How Does the Pima County Mortgage Credit Certificate (MCC) Work in 2026?
Evan EinhornPresident & Loan OfficerNMLS #1085589
Published
The Pima County Mortgage Credit Certificate (MCC) is a federal income tax credit for eligible homebuyers, mainly first-time buyers, in Pima County, Arizona. The program describes the credit as 20% of the mortgage interest you pay each year, up to $2,000 a year, for as long as you have the mortgage and live in the home.
A tax credit is different from a tax deduction. A deduction lowers the income you are taxed on. A credit comes straight off your federal income tax, dollar for dollar.
The certificate is issued by the Pima County Industrial Development Authority and administered by Community Investment Corporation, a Tucson nonprofit. The program reopened to new applications in October 2026. It charges a $1,000 one-time fee and a $100 annual fee, and you must be approved before closing.
Modern Home Lending is an independent mortgage broker licensed in Arizona. We do not issue or approve the certificate. We arrange the mortgage with a lender that accepts the MCC, share the current program details and application with you, and help send your paperwork to the program.
We are mortgage professionals, not tax advisors. The tax details below come from program and IRS publications. Confirm your own numbers with a tax professional.
Is the Pima County MCC open right now?
Yes, the Pima County MCC is open as of October 5, 2026. The program announced that day that it is taking new applications.
Funding is limited, and it does run out during the year. The last round opened in June 2025. By early June 2026, only a small number of certificates from that round were left, according to Pima County Industrial Development Authority meeting minutes.
If you are buying in Pima County, ask us where funding stands before you plan around the credit. We follow the program's updates and will share the current details with you.
The program is accepting applications for Pima County only. Pima County includes Tucson, South Tucson, Oro Valley, Sahuarita, part of Marana, and unincorporated communities such as Vail, Green Valley, Catalina Foothills, and Ajo.
How much is the MCC tax credit worth?
The program describes the Pima County MCC credit as 20% of the mortgage interest you pay each year, up to $2,000 a year.
Here is how that works at different amounts of yearly interest:
| Mortgage interest paid in a year | 20% of that interest | Credit at the program's $2,000 maximum |
|---|---|---|
| $6,000 | $1,200 | $1,200 |
| $10,000 | $2,000 | $2,000 |
| $15,000 | $3,000 | $2,000 |
| $20,000 | $4,000 | $2,000 |
These figures are for illustration only. Your credit also cannot be more than your federal income tax for the year.
You pay the most interest in the early years of a mortgage, so many buyers reach the $2,000 maximum in their first full year and stay there for years. The credit is figured by tax year. If you close late in the year, your first credit covers only a few months of interest and will be smaller.
The program says an MCC can save a homeowner $50,000 over the life of a mortgage. At $2,000 a year, reaching that total takes 25 years or more of full credits, so a 5 to 10 year view is more realistic for most buyers.
How do you claim the MCC on your tax return?
You claim the MCC each year on IRS Form 8396, Mortgage Interest Credit, when you file your federal return. You do not have to itemize to claim it. If you do itemize, the IRS has you reduce your mortgage interest deduction by the amount of the credit, which makes the net benefit somewhat smaller.
Some homeowners update Form W-4 with their employer so the savings show up in each paycheck instead of at tax time. Ask a tax professional before you change your withholding.
MCC calculator: what could you save?
This MCC calculator estimates your yearly tax credit and your net savings after program fees, using the figures the program publishes. Enter your own loan amount, interest rate, and how long you expect to keep the loan.
Enter a loan amount, your own interest rate, and a loan term to see an estimate.
Your estimate will appear here once you enter your interest rate.
Estimate only, not tax advice and not a quote or approval. This calculator is published by Modern Home Lending, not by the Pima County MCC program. The rate is your own entry. It assumes a fixed-rate loan with level payments and the figures the program published as of October 5, 2026: a credit of 20% of mortgage interest up to $2,000 a year, a $1,000 one-time fee and a $100 annual fee. It also assumes you keep the loan, live in the home, and have enough federal income tax each year to use the full credit. If you itemize, your mortgage interest deduction is reduced by the credit, so your net savings will be lower. Each year here is 12 months from closing, not a tax year, so the credit on your first tax return will usually be smaller. Your actual credit is figured on IRS Form 8396. Ask a tax professional about your situation.
