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Notice of Mortgage Credit Certificate Program

January 06, 2023

The Alabama Housing Finance Authority ("AHFA") announces its Mortgage Credit Certificate Program (December 8, 2022). Section 25 of the Internal Revenue Code authorizes "issuers" to issue Mortgage Credit Certificates (MCC) in lieu of qualified mortgage bonds. AHFA is an issuer of MCCs. Mortgage Credit Certificates entitle qualifying individuals to a credit against the individual's Federal income tax. The amount of the credit is determined by multiplying the certificate credit rate by the interest paid or accrued during the taxpayer's taxable year on the mortgage loan for the taxpayer's principal residence. In order for an individual to claim the credit provided by section 25(a), the MCC must be a "qualified mortgage credit certificate" issued pursuant
to a "qualified mortgage credit certificate program." The following criteria/requirements must be met: 

Principal Residence Requirement

The homebuyer must use the residence as their principal residence within a reasonable time (sixty (60) days) after the MCC is issued. The MCC holder will notify the issuer of the MCC if the residence ceases to be their principal residence.

New Mortgage Requirement

An MCC cannot be issued in conjunction with the acquisition, replacement or refinancing of an existing mortgage. However, a certificate can be used in conjunction with the replacement of construction period loans, bridge loans, or other temporary initial financing with a term of twenty-four (24) months or less.

Three-Year No Prior Homeownership Requirement

The homebuyer cannot have had any present ownership interest in a principal residence at any time during the preceding three years ending on the date the MCC is issued. This three-year, first-time homebuyer requirement does not have to be met if the residence for which a mortgage loan application is being made is located in a designated target area. A target area is a particular area in the State determined or approved by the Federal government that will receive special consideration to provide an added stimulus to housing in that area.

Purchase Price Requirements

There are maximum allowable purchase prices which vary based upon whether the home is located in a designated target area, or a non-target area. The maximum purchase
prices at this time are:


Homebuyer Income Limits

The homebuyer must have family income at or below the income limit for the county in which the residence being purchased is located, considering family size and whether the home is located in a target area. Current maximum income limits range from $73,600 to $110,400. A complete listing of income limits can be obtained by contacting AHFA.

Methods by Which Certificates Are Issued

Prior to the mortgage loan closing, the participating lender must submit to AHFA an application, affidavit and supporting documents. AHFA will review these documents and either reject or accept the application. At the mortgage loan closing, a closing affidavit is prepared and sent with supporting documents to AHFA and if all documents are acceptable, a Mortgage Credit Certificate is issued by AHFA which will allow homebuyers to claim the credit.

In order to comply with Federal requirements, Mortgage Credit Certificates may not be issued prior to April 30, 2023.

For further information contact Alabama Housing Finance Authority, P.O. Box 242967, Montgomery, AL 36124-2967, telephone (334) 244-9200 or visit our web site at