Mortgage Interest Credit

The mortgage interest credit helps lower-income individuals afford home ownership. You must contact the appropriate government agency about acquiring a Mortgage Credit Certificate (MCC) before getting a mortgage or buying a home.
If you itemize your deductions, you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit you claim.

If one or more of your mortgages doesn't fit into any of these categories, refer to Publication 936, Home Mortgage Interest Deduction, to figure the amount of interest you can deduct as an itemized deduction. You may be subject to a limit (phaseout) on some of your itemized deductions including mortgage interest. For more information on the limitations based on your adjusted gross income, please refer to the Form 1040 General Instructions and Topic 501.

Mortgage Interest Credit
You may be able to take a credit against your federal income tax for certain mortgage interest if a mortgage credit certificate (MCC) was issued to you by a state or local government for low-income housing. Use Form 8396 (PDF), Mortgage Interest Credit, to figure the amount. For further information, refer to Publication 530, Tax Information for Homeowners. If you sell your home after you've taken this credit and/or the First-Time Homebuyer credit, you may have to repay all or part of the credit(s). For information on repayment of a mortgage subsidy, see Publication 523, Selling Your Home. For repayment of the First-time Homebuyer credit, refer to Topic 611.