Overview: First-Time Homebuyer Tax Credit Act of 2025
| Bill Number | Chamber | Sponsor | Date Introduced |
|---|---|---|---|
| H.R.4717 | House | Rep. Jimmy Panetta (D-CA-19) | July 23, 2025 |
| S.2402 | Senate | Sen. Sheldon Whitehouse (D-RI) | July 23, 2025 |
The First-Time Homebuyer Tax Credit Act of 2025 is a bill to give eligible first-time home buyers up to $15,000 in federal income tax credits.
The bill was introduced in the current Congress (119th), on July 23, 2025, in both the House of Representatives and the Senate. The bill's sponsor in the House is Rep. Jimmy Panetta (D-CA-19). Its sponsor in the Senate is Sen. Sheldon Whitehouse (D-RI).
A version of the bill was introduced in the 117th Congress (2021-2022) and 118th Congress (2023-2024). Neither passed into law, which is common; only 4% of bills become law, according to FactCheck.org.
The First-Time Homebuyer Tax Credit Act of 2025 is different from its prior iterations. This article is 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.
Bill Overview
First-Time Homebuyer Tax Credit Act of 2025
A bill to give first-time home buyers a refundable tax credit of up to $15,000.
Bill Overview
First-Time Homebuyer Tax Credit Act of 2025
A bill to give first-time home buyers a refundable tax credit of up to $15,000.
Official Title as Introduced
To amend the Internal Revenue Code of 1986 to provide for a first-time homebuyer credit, and for other purposes.
House of Representatives
Senate
What is the First-Time Homebuyer Tax Credit of 2025?
The First-Time Homebuyer Tax Credit of 2025 is a refundable federal tax credit worth up to $15,000 to first-time buyers. This bill is designed to help people buy their first home and build long-term wealth through homeownership.
Buyers eligible for the program can use their tax credit to lower their federal tax bill, receive cash back from the IRS, or get upfront cash and use it to make a downpayment.
The bill is different from prior versions from the 117th Congress and 118th Congress. Here are the rules.
1. Must be a first-time home buyer
Eligible home buyers may not have owned a home or co-signed on a mortgage within the last thirty-six months, including for primary residences, second homes, and investment properties. Buyers who owned a home more than thirty-six months ago are eligible under the definition of first-time home buyer, and home buyers who own commercial properties through a business are also program-eligible.
2. Must be using the first-time buyer tax credit for the first time
The First-Time Homebuyer Tax Credit Act is a one-time benefit. Eligible buyers may use the tax credit one time only. For example, suppose this year you claim your federal tax credit under the First-Time Homebuyer Act. In that case, you may not claim the credit again.
3. Must earn a modest income based on location and household size
The First-Time Homebuyer Tax Credit is designed to help middle-income households get into homeownership. So to make sure the benefit goes to buyers who need it most, eligibility is tied to household income compared to an area’s median income (AMI).
- When income is less than 150% of AMI, buyers qualify for the full $15,000 credit.
- When income is 170% of AMI or higher, buyers are not eligible for the credit.
- When income falls between 150% and 170% of AMI, the credit is reduced gradually.
This gradual reduction is called a phaseout. The higher that household income moves within the range, the smaller the buyer's tax credit becomes until, at 170% of AMI, it reaches zero.
Use our Income Limits calculator to see if you earn too much to qualify based on where you live.
Income Phaseout Example (AMI = $60,000)
In this example, a household with an AMI of $60,000 receives the full credit up to $90,000 in income (150% of AMI). The credit then decreases step by step until it disappears entirely at $102,000 (170% of AMI).
| Household Income | % of AMI | Credit |
|---|---|---|
| $60,000 | 100% | $15,000 |
| $70,000 | 117% | $15,000 |
| $80,000 | 133% | $15,000 |
| $89,000 | 148% | $15,000 |
| $90,000 | 150% | $15,000 |
| $91,000 | 152% | $13,750 |
| $92,000 | 153% | $12,500 |
| $93,000 | 155% | $11,250 |
| $94,000 | 157% | $10,000 |
| $95,000 | 158% | $8,750 |
| $96,000 | 160% | $7,500 |
| $97,000 | 162% | $6,250 |
| $98,000 | 163% | $5,000 |
| $99,000 | 165% | $3,750 |
| $100,000 | 167% | $2,500 |
| $101,000 | 168% | $1,250 |
| $102,000 | 170% | $0 |
📊 Key Statistic
4. Must purchase a modest home for the area
The First-Time Homebuyer Tax Credit is also limited by the purchase price of a home. To qualify for the full credit, a buyer's home must be priced at or below 110% of the local median purchase price.
