Status of the First-Time Homebuyer Act of 2021

The First-Time Homebuyer Act of 2021 was a legislative proposal that did not pass Congress and is not law. The bill was intended to create a substantial federal tax credit to make homeownership more accessible for new buyers by providing funds at the time of purchase. Since the bill failed to advance through the required legislative stages, the tax credit it proposed is not available.

Key Provisions of the Proposed 2021 Act

The First-Time Homebuyer Act of 2021 proposed a refundable tax credit of up to $15,000, calculated as 10% of the home’s purchase price. A home costing $150,000 or more would have received the maximum benefit. The credit was designed to be available at closing, allowing buyers to use the funds immediately for their down payment or other costs instead of waiting to file their annual tax return.

Eligibility required that an individual could not have owned a home in the three years prior to the purchase. The bill also set income limits, restricting eligibility to individuals with an income of no more than 160% of the Area Median Income. Further conditions would have applied to the property and buyer:

• The purchase price could not exceed 110% of the area’s median purchase price.
• The home had to be the buyer’s principal residence.
• The property could not be purchased from a close relative.
• A portion of the credit would need to be repaid if the homeowner sold the residence within four years.

Legislative Status and Outcome

The First-Time Homebuyer Act of 2021 was introduced in the U.S. House of Representatives on April 28, 2021, and referred to the House Committee on Ways and Means. The bill did not advance out of the committee and was never brought to the floor of the House or Senate for a vote. Other similar proposals, like the Downpayment Toward Equity Act, have also been introduced in subsequent years but have not passed.

Current Federal Assistance for First-Time Homebuyers

While a broad federal tax credit is not available, several federal programs assist first-time homebuyers by insuring or guaranteeing loans. The Federal Housing Administration (FHA) offers an insured loan program allowing down payments as low as 3.5% for applicants with a qualifying credit score. These loans are provided by FHA-approved lenders and require the borrower to pay mortgage insurance premiums.

For eligible service members, veterans, and surviving spouses, the Department of Veterans Affairs (VA) guarantees a portion of home loans. This guarantee allows private lenders to offer VA loans often with no down payment requirement and no private mortgage insurance. The borrower may need to pay a one-time VA funding fee, which can vary based on service type, down payment amount, and whether it is a first-time use.

Another option is the loan program from the U.S. Department of Agriculture (USDA), which targets rural and some suburban areas. USDA loans can provide 100% financing, meaning no down payment is required for eligible borrowers purchasing a home in a designated rural area. These loans have income limitations, which are determined by the household size and the property’s location.

State and Local First-Time Homebuyer Programs

Beyond federal loan programs, prospective homebuyers should investigate assistance offered at the state and local levels. These programs are administered by state or regional housing finance agencies and are designed to address local housing market conditions.

Common forms of assistance include down payment assistance (DPA) programs, which may be grants that do not need to be repaid or forgivable loans. A forgivable loan is often forgiven over several years if the buyer remains in the home. Another option is the Mortgage Credit Certificate (MCC), which allows a homebuyer to claim a tax credit for a portion of the mortgage interest paid each year.

To find these resources, individuals should search online for the “housing finance agency” in their specific state. These agencies’ websites are the authoritative source for details on available programs, eligibility rules, and lists of participating lenders. The U.S. Department of Housing and Urban Development (HUD) also provides a state-by-state portal on its website that can direct users to these local resources.