California Debt Limit Allocation Committee

 

What the Program Offers

The Extra Credit Teacher Program provides participants with mortgage assistance in the form of either a reduced interest rate mortgage loan (mortgage revenue bond) or an annual reduction of their federal income taxes with a tax credit (mortgage credit certificate program).

What is a Mortgage Revenue Bond (MRB) Loan or Mortgage Credit Certificate (MCC)

• Mortgage Revenue Bond (The following example is for illustration purposes only. Rates are subject to change)
  For a family with a $305,000, 30-year mortgage, at 6.125% fixed interest rate, the interest rate would be approximately 1/4% below market interest rates, which would result in savings of approximately $17,000 over the life of the loan. This example is based on a market interest rate of approximately 6.375%.
  
  A MRB loan is a mortgage financed through the sale of mortgage revenue bonds.  These loans normally have an interest rate that is below the normal market rate.  Savings over the life of the loan can be substantial.
• Mortgage Credit Certificate
  For a family with a $210,000, 30-year mortgage, at 6% fixed interest rate, the credit would be approximately $1,880 for the first year and approximately $36,489 over the life of the mortgage. The credit would be highest in the early years of the loan, when there is more interest paid by the homeowner. This example is based on a 15% tax credit.
  
  Through the use of an MCC, eligible home buyers increase their ability to qualify for a mortgage loan. MCC recipients may take 15% of their annual mortgage interest payments as a dollar-for-dollar tax credit, thereby reducing their federal income tax bill. The homebuyer may adjust his or her federal income tax withholding, thereby increasing income available to pay the mortgage. If the homebuyer does not pay enough tax during the year to use the full credit, the unused credit can be carried over to future years for up to three years.