Owning a home might soon be more achievable for many Americans. There's exciting news about a proposed $15,000 tax credit that aims to help first-time home buyers.
Although this tax credit is not yet a sure thing, it could make the dream of buying a home a reality for many people.
What's the Big Idea?
In efforts to make buying your first home easier, a proposal called the First-Time Home Buyer Tax Credit is making its way through the process of becoming a law.
This proposal suggests giving up to $15,000 as a refundable tax credit. This means if you are buying your first home, you could get 10% of its purchase price back (up to $15,000) to help with your down payment, closing costs, or other expenses.
The best part? This isn't a loan, so you wouldn't need to pay it back under most circumstances.
If you sell the house or move out within a year, though, you would have to return the full amount. If you stay beyond a year, the requirement to repay the credit decreases by 25% each year over four years.
Special cases like divorce, death, or military relocation are exceptions to this rule.
What's the Status?
As of January 2025, the First-Time Home Buyer Tax Credit has not been turned into law, which means this tax credit isn't available yet.
There's no set date for when it could become available, as it could either happen soon or face delays.
Who Can Get This Credit?
While the specifics could change, here's what we know so far about who might be eligible:
- You haven't owned or co-signed a mortgage in the last three years.
- Your income doesn't exceed 60% above the area's median income.
- The price of the home you're buying isn't more than the median price for your area.
- The home must be your main residence.
What About a $25,000 Home Buyer Grant?
Besides the tax credit, there's talk of another bill called the Downpayment Toward Equity Act, which could give first-time home buyers a $25,000 cash grant.
This bill hasn't been passed yet either but aims to help with down payments.
Read more: Proposed $25,000 Grant for First-Time Home Buyers Remains Under Congressional Review
What If You Can't Wait?
Don't worry if you're ready to buy a home now and can't wait for these proposals to become law.
There are many programs and loans designed to help first-time buyers, like low down payment loans and state-specific assistance. These can help make buying a home more affordable.
Types of Loans and Assistance
- FHA Loans: Low down payments and flexible credit requirements.
- Conventional 97 Loans: Only 3% down payment needed.
- Home Possible and HomeReady: Offered to low- to moderate-income buyers.
- USDA Loans: No down payment required, for rural area homes.
- VA Loans: For veterans and active military, with no down payment.
Additionally, every state offers programs to help first-time home buyers, which can include financial assistance for down payments and more.
Finding Down Payment Help
You can find down payment help through grants, low-interest loans, or employer programs.
Some help doesn't need to be paid back, while other assistance comes in the form of loans that you pay back over time.
Getting Mortgage Approval
For most people, getting mortgage approval can be hard, but knowing the steps you need to take can simplify the process.
You simply have to understand the different programs and assistance available to make the dream of owning your first home a reality.
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Previous Article: A Look at the Proposed $25,000 Downpayment Grant for First-Time Homebuyers
