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.
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 sales price for a home is $565,300.
Many homebuyers who have purchased an MCC often use resources 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 DC Open Doors is that the borrower does not have to be a D.C. resident to apply. As long as the buyer purchases a home in Washington, D.C., then he or she 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). To qualify for HPAP, the applicant must be a resident of the District of Columbia.
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.
The first step in the homebuying process should be finding a trusted lender and getting educated on all the available programs. This month, DCHFA brought back its in-person homeownership seminars. The Agency hosts these informational sessions on the first and third Wednesdays 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 really well. A list of all upcoming events can be found at bit.ly/dcopendoors.