Mortgage Tax Credit

The Tennessee Housing Development Agency (THDA) recently announced the renewal of the Take Credit Mortgage Credit Certificate Program. It had previously been unclear as to whether the program would be able to continue under the new tax bills. This is great news if you are planning to build a home this year. This program allows new homebuyers to get a tax credit for half of the yearly interest paid on their mortgage up to $2000.00. This is different from the mortgage interest deduction that is already available to homeowners. “A federal income tax credit actually reduces the bottom line of the federal income tax bill on a dollar for dollar basis. For example, while a $2,000 tax deduction reduces a homebuyer’s taxable income, a $2,000 tax credit equals $2,000 in saved dollars by reducing the homebuyer’s tax liability or taxes due” ( What does that look like related to your budget? That means as much as $2000.00 in your pocket each year, or an additional $166.00 per month in income. It is a bit like giving yourself a raise. And just in case you were wondering, you can still deduct the remainder of the interest you paid on your mortgage.

To access this tax credit, you must work with a lender who has an agreement to partner with THDA in the program. The Mortgage Credit Certificate is good for any new construction home regardless of the type of loan with the exception of loans financed by THDA. You must also be purchasing the home in the state of Tennessee and for your primary residence. There are also income limits that vary by county.

Clinch-Powell has been a long-time partner of THDA. If you would like to learn more about this or other homeownership programs, contact us today. Visit