Overview: First Home Purchase Tax Benefits
| Bill Number | Chamber | Sponsor | Date Introduced |
|---|---|---|---|
| H.R. 7402 | House | Rep. Moore, Tim [R-NC-14] | February 5, 2026 |
The First Home Purchase Tax Benefits is a proposed change that would let eligible home buyers use distributions from qualified tuition programs, often called 529 plans, for a first home purchase.
For home buyers, this bill centers on flexibility. It treats certain education savings as a potential source of funds for home buying, which may help some buyers bring more money to the closing table without changing their day-to-day budget.
H.R. 7402 was introduced in the 119th Congress. Note that bills often change on their way to becoming law, so this page will update as new details emerge. For real-time updates, subscribe to our newsletter.
Bill Overview
First Home Purchase Tax Benefits
A bill to amend the Internal Revenue Code of 1986 to allow distributions from qualified tuition programs for first home purchases, and for other purposes.
Bill Overview
First Home Purchase Tax Benefits
A bill to amend the Internal Revenue Code of 1986 to allow distributions from qualified tuition programs for first home purchases, and for other purposes.
Bill
First Home Purchase Tax Benefits
House of Representatives
What Is the First Home Purchase Tax Benefits?
The First Home Purchase Tax Benefits is a proposal to expand how qualified tuition program funds can be used. Today, these accounts are generally associated with education-related expenses. This bill would add “first home purchases” as an allowed use.
In practical terms, the bill aims to make it possible for a buyer to use some 529 plan funds toward buying a first home, rather than limiting those funds to school costs only.
Because the full details are not included here, the clearest takeaway is the intent: make certain 529 plan distributions eligible for a first home purchase.
Who Qualifies for the First Home Purchase Tax Benefits?
Based on the bill’s title, eligibility would likely connect to two things:
- The money comes from a qualified tuition program, such as a 529 plan
- The purchase is a first home purchase under the bill’s definition
When a bill like this becomes law, it typically spells out who counts as a first-time home buyer, which purchases qualify, and how the distribution must be reported. Those details will come from the bill text and follow-up guidance if the proposal advances.
How The First Home Purchase Tax Benefits Works
The bill would work by expanding the permitted reasons for taking money out of a qualified tuition program. Instead of limiting qualifying withdrawals to education expenses, it would add first home purchases to the list.
If enacted, home buyers may see rules that cover:
- Which expenses count as part of a first home purchase
- Whether there is a dollar limit per buyer or per account
- Whether the funds must be used within a certain timeframe around closing
Even with added flexibility, your home purchase still needs a solid plan for the down payment, closing costs, and cash reserves after closing. The First Home Purchase Tax Benefits is designed to support that plan with another potential source of funds.
Who Sponsors the First Home Purchase Tax Benefits?
The First Home Purchase Tax Benefits is introduced as H.R. 7402 in the House. Sponsor and cosponsor information can change as the bill moves through Congress and gains support.
For the latest legislative updates and cosponsors, see the Bill Tracker above.
Frequently Asked Questions About the First Home Purchase Tax Benefits
Get answers to common questions about the proposed First Home Purchase Tax Benefits.
What does the First Home Purchase Tax Benefits do?
It proposes allowing distributions from qualified tuition programs, commonly known as 529 plans, to be used for a first home purchase.
Does the First Home Purchase Tax Benefits apply to 529 plans?
Yes. The bill focuses on qualified tuition programs, which is the tax term commonly used for 529 plans.
Who would be able to use a 529 plan for a first home purchase under the First Home Purchase Tax Benefits?
The bill is intended for people making a first home purchase, though the final law would define who counts as a first-time home buyer and what documentation is required.
What home buying costs could a 529 plan distribution cover under the First Home Purchase Tax Benefits?
The bill’s title says “for first home purchases,” but it does not specify which costs qualify in the information provided. If enacted, the final rules would clarify whether funds can be used for the down payment, closing costs, or other eligible expenses.
Would the First Home Purchase Tax Benefits change how 529 withdrawals are taxed?
It would likely expand the list of permitted uses for 529 distributions to include certain first home purchase expenses. The exact tax treatment and any limits would be defined in the final bill text and guidance.
Does the First Home Purchase Tax Benefits mean you should open a 529 plan to buy a house?
The bill would create a potential path for using 529 funds for home buying, but it does not change the basics of budgeting for a home purchase. Your down payment, your monthly payment, and your cash reserves still shape what feels comfortable.
About the Author
Dan Green
20-year Mortgage Expert
Dan Green is a mortgage expert with over 20 years of direct mortgage experience. He has helped millions of homebuyers navigate their mortgages and is regularly cited by the press for his mortgage insights. Dan combines deep industry knowledge with clear, practical guidance to help buyers make informed decisions about their home financing.
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