The Bipartisan American Homeownership Opportunity Act of 2025: Explained

Overview: Bipartisan American Homeownership Opportunity Act of 2025

The Bipartisan American Homeownership Opportunity Act of 2025 is a bill that creates tax credits for first-time homebuyers and home builders to encourage homeownership and the construction of affordable starter homes.

The bill was introduced in the current Congress (119th), on May 17, 2025, in the House of Representatives. The bill's sponsor is Rep. Brian Fitzpatrick (R-PA-1).

This is the first time this bill has been introduced in Congress. Only 4% of bills become law, according to FactCheck.org.

The Bipartisan American Homeownership Opportunity Act of 2025 focuses on tax incentives rather than direct loan programs. This article provides a full review.

Note that bills often change on their way to becoming law, so this page will update as new details emerge. For real-time updates about this and other first-time home buyer programs, subscribe to our newsletter.

1. Must be a first-time home buyer

Home buyers must be purchasing their first home ever or have not owned a home in the last 10 years.

Note that The Bipartisan American Homeownership Opportunity Act defines a first-time home buyer more strictly than some other programs like the First-Time Home Buyer Tax Credit Act, which allow for a 3-year reset period instead of ten.

In addition, if two or more people are co-applicants on the mortgage, each applicant must meet the bill's first-time home buyer definition. And, if a spouse or partner owned their primary residence in the last 10 years, neither qualifies under this Act.

Reference: First-Time Home Buyer Scenarios

2. Must meet income requirements

The Bipartisan American Homeownership Opportunity Act of 2025 tax credit is geared toward middle-income U.S. households. Buyers can receive up to $50,000 in tax credits, but the credit begins to phase out once a household's income rises above certain levels:

• $300,000 for joint filers or surviving spouses
• $225,000 for head of household filers
• $150,000 for single filers

The phase-out is based on modified adjusted gross income from the previous tax year.

For households earning more than these amounts, the available credit phases out gradually over the next $100,000 of income until the credit disappears completely. For example, a couple filing jointly with $350,000 of income qualify for half of the credit only, while a couple earning $400,000 or more does not qualify at all.

Program income limits adjust for inflation, so the cutoffs should rise gradually over time.

How the tax credit phases out for joint tax filers

3. Must use the home as principal residence

The home must be used as the buyer's principal residence. Vacation homes, second homes, and investment properties are not eligible for the tax credit.

• The home must be your main dwelling where you live most of the year
• Vacation properties, rentals, or second homes do not qualify
• If you sell or stop using the home as your principal residence before year-end, you won’t receive the credit for that year

4. Must maintain ownership for five years

Under the rules of The Bipartisan American Homeownership Opportunity Act, should a home buyer sell, lease, or stop using the home as their principal residence within five years of purchase, they're obligated to repay the full amount of the credit.

Certain exceptions exist for death, divorce, government orders, or purchasing a new primary residence.

5. Must use a regular mortgage loan

To qualify for the Bipartisan American Homeownership Opportunity Act, the home buyer must finance their home with a typical mortgage loan from a bank, credit union, or other licensed lender.

Cash purchases don’t qualify, and neither does borrowing from a family member or using the seller to finance the purchase. Requiring a standard mortgage limits tax fraud and abuse.

Eligible financing sources

6. Must meet tax filing requirements

Eligible first-time homebuyers must file a federal tax return to claim the credit. The credit is refundable, meaning taxpayers can receive a refund even if they don't owe taxes.

Who Qualifies for the Bipartisan American Homeownership Opportunity Act?

The Bipartisan American Homeownership Opportunity Act creates two separate tax credit programs.

One program is aimed at home buyers, using tax credits to make homeownership more affordable. The other program is aimed at homebuilders. It provides tax incentives for building affordable homes with bonus credit given for selling to first-time buyers.

Combined, the tax bill addresses both the demand side and supply side of the U.S. housing market.

A first-time home buyer tax credit

The Bipartisan American Homeownership Opportunity Act creates a first-time homebuyer tax credit equal to the size of a home buyer's down payment, up to $50,000.

This means:

• If you make a $30,000 down payment on a home, you can claim a $30,000 tax credit
• If you make a $60,000 down payment on a home, you can claim the maximum $50,000 tax credit
• Your federal tax bill is reduced dollar-for-dollar by the size of your downpayment, up to $50,000
• If your credit exceeds your tax bill, you receive the excess monies as a federal tax refund

For a lot of first-time home buyers, the Bipartisan American Homeownership Opportunity Act provides an incentive to put more money down on a home because, by making a larger downpayment, the home's monthly PITI is reduced and so is their annual tax bill.

Get money upfront for your downpayment

Eligible first-time home buyers can get their $50,000 tax credit paid upfront, and use it to make a down payment. The process is straight-forward.

Notify your lender that you'd like to use your Bipartisan American Homeownership Opportunity Act credit for a down payment, and your lender will arrange for the IRS to post money into a restricted bank account.

Funds in the account can only be applied to a down payment -- they cannot be used for moving costs, furniture, or anything else -- and any unused funds are returned to the U.S. Treasury after the closing.

