The SC Mortgage Tax Credit is a Mortgage Credit Certificate (“MCC”) program administered by the South Carolina State Housing Finance and Development Authority (SC Housing) that provides a federal income tax credit to qualified homebuyers of up to $2,000 per calendar year.
The MCC allows a homebuyer to convert a portion of their annual interest deduction on their primary residence into a Federal Tax Credit. This credit can be up to $2,000 per year for the life of the loan. The Homeowner can then subtract the credit taken from their annual interest and use the remaining balance as a regular interest deduction.
The credit can be taken annually when filing federal taxes, as a lump sum reducing your taxes owed, therefore getting a higher refund or you can increase your take-home pay by adjusting your federal tax deduction with your employer.
The credit can also be used as additional income on a mortgage application to allow a borrower to lower their debt ratio to help qualify for a loan or be able to qualify for a larger loan.
The cost of an SC Mortgage Tax Credit is just $500, with participating lenders also being able to charge up to a $500 processing fee. The cost of obtaining the credit may be paid by the borrower or by the seller of the home.
Income and house price limit can be found here.
A SC Mortgage Tax Credit may be used with conventional (Fannie Mae/Freddie Mac) or government (FHA/VA/USDA) financing. MCC’s may not be used with SC Housing’s bond program, FHA 203(k) or USDA 502 direct loans.
For more information, click the program flyer below: