The dream of homeownership may soon become more attainable for many Americans thanks to a proposed initiative known as the Biden First-Time Home Buyer Tax Credit.
This potential tax credit aims to provide financial assistance to those looking to purchase their first home, easing one of the most significant barriers to entry in the housing market. While the legislation has yet to become a reality, the promise of support could open doors for countless aspiring homeowners.
If you are eager to buy a home, it is important to know that you do not have to wait for this proposed tax credit. Here’s what you can expect.
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The Biden First-Time Homebuyer Act of 2021 is a bill that would provide a refundable tax credit of up to $15,000 for first-time home buyers.
The proposed law seeks to revive and update a 2008 tax credit that has since expired. Under Biden’s new proposal, eligible home buyers could receive a tax credit equal to 10% of the purchase price of their home, capped at $15,000. Unlike a loan or cash grant, this refundable tax credit would be applied directly to your tax bill after purchasing your first home.
As of September 2024, the Biden First Time Home Buyer Act has not been passed into law, so the tax credit is not available.
The House of Representatives passed the proposed legislation in March 2021, but the Senate must approve it too before the President signs it into law. Although Democrats currently control the Senate, it’s not clear if they have enough votes to pass the proposal.
There is no set timeline for Biden’s first-time home buyer tax credit to pass. It is possible that it could be passed in the near future, but it is also possible that it could be delayed or even defeated.
As the bill is still under consideration and has not been enacted into law, the final requirements remain subject to change. However, some likely stipulations for the Biden tax credit include:
These potential requirements provide a glimpse into the framework of the proposed tax credit, reflecting an effort to make homeownership more accessible to a broader range of Americans.
The First-Time Homebuyer Act isn’t the only housing-related bill moving through Congress right now.
Another piece of proposed legislation is the Downpayment Toward Equity Act. If it becomes law, first-time home buyers may be eligible for a $25,000 cash grant to help with their purchase.
Buying a home for the first time is a significant milestone, and it comes with its fair share of challenges. But there’s no need to wait for the Biden first-time home buyer tax credit. You might get a house sooner than you think if you take advantage of existing housing assistance programs.
A first-time home buyer loan is a specialized mortgage loan, often featuring more favorable terms such as lower down payments or reduced interest rates.
| Program | Minimum Credit Score | Down Payment Requirement | Other Requirements |
| FHA Loans | 580 (with 3.5% down) | 3.5%-10% | Mortgage insurance is required. Property must meet certain standards |
| Conventional 97 | 620 | 3% | At least one borrower must be a first-time home buyer. Private Mortgage Insurance may be required |
| Home Possible | 660 | 3% | Income limits apply. Homeownership education required |
| HomeReady | 620 | 3% | Income limits apply. Homeownership education required |
| USDA Loans | 640 | 0% | Must be in a USDA-eligible rural area. Income limits apply |
| VA Loans | Varies by lender | 0% | Available to veterans, active-duty service members, and certain members of the National Guard or Reserves |
Additionally, every state offers some form of first-time home buyer program tailored to the local housing market. Your state may also work closely with local lenders, developers, and housing agencies to create opportunities for first-time buyers. This collaboration can lead to innovative solutions and additional resources that cater to the unique needs of the community.
To find out about financial assistance in your area, read our guide to home buyer programs in every state.
In addition to first-time home buyer loans, another integral part of the home buying process that goes hand-in-hand with these loans is down payment assistance (DPA). This assistance can be a game-changer for many buyers, as it lowers the upfront costs of buying a home.
comprehensive guide to down payment assistance in all 50 states. It’s a valuable resource designed to help you navigate the opportunities available in your area and take the next step toward homeownership.
Navigating the path to mortgage approval can be a complex process, but understanding the key steps can make it more manageable.
What is Biden's $15,000 First-Time Homebuyer Act?
Biden’s $15,000 First-Time Homebuyer Act is proposed legislation aimed at reducing the homeownership gap, especially among first-generation home buyers and low-income families. If it becomes law, the act will offer financial assistance in the form of a refundable tax credit, up to 10% of the new home’s purchase price or a maximum of $15,000. This credit is designed to help with closing costs and make homeownership more accessible in housing markets throughout the U.S.
Did Biden pass the first-time home buyer tax credit?
As of September 2024, the first-time home buyer tax credit has not become law. Despite being one of the White House’s campaign promises, the bill is still under consideration. It reflects Biden’s commitment to supporting renters transitioning to homeownership and addressing challenges in the real estate market.
Why does Biden want to help first-time home buyers?
Biden’s interest in helping first-time home buyers stems from a desire to bridge the homeownership gap, particularly among low-income and first-generation home buyers. By offering financial assistance, the Biden administration aims to make real estate more accessible, stabilize housing markets, and promote economic growth.
What are the benefits of being a first-time home buyer?
First-time home buyers often have access to special mortgage rates, down payment assistance programs, and mortgage interest deductions. Lenders, including Fannie Mae and Freddie Mac, may offer favorable terms to encourage homeownership. These benefits can make the transition from renting to owning more manageable, especially in competitive real estate markets.
What is the difference between a first-time home buyer and a new home buyer?
A first-time home buyer is typically defined as someone who has not owned or co-signed a mortgage loan in the last three years. This category may include renters, those in foster care, or individuals benefiting from first-time home buyer programs. A new home buyer, on the other hand, may have owned property in the past but is purchasing a new home. While first-time buyers may qualify for specific benefits like reduced interest rates or IRS credits, new home buyers may not have access to these same advantages.
Many Americans in low- and middle-income brackets may be able to get a tax credit for buying a home if the Biden First-Time Homebuyer Act of 2021 is passed. Furthermore, unless the house is sold within the first four years of ownership, this tax credit might not need to be repaid.
Meanwhile, those looking to buy their first home should explore existing options such as low-down payment loans and down payment assistance. These financial aids can make becoming a homeowner a reality sooner than you might have thought possible.
Ready to begin your home-buying journey today? Get preapproved and compare rates to find the best fit for your financial situation. Your dream home could be just a few clicks away!
Authored By: Ryan Tronier The Mortgage Reports EditorRyan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Reviewed By: Paul Centopani The Mortgage Reports EditorPaul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.