Example: Upfront payment election

You are buying a $400,000 home and need a $30,000 down payment. You qualify for the full $30,000 first-time homebuyer tax credit. Before closing, you elect to receive $25,000 upfront to help with your down payment. The IRS deposits this money into your escrow account. You use all $25,000 for your down payment, then pay the remaining $5,000 out of pocket. When you file your taxes, you claim the remaining $5,000 credit -- $30,000 total credit minus the $25,000 you already received).

More affordable homes to choose from

The Bipartisan American Homeownership Opportunity Act also helps buyers indirectly by giving tax breaks to builders who build affordable starter homes.

For every home they build that is 1,200 square feet or less and priced at no more than 80% of the local median home price, the bill gives home builders a 15% tax credit for materials and labor. Then, if the home is eventually sold to a first-time buyer, the credit doubles to 30 percent.

The Bipartisan American Homeownership Opportunity Act makes it more appealing for builders to put up smaller, less expensive homes, which are exactly the kinds of homes that buyers can struggle to find.

How Does the Bipartisan American Homeownership Opportunity Act Work?

The Bipartisan American Homeownership Opportunity Act creates two separate tax credit programs.

One program is aimed at home buyers, using tax credits to make homeownership more affordable. The other program is aimed at homebuilders. It provides tax incentives for building affordable homes with bonus credit given for selling to first-time buyers.

Combined, the tax bill addresses both the demand side and supply side of the U.S. housing market.

A first-time home buyer tax credit

The Bipartisan American Homeownership Opportunity Act creates a first-time homebuyer tax credit equal to the size of a home buyer's down payment, up to $50,000.

This means:

• If you make a $30,000 down payment on a home, you can claim a $30,000 tax credit
• If you make a $60,000 down payment on a home, you can claim the maximum $50,000 tax credit
• Your federal tax bill is reduced dollar-for-dollar by the size of your downpayment, up to $50,000
• If your credit exceeds your tax bill, you receive the excess monies as a federal tax refund

For a lot of first-time home buyers, the Bipartisan American Homeownership Opportunity Act provides an incentive to put more money down on a home because, by making a larger downpayment, the home's monthly PITI is reduced and so is their annual tax bill.

Get money upfront for your downpayment

Eligible first-time home buyers can get their $50,000 tax credit paid upfront, and use it to make a down payment. The process is straight-forward.

Notify your lender that you'd like to use your Bipartisan American Homeownership Opportunity Act credit for a down payment, and your lender will arrange for the IRS to post money into a restricted bank account.

Funds in the account can only be applied to a down payment -- they cannot be used for moving costs, furniture, or anything else -- and any unused funds are returned to the U.S. Treasury after the closing.

Example: Upfront payment election

You are buying a $400,000 home and need a $30,000 down payment. You qualify for the full $30,000 first-time homebuyer tax credit. Before closing, you elect to receive $25,000 upfront to help with your down payment. The IRS deposits this money into your escrow account. You use all $25,000 for your down payment, then pay the remaining $5,000 out of pocket. When you file your taxes, you claim the remaining $5,000 credit -- $30,000 total credit minus the $25,000 you already received).

More affordable homes to choose from

The Bipartisan American Homeownership Opportunity Act also helps buyers indirectly by giving tax breaks to builders who build affordable starter homes.

For every home they build that is 1,200 square feet or less and priced at no more than 80% of the local median home price, the bill gives home builders a 15% tax credit for materials and labor. Then, if the home is eventually sold to a first-time buyer, the credit doubles to 30 percent.

The Bipartisan American Homeownership Opportunity Act makes it more appealing for builders to put up smaller, less expensive homes.

If You Sell Within 5 Years, You'll Repay the Full Credit

The Bipartisan American Homeownership Opportunity Act promotes long-term wealth through homeownership.

The bill requires homeowners to use the home as their principal residence for five years. If the home is sold, leased to a third party, or no longer used as the principal residence within five years, your tax for that year is increased by the full credit amount.

In other words, you owe back the entire credit.

The all-or-nothing nature of the bill's tax credit is different from the graduated repayment structure used in the Downpayment Toward Equity Act and Home Of Your Own Act. Any recapture event anytime in the first five years requires a full repayment of all credit paid.

Recapture Exceptions

There are exception events that will not trigger the repayment of the Bipartisan American Homeownership Opportunity Act tax credit:

• Buying a new primary residence and using the sale proceeds to purchase it. The new home inherits the original 5-year clock starting from your first purchase date.
• Death of the taxpayer or spouse.
• Divorce transfers under section 1041 of the tax code.
• Government orders for qualified official extended duty, such as military, Foreign Service, or intelligence service.

Tax Credit Recapture Timeline

Who Sponsors the Bipartisan American Homeownership Opportunity Act in Congress?

The Bipartisan American Homeownership Opportunity Act of 2025 was introduced in the House of Representatives on May 17, 2025, by Rep. Brian Fitzpatrick (R-PA-1).

For the latest legislative updates and a full list of cosponsors, see the Bill Tracker above.