TAX CREDITS FOR HOMEBUYERS
Presented by:
Coleen Baumert, Business Development Manager
Tom Wolf, Governor
Brian A. Hudson, Executive Director
PHFA Mission
In order to make the Commonwealth a better
place to live while fostering community and
economic development, the Pennsylvania
Housing Finance Agency provides the capital
for decent, safe and affordable homes and
apartments for older adults, persons of modest
means and those with special housing needs.
www.phfa.org
PENNSYLVANIA HOUSING FINANCE AGENCY
PHFA, who are we?
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We are a home loan investor
 We
provide funding for homebuyers to purchase
homes through participating lenders
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Created in 1972- Homeownership in 1982
Headquarters in Harrisburg, PA
PHFA has invested over $11.9 billion in home loans
for potential Pennsylvania homeowners
Provided home loan funding to more than 158,900
homeowners
PENNSYLVANIA HOUSING FINANCE AGENCY
PHFA Advantages
PENNSYLVANIA HOUSING FINANCE AGENCY
PHFA Advantages
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PHFA has different loan programs to meet the
different home purchase needs of PA homebuyers
Home purchase/refinance loan options
Assistance programs
Competitive interest rates and affordable
mortgage terms
Free homebuyer education
Over 90 lending partners throughout PA
Loan servicing provided by PHFA
PENNSYLVANIA HOUSING FINANCE AGENCY
BUYER
LENDER
PHFA
Buyer
Application
Lock Rate
REALTOR®
Process &
Underwrite
Approve
Loan
Close
Purchase
Loan
Service
Loan
PENNSYLVANIA HOUSING FINANCE AGENCY
Mortgage Credit Certificate
PENNSYLVANIA HOUSING FINANCE AGENCY
What is a Mortgage Credit Certificate?
MCC = Homebuyer Tax Credit
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An MCC is an actual paper certificate that allows a
homebuyer to claim an annual federal tax credit for the life of
the original mortgage, as long as it remains the homeowner’s
principal residence.
A PHFA MCC is given to eligible homebuyers who are using a
PHFA First Mortgage to purchase their home. There is no fee
for this certificate.
The credit only expires if the homeowner sells, pays off
mortgage or no longer utilizes the home as their principal
residence.
PENNSYLVANIA HOUSING FINANCE AGENCY
What is a Mortgage Credit Certificate?
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Homeowners can claim a tax credit of up to 50% of the
mortgage interest they pay each year, not to exceed $2,000
annually.
The remaining mortgage interest paid may be claimed as a
deduction per IRS guidelines.
The tax credit can not be more than the tax liability (unlike
the First-time Homebuyer Tax Credit)
In other words…
PENNSYLVANIA HOUSING FINANCE AGENCY
MCC Example
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Mortgage Amount
$125,000
Mortgage Interest rate
($5,000)
X
4.00
MCC percentage
X
.50
Eligible Credit Amount
$ 2,500
$2,000
The credit can not exceed the amount of the federal tax owed after
all other credits and deductions have been taken and can never
exceed $2,000 in any given year. In this example, the borrower is
entitled to a maximum of $2,000 in the form of a tax credit and the
remaining $3,000 as a standard mortgage deduction using
Schedule “A” of their annual federal tax return.
To claim the credit, the homeowner completes and submits IRS
Form 8396 along with their federal tax returns.
PENNSYLVANIA HOUSING FINANCE AGENCY
MCC Requirements
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An MCC can be given in conjunction with a PHFA first
mortgage using:
 Keystone Government (K-Gov)
 HFA Preferred Risk Sharing No MI
 HFA Preferred Lo MI
Due to the source of funds, MCC can not be used with the
Keystone Home Loan program.
Purchases only no refi’s
If the homeowner chooses to refinance, the MCC may be able
to be reissued with the approval of PHFA
 $100
reissue fee
PENNSYLVANIA HOUSING FINANCE AGENCY
Eligibility Requirements
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MCC borrowers may also qualify for an Advantage Assistance
Loan in addition to the MCC.
Eligible borrowers must meet the requirements for the PHFA
first mortgage program, in addition to the requirements for
the Keystone Home Loan program since the funding for the
MCC program comes from the same source.
The following Keystone Home Loan eligibility requirements
must be met:
 First-time Homebuyer
 Income Limit
 Purchase Price Limit
PENNSYLVANIA HOUSING FINANCE AGENCY
First-time Homebuyer
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Someone who has not had ownership interest in (not listed
on the deed of) their principal residence during the last three
years.
This includes:
 All borrowers
 All other adults who intend to live in the home within 12
months from closing
First time homebuyer requirement waived in Targeted
counties and census tract listed in Appendix A
 Waived for Veterans
PENNSYLVANIA HOUSING FINANCE AGENCY
Income and Purchase Price Limits
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Income Limits: The gross The gross annual income for all
adults that intend to occupy the home within one year from
closing, must not exceed the income limit - Appendix A
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All sources of All sources of income must be included except for
income received by persons under 18
Income received by dependents do not need to be included if
enrolled in a full-time undergraduate program of at least 12
credits per semester
Purchase Price Limits: The purchase price of the home can
not exceed limits listed in Appendix A
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Includes all cost to complete a home: Total Acquisition Cost
For two-units (K-Gov only), purchase price can exceed limit by
10%
PENNSYLVANIA HOUSING FINANCE AGENCY
Why do we think MCCs will be good for business?
