Proposed Bills in Congress Could Make First-Time Homeownership Easier
It is not uncommon for many potential homeowners to take several years to work towards the possibility of purchasing their first home. This can include saving for a down payment or working on attaining a favorable credit score to get the best mortgage approval. Adding a competitive housing market to this with very few properties available can make it much more difficult for first-time homebuyers to be successful in their homebuying ventures. The median price of homes across the country in 2021 was about $341,600 which is a 19.1% increase over the previous year.
In an effort to help more first-time buyers be able to enter the realm of homeownership the federal government is looking at options for providing down payment assistance and tax credit help to make homeownership more attainable for those that want to enter the real estate market. The president has recently included a first-time home buyer tax credit in his campaign platform and now lawmakers are attempting to take action in Congress to see some form of assistance available for first-time homebuyers.
No law has passed yet or been voted on but there are multiple bills in committee or in preparation stages waiting to be introduced. Here are some details on some of those bills:
This was introduced in the house of representatives in the month of April 2021 by representative Earl Blumenauer and representative Jimmy Panetta. This act would establish a refundable tax credit of 10% of the home’s purchase price up to a total limit of $15,000 on the purchase of a home. In order for a homebuyer to be eligible for this tax credit, the buyer must be a first-time buyer not having owned or purchased a home in the last three years. The homebuyer’s income must also be at or below 160% of the area’s median household income. The home’s purchase price must also be below 110% of the local median home purchasing price.
This bill currently most closely resembles the tax credit that was proposed by the Biden campaign ahead of the 2020 election. When this bill was introduced it referenced Biden’s proposition during the election process.
The Down Payment Towards Equity Act of 2021 will filter funds to states through the US Department of Housing and Urban Development for direct down payment assistant rather than as a tax credit. This act offers up to $25,000 in down payment assistance for first-time homebuyers that are eligible. To be eligible a home buyer must be a first-time buyer not owning a home in the previous three years to application and must also be considered as a first-generation home buyer. A first-generation home buyer is defined as a person whose parents have never owned a home in the buyer’s lifetime or own a home and lost it in foreclosure, short sale, or deed in leu of foreclosure, and their parents must not currently own a home.
Buyers eligible of this program must also have an income at or below 100% of the area’s median household income, or in high cost areas 180%. To receive the full $25,000 eligible homebuyers must also be determined as socially and economically disadvantaged individuals. This is defined as being part of a racial or ethnic group that has been deemed as historically subject to buying prejudice such as black, Hispanic, Asian American, and Native American individuals or otherwise able to provide evidence of social disadvantage.
Both of these bills state their goal is to help lower-income households achieve homeownership particularly for disadvantaged or minority communities with historically lower rates of homeownership. Neither of these bills has passed yet and are still in discussion and consideration. They both have a long way to go before being seriously considered as turned into law.