within the time-frame described above. The application fee is refundable if the Housing Development Fund is unable to issue a MCC to the applicant. A lender may act as a packager for assisting in the preparation of the certifications and supporting material and will receive $50.00 for this assistance.

Documents and Forms

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MCC Program Manual

Contact Us for more information on the Mortgage Credit Certificate (MCC) Program.