PENNSYLVANIA HOUSING FINANCE AGENCY
Mortgage Interest Paid
$120,000
Loan Amount
K-Gov Interest
Paid (4.25%)
Effective K-Gov
Interest (4.25%)
With MCC
Savings
Year 1
$5,061
$3,061
$2,000
Years 1-10
$46,171
$26,171
$20,000
Years 1-20
$79,307
$42,739
$36,568
Years 1-30
$92,518
$49,345
$43,173
PENNSYLVANIA HOUSING FINANCE AGENCY
PHFA First Mortgages used with MCC
PENNSYLVANIA HOUSING FINANCE AGENCY
Conventional Loan Programs
HFA Preferred Risk SharingTM
 Slightly higher rate but NO mortgage insurance is
required
HFA PreferredTM
 Mortgage insurance provided by a Fannieapproved insurer
PENNSYLVANIA HOUSING FINANCE AGENCY
HFA Preferred Risk SharingTM No MI/HFA PreferredTM Lo MI
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For purchase and limited cash-out refinance (Cash back
limited to lesser of 2% of the balance of the new loan or
$2,000)
No first-time homebuyer requirement however, the
borrower may not have an ownership interest in any other
residential dwelling at the time of loan closing.
Must meet HFA income limits
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Appendix B
Gross, annual income projected over the next 12 months
Calculated on ALL adults who intend to occupy the home within one
year from loan closing
Loan amount cannot exceed the current Fannie Mae
standard loan limits
High cost areas do not apply
PENNSYLVANIA HOUSING FINANCE AGENCY
HFA Preferred Risk SharingTM No MI/HFA PreferredTM Lo MI
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Desktop Underwriter (DU)
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Borrowers must have a FICO of at least 620
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up to 97% LTV regardless with a DU finding of Approve/Eligible
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Maximum CLTV 105%
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Maximum Debt -to-income ratio of 45%
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Borrowers must contribute lesser of 1% or $1000 of own funds
Approve/Eligible only
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Qualifying income, reserves and credit score determined by DU
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No flexibility on PHFA’ s part
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No exceptions
PENNSYLVANIA HOUSING FINANCE AGENCY
HFA Preferred Risk SharingTM No MI/HFA PreferredTM Lo MI
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Manual underwriting permitted
 Max LTV of 95%; Max CLTV of 105%
 Borrowers must have a FICO of at least 680
Maximum DTI for borrowers with FICO scores between 680 and 700
is 36%
 Maximum DTI for borrowers with FICO scores 700 or higher is 45%
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Borrowers with no credit scores or “thin” files are not
acceptable
 Borrowers must invest lesser of 1% or $1000
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PENNSYLVANIA HOUSING FINANCE AGENCY
HFA Preferred Risk SharingTM No MI/HFA PreferredTM Lo MI
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Balance of required funds to close may come from PHFA
Advantage loan and/or Fannie approved
CommunitySeconds®
Used for one unit homes, PUDs, condos and
manufactured housing
PENNSYLVANIA HOUSING FINANCE AGENCY
Government Options
PENNSYLVANIA HOUSING FINANCE AGENCY
Keystone Government (K-Gov)
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Mortgage insurance provided by FHA, VA or RD
Follows government entity guidelines
Minimum FICO score of at least 620
Borrower must contribute the lesser of 1% or $1,000 of their
own funds (FHA loans only)
Debt-to-income ratio of 45%
No PHFA income or purchase price limits
No PHFA first time homebuyer requirements
Use for one or two unit dwellings, condos or manufactured
homes
PENNSYLVANIA HOUSING FINANCE AGENCY
Assistance Program
PENNSYLVANIA HOUSING FINANCE AGENCY
Keystone Advantage Assistance Loan
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Downpayment and/or closing cost assistance for eligible
homebuyers
Borrowers must have a FICO score of 660
Assistance available for purchase or refinance loans
Existing homes: 4% of purchase price, capped at $6,000
0% interest rate over 10 years
Can only be used with PHFA first mortgages, but not Keystone
Home Loan- Conventional
Assistance funding is based on need
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Determined by the originating lender
PENNSYLVANIA HOUSING FINANCE AGENCY
Just imagine… these financing possibilities
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Conventional mortgage option with No MI or Lo MI
Or affordable FHA product (through K-Gov)
 WITH
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Downpayment and/Closing Cost Assistance
 4%
of sales price maximum $6,000
 WITH
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Mortgage Credit Certificate (MCC)
 Homebuyer
tax credit incentives up to $2,000 annually
PENNSYLVANIA HOUSING FINANCE AGENCY
PENNSYLVANIA HOUSING FINANCE AGENCY
Contact Information
Coleen Baumert, PHFA Business Development Manager
[email protected] 717.780.1871
www.phfa.org
Solution Center
1.800.822.1174
PENNSYLVANIA HOUSING FINANCE AGENCY
PENNSYLVANIA HOUSING FINANCE AGENCY
THANK YOU FOR YOUR
TIME AND ATTENTION
5/6/15
www.phfa.org