The Neighborhood Homes Investment Act: Explained

Overview: Neighborhood Homes Investment Act

The Neighborhood Homes Investment Act creates a Neighborhood Homes tax credit to finance building and rehabilitating homes that are sold to owner-occupants. The goal is straightforward: increase the supply of homes you can buy in places where it has been difficult for the private market to deliver for-sale housing at prices local buyers can support.

The bill targets investment to distressed or underserved areas and is designed to close a common gap in those neighborhoods: the cost to build or renovate a home is higher than what that home sells for in the local market. When that gap gets smaller, more homes pencil out for builders and rehabbers, and more homes reach the market for you to purchase.

The Neighborhood Homes Investment Act was introduced in the 119th Congress on April 10, 2025, and referred to the House Committee on Ways and Means.

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What Is the Neighborhood Homes Investment Act?

The Neighborhood Homes Investment Act is a tax-credit program built into the federal tax code that encourages private investment in for-sale housing. Instead of offering a grant or a government loan, the bill uses a tax credit to attract capital to projects that build new homes or rehabilitate existing homes.

The program is aimed at neighborhoods where home values are lower than the cost to create quality housing. In those markets, a builder or rehabber can do everything right and still lose money because the final sale price does not cover the total cost of construction, rehabilitation, and financing. The Neighborhood Homes tax credit is designed to fill that gap so projects move forward and more homes reach the market.

For home buyers, the practical outcome is more inventory in targeted areas and home prices that align with the neighborhood’s market value instead of reflecting the full development cost.

Who Benefits From the Neighborhood Homes Investment Act?

The Neighborhood Homes Investment Act is built to benefit home buyers by increasing the supply of homes for sale to owner-occupants in distressed or underserved areas. It also supports communities by encouraging reinvestment in homes that already exist and by adding newly built homes when that makes sense for the neighborhood.

You benefit most directly when:

• You want to buy in a targeted neighborhood where few move-in-ready homes are for sale
• You want a home that has been renovated to a livable standard rather than needing major work
• You want home prices that reflect local market values, even when building costs are higher

The bill also benefits the people who build and renovate homes, because it gives them a workable way to finance projects where costs and local sale prices do not match. That added financing is what increases for-sale supply for buyers.

How The Neighborhood Homes Investment Act Works

The Neighborhood Homes Investment Act uses a tax credit to channel private capital into building and rehabilitating homes, with a clear end goal: the home is sold to an owner-occupant. That owner-occupant requirement matters because it keeps the program focused on homes that people live in, not homes being held as rentals or short-term investments.

Here is the basic structure in plain language:

1. The tax credit finances home construction and rehabilitation

Today, many for-sale housing projects are funded through a mix of construction loans, investor cash, and the expected resale price of the finished home. In distressed or underserved areas, the resale price often falls short of the all-in cost.

The Neighborhood Homes tax credit changes the financing by adding a source of value through the tax code. That credit draws in private investors, and the investment supports the project budget. The result is a completed home that reaches the market even when local prices are lower.

2. The program targets distressed or underserved areas

The bill directs the tax credit to neighborhoods that have been left out of new investment or where market conditions have limited for-sale housing supply. That targeting is the core design feature: it aims the credit at places where it changes outcomes, not places where homes already get built at scale.

For a home buyer, the targeting shows up as more choices in neighborhoods where you otherwise see few listings, limited new construction, or homes that need substantial repairs.

3. The credit closes the “cost vs. value” gap to support for-sale prices

A common barrier in underserved neighborhoods is the appraisal and resale reality: even a beautifully finished home sells for what the local market supports. When building or renovation costs run higher than that value, projects stall.

The Neighborhood Homes tax credit fills that difference so the home can be sold at a price a local buyer can pay, while the project still works financially.

Here is what that looks like with real numbers:

In this example, the tax credit-backed investment covers the $70,000 gap. The home still sells for $250,000, which matches the neighborhood market, and the project moves forward because the developer’s financing works.

4. Homes are sold to owner-occupants, increasing buyer-ready supply

The bill is designed around homes that are sold to people who will live in them. That requirement keeps the program aimed at expanding homeownership opportunities and building a stable pipeline of for-sale homes in targeted areas.

For buyers, the benefit is not a coupon at closing. The benefit is more homes you can tour, finance, and move into, in neighborhoods that see fewer for-sale options.

Who Sponsors the Neighborhood Homes Investment Act?

The Neighborhood Homes Investment Act is a House bill in the 119th Congress and is currently referred to the House Committee on Ways and Means. The Ways and Means committee writes tax legislation, which fits this bill’s approach of using a tax credit to increase for-sale housing supply.

For the latest legislative updates and cosponsors, see the Bill Tracker above.