How To Afford More House As A Kansas City Homebuyer

Looking to buy a home, but don’t have a 20-percent down payment? It’s a common financial situation for Kansas City area homebuyers. Homeownership is still possible with Kansas City area down payment help programs including the Mortgage Credit Certificate program. It helps Veterans and first-time homebuyers afford more home, through a federal tax credit.

Missouri Mortgage Credit Certificate

Frustrated you can’t find the home you’re looking for in your budget? The Mortgage Credit Certificate (MCC) program is the answer! It’ll make your first home affordable. It enables you to buy more house with less money.

Here’s how this Missouri home loan program works. The MCC is an annual federal tax credit. Since it’s a federal tax credit and not a deduction, the financial impact is felt every other week in your paycheck. You adjust your W-4 for the tax credit, up to $2000 a year. You also have the option to get the credit annually, if you prefer that option.

Since you use the tax credit as qualifying income, your debt to income ratio is lower allowing you to buy a higher priced home.

This program is available to qualifying first-time homebuyers and Veterans.

Missouri first-time homebuyer tax credit

So, how much is the Missouri first-time homebuyer tax credit, also known as the Mortgage Credit Certificate? It’s 25-percent of the interest paid, up to $2000 a year for the life of the loan!

While it’s for first-time homebuyers, you’re technically a first-time buyer if you haven’t owned or had an ownership interest in a primary residence for the last three years. So, it’s possible a repeat buyer could qualify for this money.

Many buyers look at their monthly mortgage payment when calculating how much home they can afford. Michelle Ekstam of Community Mortgage, says the difference in monthly costs is significant with the Mortgage Credit Certificate. If your goal is a $1155 monthly payment, you can actually afford $1321 with the program. That’s an extra $166 loan payment each month!

When you look at the numbers in terms of purchasing power, it’s an extra $22,000! Now you can afford a $172,000 home rather than a $150,000 home. Think of all the extra home purchasing options this program opens you up to.

These numbers are based on an FHA loan with 3.5 percent down, and a 5-percent interest rate. Numbers vary based on the going interest rate, your purchase price, and loan. A lender can run specific quotes for your financial situation.

It works with all loans – conventional, FHA, USDA and VA. You can also use it with other down payment assistance programs.

Veterans and Missouri first-time homebuyers qualify for the Mortgage Credit Certificate.

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MCC Guidelines

Here’s the catch. There are income and purchase price limits. Plus, there’s a one-time 1% loan origination fee plus standard closing costs.

The purchase price limit in a non-targeted area is $271,164 and $331,423 in a targeted area. Targeted areas are designated as economically distressed neighborhoods or where at least 70-percent of families have an income that’s 80-percent or less of the statewide median income. That’s a lot of numbers, so it’s best to check the Missouri census tracts which are designated as “targeted” by the Secretary of the Treasury and Housing and Urban Development.

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According to the Missouri Housing Development Commission, these are the latest income limits.

NON‑TARGETED AREAS TARGETED AREAS

1‑2 persons 3+ persons 1‑2 persons 3+ persons

Kansas City MSA $80,000 $92,000 $96,000 $112,000

(Counties of Caldwell, Cass, Clay, Clinton, Jackson, Lafayette, Platte & Ray) *

Jefferson City MSA $71,500 $82,225 $85,800 $100,100

(Counties of Cole & Osage) **

Columbia MSA $76,400 $87,860 $91,680 $106,960

(Boone County)

St. Louis MSA $76,800 $88,320 $92,160 $107,520

(Counties of Franklin, Jefferson, Lincoln, St. Charles, St. Louis City, St. Louis County & Warren) ***

All Other Areas $66,400 $76,360 $79,680 $92,960

The Mortgage Credit Certificate is is just one of several down payment assistance programs available to Missouri homebuyers. Search for a qualified lender in your neighborhood, or talk with your real estate agent to see who they recommend.