Buying in Pima County? See your numbers with the MCC
Get a no-cost purchase quote. No SSN or credit check required for the estimate.
Who qualifies for the Pima County MCC?
The Pima County MCC is generally for first-time buyers purchasing a primary residence in Pima County within the program's income and price limits. You need to meet all of these:
- First-time buyer. The program defines that as someone who has not owned a home in the past three years.
- Primary residence in Pima County. You must move in within 60 days of closing and live there. Rentals, second homes, and vacation homes do not qualify.
- Income and purchase price within the program limits.
- Federal income tax liability. The credit can only reduce the federal income tax on your return for the year. That is your total tax before withholding, not a balance due in April, so you can get a refund every year and still use the credit.
Two groups do not have to be first-time buyers: qualified military veterans, who can use the exception one time under federal law, and buyers purchasing a home in a target area.
Single-family homes, condos, townhouses, duplexes, and manufactured homes on a permanent foundation can all qualify.
The program says the MCC works with all types of loans, which includes conventional, FHA loans, VA loans, and USDA financing. The exception is a loan funded by tax-exempt mortgage revenue bonds. You can only get a new MCC with a home purchase, not by refinancing a mortgage you already have.
What are the 2026 Pima County MCC income and purchase price limits?
As of October 5, 2026, the Pima County MCC income limit is $103,600 for one or two people and $119,140 for three or more, and the purchase price limit is $566,354. All three are higher in a target area.
| Limit | Non-target area | Target area |
|---|---|---|
| Household income, 1 to 2 people | $103,600 | $124,320 |
| Household income, 3 or more people | $119,140 | $145,040 |
| Purchase price, new or existing home | $566,354 | $692,211 |
A family of four uses the 3 or more people row.
Income means current gross annual household income, and the program application says it includes both spouses. If you are married and only one of you will be on the loan, ask us and we will find out how the other spouse's income counts.
What is a target area? A target area is a census tract on a federal list of lower-income areas. Target areas have higher limits and no first-time buyer requirement.
Pima County has 34 on the current IRS list. Most are in the Tucson urban area, on the south side, in the central city, and on the north side, including South Tucson, Flowing Wells, and Drexel Heights. Three cover the Ajo area and parts of the Tohono O'odham Nation. We can help you check whether an address is in one.
How much does the MCC cost?
The Pima County MCC has two fees: a $1,000 one-time program fee and a $100 annual fee.
- $1,000 one-time program fee. You pay it after closing, before the certificate is issued. The program offers payment plans of up to six months.
- $100 annual fee. It is billed each spring for the prior year. The first bill is prorated for the months you held the certificate in the year you bought.
The program says it will waive the annual fee for a year in which you had no tax liability and received no credit, if you send a copy of your tax return.
A full year at the $2,000 maximum is twice the one-time fee. If you close late in the year, your first credit will be smaller, so it can take until your second tax return to cover the fee.
Fees can change, so confirm the current amounts when you apply.
Does the MCC help you qualify for a mortgage?
The MCC can help. The program says the credit can be used to increase qualifying income by up to $2,000 a year, about $167 a month.
Conventional, FHA, VA, and USDA guidelines each allow a lender to count the credit, with their own calculations, paperwork, and exceptions. Fannie Mae, for example, adds it to your qualifying income instead of subtracting it from your payment.
About $167 a month is a modest boost. It matters most when your debt-to-income ratio, the share of your income that goes to debt payments, is right at the limit.
Your lender needs the program's documentation to count it, so tell your loan officer about the MCC at the start, not a week before closing.
Want to know if the MCC changes what you qualify for?
Tell us your price range and we will run your purchase with and without the credit.
Is the Pima County MCC worth it?
The Pima County MCC can be worth it, but only if you have enough federal income tax to use the credit and plan to stay in the home for several years. These are the downsides to weigh:
- You need a federal income tax liability. The credit is nonrefundable, so it does not pay out beyond your tax for the year. Unused credit can carry forward for up to three years.
- It lasts only while you live in the home. If you sell, rent the home out, or move, the certificate is canceled.
