When you purchase a home with a mortgage, the mortgage interest you pay throughout the year is deducted from your income reducing your overall tax burden. This amounts to a tax savings which is why having a mortgage and owning a house can provide a tax advantage over those who pay rent. The Mortgage Credit Certificate Program allows eligible first time homebuyers to convert 20 percent of the mortgage interest paid throughout a year into a tax credit with the remaining 80 percent remaining as a tax deduction. A tax credit is similar to a store credit except its a credit with the federal government. While a tax deduction is more like a store discount.
The Mortgage Credit Certificate Program provides housing assistance to families of low and moderate income. As of January 2012, the income limit for Oahu or Honolulu County for families of 3 or more is $114,380 while for smaller families the income limit is $98,040. If you qualify, you may purchase a new or existing fee simple home for no more than $714,375. Only certain lenders participate in the Mortgage Credit Certificate Program. The State of Hawaii Housing Finance and Development Corporation Question and Answer brochure contains a list participating lenders and additional information on the program.