Mortgage Credit Certificate Program (MCC)

The MCC Program is only available through Approved Participating Lenders

Click here for the Participating Lender List

Effective July 5, 2016:

   MCC (non-refundable) Application Fee $696




The Mortgage Credit Certificate (MCC) program can help first time home buyers purchase a home in the City and County of San Francisco. Through the use of a MCC, eligible home buyers increase their ability to qualify for a mortgage loan and reduce their effective mortgage interest rate.

The federal income tax advantage provided by the MCC for a homebuyer who keeps the same mortgage loan and lives in the same house in San Francisco will be equal to 15% of the mortgage interest paid annually on a dollar for dollar basis.   This means the total of 15% of your mortgage interest is deducted directly from your annual tax debt. The remaining 85% of your mortgage interest is taken as a deduction from your gross income in the usual manner. This result in making you qualified for a greater mortgage amount with the same income

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A homebuyer with 3.75% fixed rate 30-year mortgage of $300,000 would pay approximately $11,250 in interest payments for the first year. With a MCC, up to $1,687.50 (15% of $11,250) of the payments could be allowed be taken as a tax credit toward the buyer's federal income taxes, effectively reduce the monthly mortgage payment, giving the buyer greater ability to qualify for and support a mortgage. As an example:


First Mortgage Amount



Mortgage Interest Rate






Monthly Principal (P)



Monthly Interest (I)



MCC Rate



Monthly Credit Amount



Effective Monthly P & I



Effective Interest Rate



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A MCC can be used for the purchase of new or existing single-family homes including single-family detached homes, condominiums and townhouses in the City and County of San Francisco.

San Francisco has identified specific Census Tracts as “Targeted Areas”. The MCC allows greater flexibility for property and homebuyer in target areas to encourage growth of home ownership and development in specific sections of the City’s neighborhoods.

What are Targeted Areas?
Targeted Areas are designated by U.S. Department of Housing & Urban Development and the U.S. Treasury Department to encourage economic growth. Generally, these are areas where the government wants to stimulate development: urban cores, infill and other up-and-coming locations. They are defined by census tract as well as other criteria set by those departments.

How do I find a Targeted Area?
The lender should be able to assist you in determining whether a particular home is within one of these census tracts. Or if home buyer already have an address, you can find out whether it is in a targeted area. To enter the address and get a census tract number or tract code, visit the following website: Then refer back to our list of targeted areas to see if those tract codes are on the list as follows: Click here for a map of targeted areas.

The following census tract numbers are designated as Targeted Areas:


North Beach

107.00, 113.00, 114.00, 115.00, 118.00

North of Market

117.00, 124.00, 125.00

South of Market


Western Addition


Bayview / Hunters Point


Visitacion Valley


What are the maximum purchase price limits?
The purchase price of a home cannot exceed the following maximum purchase price:



Non-Target Area    

Targeted Area

Existing Home (Resale)



New Home (Not Previously owned)




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Who is considered to be a first time homebuyer?
Those persons who have not had an ownership interest in a “Principal Residence” within the last three years. If you have claimed mortgage interest deductions on your tax returns at any time in the previous three tax years, you do not qualify for MCC. You do not have to be considered first time homebuyer if you purchase property in the targeted areas.

What are the maximum income limits?
The total household income (including the income of anyone who is both residing in the property, responsible for the mortgage and/or any co-mortgagor listed on title) cannot exceed:



Non-Target Area    

Targeted Area

1 or 2 person



3 or more person



How do you define Owner - Occupant?
MCC is not eligible for property purchased as investment or rental. The program will require the home buyer live in the property being purchased within 60 days from the date close of escrow.

What is the cost of the application fee?
The home buyer pays a NON-REFUNDABLE application fee in the form of a signed cashiers check or money order, payable to the City and County of San Francisco to process the MCC application. Click here for current fees.