- Refinancing takes an extra step. You keep the credit after a refinance only if the program reissues the certificate for the new loan.
- Recapture tax is possible. It can apply if you sell within the first nine years.
The program points to line 24 of your Form 1040 as a quick check of your tax liability. That line can include self-employment tax, which the credit does not reduce. If your tax is low mainly because of the child tax credit, you may still benefit, so ask a tax professional to check.
What is the MCC recapture tax?
Recapture tax is a federal tax that can apply when you sell a home you bought with a Mortgage Credit Certificate (MCC). You owe it only if all three of these are true:
- You sell or otherwise dispose of the home within nine years of closing.
- You have a gain on the home, even if that gain is tax-free under the home sale exclusion. Giving the home away counts as a sale at its market value.
- Your income in the year you sell is above a federal limit, which rises each year you own the home.
If any one of those is not true, no recapture tax is due.
At most, the tax is the lesser of 50% of your gain or 6.25% of your highest loan balance, and the formula often produces less. It is calculated on IRS Form 8828, Recapture of Federal Mortgage Subsidy. If you sell within the nine years, the IRS has you file that form with your return even when no tax is due, so have a tax professional prepare that return.
The 2025 program documents also say the Pima County Industrial Development Authority may reimburse a certificate holder who ends up paying recapture tax. Ask whether that applies to your certificate when you apply.
How do you apply for the Pima County MCC?
You apply for the Pima County Mortgage Credit Certificate through the program, not through your lender, and you need the program's approval before you close. Here is how it works when you finance with us:
- Tell your loan officer you want the MCC when you get pre-approved.
- We send you the current application and program details.
- You complete the application with the program's staff by phone, in person, or online. The program requires your last three years of federal tax returns, so have them ready.
- We help send your paperwork to the program, including a copy of your loan application.
- The program reviews your application. Its approval has to be in place before you close.
- After closing, you pay the program fee and the certificate is issued.
- You file Form 8396 with your federal tax return each year.
The lender also signs a certificate for the program. We work with lenders that accept the MCC and coordinate that step with the lender that funds your loan.
Common questions about the Pima County MCC
Do I have to be a first-time homebuyer to get the Pima County MCC?
Usually, yes. The Pima County MCC program defines a first-time buyer as someone who has not owned a home in the past three years. Qualified military veterans and buyers purchasing in a target area do not have to be first-time buyers, but the income, price, and occupancy rules still apply.
Can I get an MCC after I close on my home?
No. You must apply and be approved for the MCC before closing.
What happens to my MCC if I refinance?
You can stay in the MCC program after a refinance, but the program must reissue your certificate each time you refinance. You request the reissued certificate after the refinance closes.
What if I do not owe enough federal income tax to use the whole MCC credit?
The MCC can only offset federal income tax, so in a year with no tax you get no credit. The unused part of the credit can carry forward for up to three years.
Is the MCC available in Phoenix or Maricopa County?
No, not through the Pima County program. The home must be in Pima County. As of October 2026, the program is accepting MCC applications for Pima County only.
Does Modern Home Lending issue the MCC?
No. The Pima County Industrial Development Authority issues the certificate through its program administrator. Modern Home Lending, a mortgage broker based in Scottsdale and licensed in Arizona, arranges the mortgage for your purchase and helps you send your MCC paperwork to the program.
See what the MCC could add to your Pima County purchase
If you are buying in Tucson or anywhere else in Pima County and think you may qualify, bring up the MCC before you write an offer. The approval has to be in place before closing, and funding can run out during the year.
Modern Home Lending can price your home purchase with and without the credit, and compare FHA, VA, and conventional loan options side by side.
Find out what the MCC is worth on your Pima County home
Get a quote online, book a time that works for you, or give us a call.
The Mortgage Credit Certificate is issued by the Pima County Industrial Development Authority and administered by Community Investment Corporation. Neither is affiliated with Modern Home Lending or endorses this article. Modern Home Lending does not issue or approve certificates. Program information was checked on October 5, 2026 and can change, so ask us for the current terms. This article is general information, not tax advice. Talk with a tax professional about your situation.
Programs, rates, and terms are subject to change without notice. This is not a commitment to lend. All loans are subject to credit approval and program guidelines.