If someone you love plans to buy a house for the first time, then this state program could save him or her up to $2,000 off income taxes for the life of the loan.

"This is the program you get for your nephews and nieces," said John Meier, a loan officer with Prime Lending in Allentown. "It's literally $2,000 right off your taxes."Meier recently explained the ins and outs to a group of real estate agents.The savings potential is through a Mortgage Credit Certificate, available through the Pennsylvania Housing Finance Agency. It's free and doesn't expire as long as the first-time homebuyer continues to own the house and lives in it as his or her primary residence, he said.Here's how an MCC works.The first-time homebuyer can claim up to 50 percent of the mortgage interest paid each year up to $2,000. This percentage is called the credit rate.If the loan amount is $100,000 or less, than the buyer can claim a credit rate of 50 percent. If the loan is between $100,001 and $150,000, the credit rate is 40 percent. When the loan is between $150,001 and $200,000, the credit rate is 30 percent. And if the loan is $200,001 and up to the county's maximum, the credit rate is 20 percent.As an example, the PHFA website uses a $125,000 mortgage at an interest rate of 4 percent. This would equal $5,000 of interest being paid in one year. Since the mortgage is in the 40 percent credit rate, 40 percent of that $5,000 is $2,000, which is the maximum amount that can be deducted. The remaining $3,000 of the interest can be a schedule A deduction as allowed by the IRS tax code.The credit deduction does decrease as the annual interest being paid goes down, so the credit rate being applied to it would result in less than $2,000. Even at that, a mortgage held for 30 years could yield a tax credit savings of more than $39,000.Like everything in life, there are conditions.The conditions of the MCC as listed by PHFA include:1. The borrower and all of the adults who plan to live in the house within 12 months of closing must all be first-time homebuyers. This doesn't apply if the borrower is a veteran or purchasing a house in a targeted county.Carbon, Monroe, Lehighton and Northampton are not targeted counties. Schuylkill and Luzerne counties do have this designation.2. The gross income level for a two-person household is $85,400, and $99,600 for three or more people. The gross income is based on how much will be brought in during the first year after closing, not before the purchase.3. The purchase price of the house cannot be greater than the Keystone Home Loan Program purchase price limit. For Carbon County, the limit is $351,300.The appraised value of land connected to a property already owned outright for more than two years is not included in the total purchase price.4. Borrowers must complete a PHFA Mortgagor's Affidavit at the time of the loan application and reaffirm it at closing to qualify. The Recapture Tax Notice also has to be signed at the time of or before closing.Still interested?To apply for the MCC, buyers need to contact a PHFA participating lender. The MCC has to be applied for when the buyer applies for a mortgage, not after the purchase.It is available through PHFA loan programs. These are 30-year loans with fixed-rate terms and include:• HFA Preferred (Lo MI) - low mortgage insurance;• HFA Preferred Risk Sharing (No MI) - no mortgage insurance required, but slightly higher interest rate;• Keystone Government Loan provides financing for first-time homebuyers, and the loans are insured by the Federal Housing Authority, Veterans Affairs, or United States Department of Agriculture Rural Development.• Keystone Advantage Assistance - this is a second mortgage.The MCC is not available to buyers through the Keystone Home Loan Program, because this program is not for first-time homebuyers.Each loan type has certain requirements.For more information, contact a PHFA or to find a lender, go to

http://www.phfa.org/homebuyers.