First-time home buyers in Montana face many financial challenges, such as qualifying for a mortgage. Making the down payment on a mortgage is another one, and affording the mortgage payments is a third. Fortunately, Montana citizens may apply for a Montana mortgage credit certificate (MCC). A mortgage credit certificate permits a taxpayer to receive an annual Federal income tax credit for a percentage of the interest paid on a mortgage during the Federal tax year. Consequently, home buyers may qualify for mortgages which lenders may not have originally extended without the mortgage credit certificate due to the use of the tax credit as extra accounted income on a monthly basis.
To qualify for a mortgage credit certificate in Montana, there are a few different criteria to meet. Firstly, you must be a first-time home buyer or an honorably-discharged military veteran. Secondly, the home you are purchasing must be claimed as your primary residence. Finally, you must meet certain home purchase price and income limits based on your specific county or metropolitan area. All Montana mortgage credit certificates are issued by the Montana Board of Housing.
It is also important to consider that a mortgage credit certificate is applicable to Federal income tax only; that is, 20 percent of the interest paid on the mortgage can be converted to a federal income tax credit, but not to a state income tax credit. The remaining 80 percent of the interest can be used as an itemized deduction in order to decrease the sum total of taxable income in a tax year. The maximum allowed annual Federal income tax credit from a Montana mortgage credit certificate is exactly $2,000.
To learn more about Montana mortgage credit certificates and how to apply for one, please refer to the Montana Board of Housing website at http://housing.mt.gov/About/homeownership/mcc.mcpx.