Financial assistance for first-time home buyers Mortgage Credit Certificates (MCC) program
The California Debt Limit Allocation Committee (CDLAC) has authorized the County of Santa Clara to issue Mortgage Credit Certificates (MCCs). The MCC Program provides financial assistance to qualified first-time homebuyers by issuing a tax credit of up to 15% of the interest paid on the homebuyer’s first mortgage which results in a reduction of the homeowner’s Federal income taxes. The MCC tax credit remains in place for the life of the mortgage, so long as the residence remains the borrower’s principal residence.
Am I eligible for an MCC?
To qualify for an MCC, you must meet these requirements:
- Be a first-time homebuyer. A first-time homebuyer is someone who has not owned their main residence during the last three years. Some exceptions may apply. The first-time homebuyer requirement is waived for homes in Targeted Areas, as defined by the U.S. Department of Housing and Urban Affairs (HUD).
- Obtain your first mortgage loan through one of the County’s Participating Lenders.
- Meet the income limits for the program.
- The sales price of the home must be less than the allowable purchase price limits, as described below.
- Purchase a new or existing single-family home in Santa Clara County. These include single-family detached homes, condominiums, or townhouses. Multiple homes on one lot, duplexes, and three- or more unit properties are not eligible for MCC-assisted mortgages.
Purchase Price Limits
Home prices cannot exceed 90% of the average area purchase price over the past 12 months, unless the home is in a federally designated Target Area, as published annually by the IRS. Current purchase price limits are shown in the table below:
| Property Type | Maximum Purchase Price | |
|---|---|---|
| Non-Targeted Areas (90%) | Targeted Areas (110%) | |
| Existing Units | $1,530,000 | $1,870,000 |
| New Units | $1,530,000 | $1,870,000 |
Reissued Mortgage Credit Certificates
The County offers Reissued MCCs (RMCCs) to homeowners who are refinancing their existing MCC-assisted mortgages. As an MCC holder, when you refinance your home, you will lose the federal tax credit unless you apply for an RMCC. The Reissued Mortgage Credit Certificate (RMCC) Program, however, allows MCC holders to maintain the benefits from the original mortgage credit certificate.
If you wish to maintain the benefits of the MCC, you must submit an RMCC application with a Participating Lender.
Am I eligible for an RMCC?
To be issued an RMCC, you must meet the following conditions:
- You have an MCC that was issued by the County of Santa Clara.
- You will continue to occupy your property as its owner.
- You must refinance with a Participating Lender and submit all the required documents with your application.
When to apply for an RMCC
Send us the RMCC application and attachments after your refinanced loan has closed. The County must receive the RMCC application within one year of the closing date of your refinance.
There is no limit to the number of times you can refinance as an MCC/RMCC holder. However, each time you refinance, a new RMCC application needs to be submitted to the County with a $350 fee.
Recapture tax
If you sell or dispose a home associated with an MCC during the first nine years from the purchase date, a part or all of the MCC benefit may be ‘recaptured’.
A portion of the MCC benefit is subject to recapture by the Internal Revenue Service if a recipient meets all three of the following conditions:
- The borrower sells the home within nine years of purchase;
- The borrower earns significantly more income than when they bought the home; and
- The borrower has a gain from the sale of the home.
Only borrowers who meet all three criteria are subject to recapture. MCC borrowers are not subject to recapture if they sell, give away, or dispose of the home more than nine full years after closing. The maximum amount of recapture, which is payable on the sale of the home, is 6.25% of the original principal balance of the loan or 50% of the gain on the sale of the home, whichever is less.
Get started
To get started, please contact a Participating Lender in the applicable County homeownership program: To contact the County directly, please email Lily Nguyen:
Lily Nguyen, Senior HCD Specialist: [email protected]