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OHFA's Mortgage Tax Credit

OHFA’s Mortgage Tax Credit (MTC) product creates an income tax deduction that reduces a household’s federal income tax liability and allows the household to have more available income to make mortgage payments. Homebuyers who qualify for the product will receive a Mortgage Tax Credit from OHFA that can be used to reduce their household’s tax burden every year for the life of their mortgage loan. With an MTC, a percentage of what the homebuyers pay in mortgage interest (20%, 25%, 30%, or 40%) becomes a tax credit that they can deduct dollar-for-dollar from their income tax liability. The remaining 80%, 75%, 70%, or 60% of their mortgage interest continues to qualify as an itemized tax deduction, as long as they have sufficient tax liability.How does this product work?
The percentage of the annual tax credit is based on the location and/or status of the property:

  • 20% credit for non-target area homes
  • 25% credit for target area homes
  • 30% for Real Estate Owned (REO) properties (single family property from HUD, Fannie Mae, Freddie Mac, VA, USDA-RD, or a financial institution that acquired the property through foreclosure)
  • 40% if homebuyer uses an OHFA loan

How is Mortgage Credit Calculated?
If the homebuyers pay $5,360* in interest on their home during the first year and that home is in a non-target area they can claim 20% of the interest or $1,072 as a direct tax credit; meaning they will free up $1,072 to help make their loan payments. In a target area they could claim up to 25%, Real Estate Owned Home 30%, and OHFA loan up to 40% (up to a maximum credit of $2,000). Note: *$5,360 is approximately what you would owe in interest during the first 12 months on a $90,000 fixed-rate mortgage at 6% interest.

How to Qualify?
Applicants for OHFA’s Mortgage Tax Credit product must meet OHFA’s income and purchase price limits, which vary by county, visit

To qualify for an MTC, applicant must also:

  • Meet one of the following:
  1. Be a first-time homebuyer—someone who has not owned or had an ownership interest in his/her principal residence in the last three years;
  2. Purchase a home in a target area—an economically distressed area designated by the U.S. Department of Housing and Urban Development (HUD). 
  3. Be Active Military or a Veteran.
  • Occupy the property you are buying as your primary residence for every year you claim the MTC. If the property ever ceases to be your primary residence, OHFA may revoke your MTC approval.
  • Be creditworthy. Applicant must meet standard credit and underwriting criteria established by the IRS and HUD for the MTC product. See IRS Publication 530.

Additional Property Requirements:

  • New or existing single-family units, condominiums, and planned unit development homes.
  • Modular or manufactured homes must be permanently affixed to the foundation and titled as real estate to be eligible.

Questions? Visit  for more information.