The Mortgage Certificate Credit is $2000. Does this mean I can receive an additional $2000 refund?

Scott,

Regarding your "for qualifying purposes" comment, you are correct. However the calculation is not applied equally across the different loan types.

When you say the credit gives you an extra $166 a month in income for qualifying purposes you are only talking about Conventional guidelines.

For FHA is it different. The amount of the MCC is SUBTRACTED from the monthly payment amount instead of added to the income. This may sound like the same thing but it's not. Let's say you are qualifying at 45% DTI. This makes the MCC on a conventional loan only worth $75 to $166 on an FHA loan. Yes, for qualifying purposes an MCC is about TWICE AS EFFECTIVE on an FHA loan when compared to Conventional guidelines.

It's a little different with VA as well. On a VA loan the MCC is added to the residual income. Effectively becoming just another compensating factor when going over VA's 41% DTI ratio guideline.

I don't want any consumers thinking the MCC is applied the same way across the board for qualifying purposes. While it is the same for tax purposes, when it comes to qualifying for the mortgage it is applied differently from program to program.

Sincerely,
Greg

It may mean exactly that. The MCC is NOT a refundable tax credit, meaning if you don't owe anything and didn't pay in enough you don't get anything back. If, after your other deductions, you still owe at least $2,000, your tax liability will be reduced by that amount. If you paid in more than that you would get it back.

But it IS a tax credit, not a tax deduction. So even though it is non-refundable it can reduce the amount you owe by $2,000 and, if everything else on your tax return is right, you would also get it back.

You can also try and spread that credit out over 12 months and adjust your income tax withholding by that amount ($2,000 / 12) so that you have that extra amount of income every month, theoretically keeping it tax-neutral (you would have that extra $$$ thought the year to do what you want to, and won't owe anything extra at the end of the year).
 
All-in-all it would take an analysis of your tax return to tell. I would consult your tax professional on that. We can only give general, but not specific, tax advice here.

I hope that isn't too confusing. ;)

Sincerely,
Greg

The MCC will remain in effect for the life of your mortgage loan, so long as the home remains your principal residence. The amount of your annual mortgage credit will be calculated on the basis of 20% of the total interest paid on your mortgage loan for that year.