- When homes are at or below 110% of the local median, the full $15,000 credit applies.
- When homes are at 115% of the local median or higher, no credit is available.
- When homes are priced between 110% and 115% of the median, the credit is reduced gradually.
This gradual reduction is another type of phaseout. The more the purchase price rises within that range, the less credit is available until it disappears entirely at 115% of the local median.
Phaseout Example (Median Purchase Price = $275,000)
In this example, a buyer receives the full credit up to $302,500 (110% of the median). The credit then decreases step by step until it disappears completely at $316,250 (115% of the median).
| Purchase Price | % of Median | Credit |
|---|---|---|
| $275,000 | 100% | $15,000 |
| $290,000 | 105% | $15,000 |
| $300,000 | 109% | $15,000 |
| $302,500 | 110% | $15,000 |
| $305,250 | 111% | $12,820 |
| $308,000 | 112% | $10,640 |
| $310,750 | 113% | $8,460 |
| $313,500 | 114% | $6,280 |
| $316,250 | 115% | $0 |
5. Must be 18 years of age or older
Eligible home buyers must be 18 years of age on the date of purchase or married to a person at least 18 years of age. This rule prevents adults from buying a home with cash in a child's name and then claiming the tax credit on the child's income tax returns.
6. Must purchase the home from a non-relative
Eligible home buyers must be making an arms-length transaction to claim their refundable tax credit. Homes may not be purchased from a relative, including a spouse, parent, child, aunt, uncle, cousin, or grandparent. The bill provides no specific guidance regarding purchasing a home from an entity controlled by a relative, such as a trust.
7. Home must be financed with a federally-backed mortgage
The bill requires buyers to use a federally backed mortgage to qualify for the First-Time Homebuyer Tax Credit. Eligible loan types include conventional mortgages, FHA loans, VA loans, and USDA loans only.
Other types of loans are not tax-credit eligible.
For example, all-cash purchases, seller-financed loans where the seller carries the note, private or hard money loans from individuals or investment groups, jumbo mortgages that are not guaranteed by Fannie Mae or Freddie Mac, and unsecured personal loans or lines of credit used to buy a home are not eligible for the tax credit.
Reference: Mortgage Eligibility for The First-Time Homebuyer Tax Credit Act
| Financing Type | Eligible for Tax Credit? |
|---|---|
| Conforming conventional mortgage | Yes |
| FHA mortgage | Yes |
| VA mortgage | Yes |
| USDA mortgage | Yes |
| All-cash purchase | No |
| Seller-financed loan | No |
| Private or hard money loan | No |
| Non-conforming jumbo mortgage (over loan limits) | No |
| Unsecured personal loan or line of credit | No |
| Private construction loan (not federally backed) | No |
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How Do You Claim The First-Time Homebuyer Tax Credit?
The First-Time Homebuyer Tax Credit can be claimed in one of three ways.
First, buyers can wait until tax season and claim their tax credit on federal tax returns, either reducing what they owe or creating a bit of a refund.
Second, buyers can opt to receive a direct cash payment from the Treasury, separate from their filing.
The third option lets buyers transfer their First-Time Home Buyer Tax Credit to their mortgage lender at the time closing, so the money can be applied immediately toward a downpayment or closing costs. In this way, buyers can use the tax credit to buy a home with little or none of their money down.
Note that married couples filing separately may each claim up to half of the available credit, while unmarried co-buyers can split the credit according to their share of ownership. In no case can the total tax credit exceed $15,000.
To claim the credit, buyers must attach a copy of their settlement statement to their tax return. The settlement statement shows the purchase details of the home, and is required to verify eligibility under the bill's language.
If You Move Within 4 Years, You'll Pay Some Money Back
The First-Time Homebuyer Act builds long-term wealth for low- and middle-income households through real estate. It specifically legislates away from house flippers and real estate investors.
