Watch The EXplainer Video If You Prefer
What the Actual effective savings looks like
Example Showing How Powerful the MCC is Compared to Buying The Rate Down With Discount Points
Explainer Video
Why You Need To Know About This Even If you Don’t Want Down Payment Assistance
Eligibility
Income Limits – THE MAJORITY of home buyers qualify – let us validate the numbers most home buyers don’t accurately calcualte their income by themselves
How to Use the MCC – You Must Have This Completed BEFORE closing on your home purchase, it cannot be done after the fact
THE ONE DOWNSIDE – Recapture Tax
The majority of homebuyers using MCC/Bond financing will not have to worry about this. Don’t overreact to this, as even in the worst case scenario the benefits far outweigh the recapture tax. CLICK HERE to see the entire document – Archetype Mortgage LLC cannot provide tax or accounting advice, please consult with a competent professional.
If “Recapture Tax” is owed, it is computed and paid to the IRS for the tax year in which the home is sold. To owe any recapture tax at all, you must:
- (1) sell your MCC or MRB financed home within nine years, AND
- (2) earn significantly more income than when you bought the home, AND
- (3) gain from the sale.
NOTE: - If your household income does not rise significantly over the life of the loan (generally more than five percent per year), there is no recapture tax due.
- If you sell your home anytime after nine years, there is no recapture tax due.
- If you sell your home within nine years but there is no gain, there is no recapture tax due.
All three of these criteria must be met.
Worst case EDUCATIONAL example: If you buy a home for $250,000 and sell it 7 years later for $350,000 and you meet all the criteria above, you will owe ~6.25% of the original mortgage in recapture taxes, or about $15,625. In an example of a 6% rate you’d be getting about $2250/yr in credits. Over 7 years you will have saved roughly $15,750 in interest credits so it doesn’t even really matter in the meantime.
