Washington, DC – U.S. Senators Sheldon Whitehouse (D-RI) and Martin Heinrich (D-NM) and Representatives Jimmy Panetta (D-CA) and Earl Blumenauer (D-OR) today introduced the First-Time Homebuyer Tax Credit Act, which would support homeownership among lower- and middle-income Americans by establishing a refundable tax credit worth up to 10 percent of a home’s purchase price – up to a maximum of $15,000 – for first-time homebuyers.
“Owning a home is at the core of the American dream, and it has been pushed further out of reach for more families over the last few years,” said Whitehouse. “Our legislation will make homeownership, which provides a stable foothold in the middle class and a straightforward way to build wealth, a reality for more Rhode Islanders.”
“Buying your first home is more than just owning property – it’s a source of pride, stability, and hope for the future. Unfortunately, buying a home is out of reach for many Americans right now. With this legislation, we’re changing that,” said Heinrich. “I’m proud to introduce the First-Time Homebuyer Tax Credit Act to ease the financial burden on aspiring homeowners to give every working family an equal opportunity to realize the American dream of owning a home.”
“High housing costs are putting the dream of homeownership out of reach for too many Americans,” said Panetta. “Our legislation would provide qualifying first-time homebuyers with a $15,000 tax credit toward the purchase of a new home, providing them with the support that is needed to build wealth and put down roots in our communities. The First-Time Homebuyer Tax Credit Act is an essential part of the solution to tackling housing affordability throughout the country and investing in the future of our working families in California’s 19th Congressional District.”
“The housing crisis did not manifest overnight. It’s the result of decades of deliberate choices from policymakers who long ago picked winners and losers. It will take a concerted effort from the federal government to level the playing field, and this legislation is a critical piece of that work. By creating incentives for families who have been systematically locked out of homeownership, we can promote housing stability and generational wealth-building opportunities for low- and middle-income Americans,” said Blumenauer.
In 2022, the median sale price for a home in the U.S. was 5.6 times higher than the median income, a ratio that is higher than during the years immediately preceding the 2007 mortgage crisis and is the highest disparity on record.
In Rhode Island, there are currently no communities where families earning the state’s median income can afford to buy a typical home. Nationwide, the shortage of affordable housing opportunities costs the American economy an estimated $2 trillion each year. High housing costs reduce disposable income and economic mobility, stifling economic opportunities for those who can no longer afford housing and their communities.
Housing unaffordability is uniquely problematic for young people, who are struggling to reach the same milestones as their parents did at their age. The typical age of a first-time homebuyer reached a record high of 36 in 2022, up from 29 in 1981. In 2022, first-time homebuyers made up just 26 percent of all homebuyers nationwide compared to 38 percent in 1981.
Under the First-Time Homebuyer Tax Credit Act, taxpayers would have the option of receiving the credit at the time of purchase by working with their mortgage issuer. Alternatively, taxpayers could elect to treat the purchase of their home as occurring in the prior taxable year to receive the credit before tax season if they are unable to qualify for the credit at point of sale.
The credit phases out for those making above 150 percent of area median income and for those buying a house with a purchase price above 110 percent of the area median purchase price. Additionally, the credit is limited to home purchases financed through federally backed mortgages.
“With a commitment to supporting lower-and middle- income families, the First Time Homebuyer Tax Credit Act would be a valuable tool,” said Rhode Island Secretary of Housing Stefan Pryor. “By easing the financial burden of first-time buyers, the dream of owning a home can become a reality for more and more Rhode Islanders.”
“As we continue to face a housing shortage with increasingly high purchase prices, homeownership is out of reach for many families across the country, including in Rhode Island,” said Carol Ventura, CEO of RIHousing. “The First-Time Homebuyers Tax Credit Act, sponsored by Senator Whitehouse, would provide financial assistance to create homeownership opportunities in this difficult homebuying market. The passage of this act would be crucial to assist families find, buy, and build equity in a home like prior generations.”
“As home prices escalate beyond what typical wages can support, the dream of homeownership is out of reach for more and more Rhode Islanders, many of whom lack the financial resources to meet down payment requirements. This is particularly true for low- and middle-income earners, who are being increasingly priced-out of that dream,” said Melina Lodge, Executive Director of the Housing Network of Rhode Island. “Programs such as the proposed First-Time Homebuyer Tax Credit Act are critical pieces of the puzzle to ensure that households who are ready to become homeowners have access to the one-time resources they need to bridge these real hurdles.”
“We know that owning a home is key to building economic security for many Rhode Islanders. Home prices have risen to the extent that a household earning the state’s median household income of $74,489 cannot afford to buy a home in ANY of Rhode Island’s 39 cities or towns. Even at the median household income of $98,975, there is only one community where residents could affordably buy (Central Falls),” said Brenda Clement, Executive Director of HousingWorks RI at Roger Williams University. “This tax credit, coupled with other resources, will help more Rhode Islanders achieve homeownership. In particular, we hope that the credit will also help to address our long-standing disparities in homeownership rates. In Rhode Island, White residents have a homeownership rate more than 30% above that of Black and Hispanic residents.”
“When first-time buyers don’t have access to home ownership, they are stripped of the opportunity to begin building long-term wealth. That, in turn, has a significant impact on our communities and our economy. Initiatives like the First-Time Homebuyers Tax Credit Act represent an opportunity to bridge the gap and empower individuals and families to invest in their future and that of our state,” said Sally Hersey, President of the Rhode Island Association of Realtors.
“NAHB strongly supports tax incentives to promote homeownership, and enacting this legislation would help alleviate one of the biggest barriers for first-time buyers–accumulating enough savings to cover the initial costs of buying a home,” said National Association of Home Builders Chairman Carl Harris, a custom home builder from Wichita, Kansas. “I want to thank Senators Whitehouse and Heinrich and Representatives Panetta and Blumenauer for making homeownership a national priority.”
The First-Time Homebuyer Tax Credit Act is cosponsored by U.S. Senators Tammy Baldwin (D-WI), Jack Reed (D-RI), Tina Smith (D-MN), Peter Welch (D-VT), and Jacky Rosen (D-NV).
The legislation is also endorsed by the National Association of REALTORS®, Rhode Island Association of REALTORS®, CALIFORNIA ASSOCIATION OF REALTORS®, and the Cooperative Credit Union Association.
A summary of the bill is available here; bill text is available here.
