Home Mortgage Tax Credit

The Home Mortgage Tax Credit, or home mortgage interest tax credit, is intended to help lower-income individuals afford home ownership.

The government’s policy is to encourage home ownership. To help low-income people become homeowners, the government offers certain assistance, including the opportunity to claim a credit for mortgage interest.

Mortgage Tax Credit Certificate
You may be eligible for a tax credit up to $2,000 of home mortgage interest paid through mortgage interest certificates.

A mortgage credit certificate (MCC) is a certificate issued by certain state and local governments that allow a taxpayer to claim a tax credit for some portion of the mortgage interest paid during a given tax year.

The amount of the mortgage credit varies depending on the state or local government that issues the certificates, but is capped at a maximum of $2,000 per year by the IRS.

Home Mortgage Tax Credit Conditions

  • You have received a mortgage credit certificate from your state or local government (“qualified mortgage credit certificate”).
  • Your home meets certain requirements (“qualified home”).

Calculating the Home Mortgage Tax Credit
You must reduce your deduction for home mortgage interest by the amount of any credit you claim.

The credit cannot be more than $2,000 if the percentage shown on your mortgage credit certificate is 20% or more.

Example: A homeowner receives an MCC that offers a 30% credit on a $200,000 loan for 30 years with a rate of 6%, the allowable credit would be determined as follows:

      1. Mortgage Interest Paid (1st year): $11,933
      2. x MCC Credit: 30%
      3. = Total Credit: $3,579

The total mortgage tax credit in the above example exceeds the IRS limit of $2,000. The homeowner would report a $2,000 credit on their tax return. Note that if the homeowner itemizes their deductions they must reduce the amount of home mortgage interest they would deduct by the $2,000 above.

The homeowner may continue to receive a tax credit as long as they live in the home and retain the mortgage.


Be aware that if you buy a home using a qualifying mortgage credit certificate and sell that home within nine years, you may have to recapture part of the tax credit on Form 8828.

You can learn more about the “Recapture of Federal Mortgage Subsidy” on the IRS website.

Visit the IRS website to learn more about the home mortgage tax credit.

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