Changes to AHFA's Mortgage Credit Certificate Program Effective May 1
Changes to MCC Income & Sales Price Limits
More Alabama families will qualify for  AHFA's Mortgage Credit Certificate program , thanks to increases in allowable household income and maximum sales price limits . 

Effective May 1, the maximum sales price in target areas is $360,067 and $294,601 in non-target areas.

The new income limits , also effective May 1, were released by the U.S. Department of Housing and Urban Development and are based upon the state's median income, which rose to $65,300.

Home buyers can earn up to $97,950 in urban areas and $91,420 in rural areas, depending on family size and location.

The higher income limits benefit participants in the MCC program , which provides a tax credit to reduce the amount of federal taxes owed by a percentage of the annual mortgage interest paid each year. The remaining annual interest may be claimed as a mortgage interest deduction on the homebuyer's federal tax return.

Qualified homebuyers will receive a larger federal tax break or tax refund each year or benefit from immediate savings by updating the withholdings on their W-4 form.

MCCs may be paired with AHFA's  Step Up program or any conventional fixed-rate, FHA, VA, Rural Development, and privately insured mortgages.  
Temporary Change to IRS Tax Transcript Requirement
Due to the current shut-down in effect from the virus outbreak, federal tax return transcripts are currently not available from the IRS. As a result, the following documentation will be acceptable on a temporary basis:

  • In lieu of IRS federal tax return transcripts, AHFA will accept the applicable year(s) signed/ dated federal tax returns (1040's) for all occupants 18 years of age and older (one year for Target; three years Non-Target); and
  • An executed 4506-T for all occupants 18 years of age and older

AHFA will accept this alternative until the IRS systems are back on-line in a timely fashion.
Permanent Change Regarding Verifying Home Ownership
When the IRS simplified tax returns, the result was the inability to use the IRS Tax Return Transcripts as an aide to determine current/ previous home ownership. The higher standard deductions often resulted in a borrower/ occupant not having to file a 'Schedule A' which may reference real estate taxes paid and/ or mortgage interest-indicators of home ownership.

As a result, AHFA will begin requiring the additional document below, effective with reservations made on/after May 1, 2020:

  • A lender-supplied Fraud Report (e.g. LoanSafe, FraudGuard) on all occupants 18 years of age and older which should reference prior ownership information

The Step 2 MCC Request for Conditional Commitment Checklist has been updated in Lender Online to reflect this additional requiremen.