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Gov. Perdue Authorizes Tax Credit Program to Life Housing, Build Economy

Press Contact Only:
Margaret Matrone, NCHFA, 919-877-5606,
Connie Helmlinger, NCHFA, 919-877-5607,


In a move today to help stimulate the economy with the sale of more than 1,500 North Carolina homes, Gov. Bev Perdue signed the authorization that will provide new financial assistance to first-time home buyers. The authorization enables the North Carolina Housing Finance Agency to expand its Mortgage Certificate Credit (MCC) program, which allows eligible home buyers to reduce their federal tax liability by 20 percent of the mortgage interest they pay annually. The program is one of a handful in the nation and could save North Carolina home buyers more than $30 million.

“The MCC will help stimulate the housing market, which is integral to the recovery of our state’s economy,” Gov. Perdue said. “This is just the type of innovation from a state government agency that will help spur our economic recovery.”

The MCC program enables first-time buyers to take a tax credit up to $2,000 every year they occupy their home. This is in addition to the itemized mortgage interest deduction that all homeowners can claim.

“Governor Perdue has asked that all public agencies look for ways to help our state’s economy,” said Lucius Jones, board chairman of the N.C. Housing Finance Agency, a self-supporting public agency. “The MCC not only helps home buyers get into their first home but keeps the home affordable through the life of the mortgage by increasing their monthly take-home pay.”

For example, a home buyer who borrows $146,750 at 5.5 percent interest pays $8,022 in interest in the first 12 months. The 20 percent MCC means that home buyer reduces his tax liability by $1,751 for that year and allows the buyer to reduce his monthly tax withholding accordingly. Over the first 10 years of ownership, the home buyer would save $14,873 in taxes paid to the IRS.

For buyers who qualify, the MCC can be even more beneficial than the home buyer tax credit in the Housing and Economic Recovery Act (HERA) of 2008. The HERA tax credit has a maximum benefit of $7,500 that can be claimed in the first year of the mortgage, but which must be repaid at a rate of $500 per year for 15 years. While Congress is considering making the HERA tax credit a grant, it still expires this year while the benefit of the MCC continues throughout the life of the loan. Even if the home buyer refinances, the 20% MCC tax credit may be reissued with the new mortgage.

To qualify for an MCC, a buyer’s income cannot exceed certain maximums, which range from $85,000 for a family of three or more in urban areas such as Raleigh down to $62,000 in more rural areas. The MCC can be used in conjunction with most mortgages, and borrowers can apply through the Agency’s more than 700 participating lenders and their branches. To find a lender, go to www.nchfa.com.

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The North Carolina Housing Finance Agency is a self-supporting public agency. It has financed 191,000 affordable homes and apartments in the last three decades, including nearly 80,000 homes for first-time home buyers. To learn more, go to www.nchfa.com or call 919-877-5700 or 800-393-0988