Are there any special Mortgages to which MCC must apply?
The program can be used with 30 years fixed rate mortgages. The MCC cannot be used in conjunction with the bond-backed loans such as California Housing Finance Authority (CalHFA) or Cal Vet bond loans.

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Recapture Tax requires the MCC holder to repay the federal government a portion of their gain upon the sale of the home if the homeowner receives MCC tax credit. This provision is administered by the Internal Revenue Service (IRS). If any Recapture Tax is due, the homeowner pays it to the IRS after selling the home as part of their federal income tax liability for the year in which the home is sold.

RECAPTURE TAX IS DUE, if MCC Holders meet all three of the following criteria:

  • If MCC holders income rise significantly over the life of the loan (generally more than 5% per year). The 5% increase in income is figured from the maximum income limit for the MCC program at the time of purchase, see MCC-8 form for calculation of recapture tax.
  • If MCC holders sell the house within nine years,
  • There is a gain from the sale.

In other words, to owe any recapture tax at all, the MCC holders must meet all three of these criteria.

When do I pay the Recapture Tax?
Any Recapture Tax due is to be submitted with your individual tax return for the year in which you sold the property. For instance, if you sold the property in 2007, the Recapture Tax, if any, along with IRS Form 8828, must be submitted with your IRS Form 1040 in 2008. We strongly recommend that you obtain the services of a tax preparer for the tax year the Recapture Tax form is required to be submitted.

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The City does not make your mortgage loans. The homebuyer will go through the normal process of choosing a Realtor, finding a home, and arranging financing with one of our MCC Participating Lenders. The lender will determine if you are eligible, help you fill out the MCC application forms and send it to the City. At the same time the lender is processing your mortgage loan application, the City reviews your loan package via DAHLIA to ensure completeness of forms and substantiating documentation to verify that you and your property qualify for an MCC. Upon confirming your eligibility, the City will issue the Mortgage Credit Certificate number and commitment within 10 working days after we receive a complete MCC Application package.

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How do I receive my MCC tax credit ?
Once you (the homeowner) receive a MCC certificate with the purchase of your home, you will need to complete an IRS Form 8396 for every tax year, in order to receive your MCC tax credit. To obtain an IRS Form 8396 you may call the IRS at (800) 829-3676 or download the forms from the IRS website at Form 8396 should be completed and submitted together with a copy of your MCC certificate and your IRS Form 1040 when you file your tax returns each year. You will be allowed to take the appropriate income tax credit every year, as long as you keep the same home and the original first mortgage and continue to live in the property as your principal residence.

You may wish to adjust your federal income tax withholding (W-4) in order to receive the MCC benefit on a monthly basis. Talk to the payroll department at your place of employment. By reducing your monthly withholding, you will have more disposable (after-tax) income with which to make mortgage payments.

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Can I Refinancing my MCC?
Current MCC holders can refinance their mortgage loans without losing their current Mortgage Credit Certificates (MCC), you must use a participating lender in order to continue to receive the tax benefits of your MCC. If you do not use a participating lender, you are not qualified for a Reissued Mortgage Credit Certificate (RMCC).

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Mortgage Loan Officers (MLO) or mortgage brokers who would like to become participating lenders for MOHCD's homeownership programs, including DALP, MCC, PIC and TND must complete the required training and pay the required fee. Each individual MLO or mortgage broker must complete the training every year. All participating loan agents must provide their NMLS ID# to MOHCD and sign the Lender Participation Agreement.

List of Participating Lenders

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PDF iconMCC Application Form 10.21.pdf (revised October, 2016) 

MCC Program Manual (pdf) (revised July, 2015) 

MCC Brochures: English (pdf)

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For additional information, please contact the Mayor's Office of Housing and Community Development at 415-701-5500.

Please note, we are not tax advisors. If you have any questions about how your taxes will be affected, consult your tax accountant or call the IRS at 1-(800) 829-3676 or visit their website at

Revised July 2015

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