Therefore, buyers claiming the credit who change their primary residence or sell their home within four years of purchase will realize a tax liability for moving out.
Assuming a $15,000 tax credit:
- Sell or move within Year 1: Repay 100% in taxes / $15,000
- Sell or move within Year 2: Repay 75% in taxes / $11,250
- Sell or move within Year 3: Repay 50% in taxes / $7,500
- Sell or move within Year 4: Repay 25% in taxes / $3,750
The repayment rule has exceptions.
One exception states that home buyers who sell their home within four years to a non-relative whose real estate gains are less than their tax liability must only pay their real estate gains.
For example, if you received a $15,000 credit when you bought your home, sold your home to somebody related to you in the first 12 months, and made five thousand dollars on the sale of your home, your tax repayment amount would be $5,000.
Other exceptions include death, divorce, job relocation, and certain military transfers.
The Tax Credit Can Get Bigger Each Year
The First-Time Homebuyer Tax Credit is equal to 10 percent of the home’s purchase price, capped at a maximum dollar amount set by law. In 2025, the maximum credit is $15,000 for most buyers, or $7,500 if you are married and file taxes separately.
The maximum amount does not stay fixed.
According to the bill's language, beginning in 2026, the cap gets adjusted each year for inflation, using the same cost-of-living formula the IRS applies to income tax brackets. This ensures that the value of the credit keeps pace with rising home prices and the cost of living. Each adjustment is rounded to the nearest $100.
Inflation-Adjusted Tax Credits, By Year
| Year | Inflation Rate | Maximum Credit |
|---|---|---|
| 2025 | 3% | $15,000 |
| 2026 | 2% | $15,300 |
| 2027 | 4% | $15,912 |
| 2028 | 2% | $16,230 |
| 2029 | 3% | $16,717 |
Who Sponsors the First-Time Homebuyer Tax Credit Act in Congress?
The First-Time Homebuyer Tax Credit Act has been introduced in several sessions of Congress. Support has grown over time, with dozens of lawmakers now backing the $15,000 tax credit for first-time buyers.
For current sponsor information and the latest legislative updates, see the Bill Tracker above.
Frequently Asked Questions About the $15,000 First-Time Homebuyer Tax Credit
Get answers to common questions about the proposed $15,000 first-time homebuyer tax credit, including eligibility, timing, and how it works.
Is this program the same as the Biden First-Time Homebuyer Act?
Yes. The $15,000 First-Time Home Buyer Tax Credit is also known as the Biden First-Time Homebuyer Act, the Biden Homebuyer Credit, and the $15,000 Homebuyer Tax Credit.
Is the $15,000 Home Buyer Tax Credit available yet?
No. The $15,000 First-Time Home Buyer Tax Credit, sometimes called the Biden First-Time Homebuyer Act, has been introduced in Congress but is not yet available to buyers.
Will the First-Time Homebuyer Tax Credit be retroactive?
It is not yet clear if the current $15,000 First-Time Home Buyer Tax Credit will be retroactive. Earlier versions of the credit allowed buyers to amend prior-year tax returns for an instant Treasury payment.
How do I apply for the $15,000 Home Buyer Tax Credit?
You do not apply directly for the $15,000 First-Time Home Buyer Tax Credit. If the program becomes law and you meet eligibility requirements, the IRS will apply the credit automatically through your tax return, or you can transfer it to your lender at closing.
Do I have to repay the $15,000 tax credit if I move for work?
Under the proposed $15,000 First-Time Home Buyer Tax Credit, repayment is generally required if you sell or move within four years. Exceptions apply for death, military orders, or qualifying job relocations.
Can I claim the credit if my fiancé is not a first-time buyer?
Yes. Under the $15,000 First-Time Home Buyer Tax Credit, if only one buyer is a first-time homebuyer, that person can claim up to half of the credit ($7,500).
Is the credit based on contract date or closing date?
The $15,000 First-Time Home Buyer Tax Credit would apply based on your closing date, not your contract date.
Do trailer, mobile, and manufactured homes qualify?
Yes. The $15,000 First-Time Home Buyer Tax Credit applies to any home zoned residential, including trailer, mobile, and manufactured homes.
Is the $15,000 First-Time Homebuyer Act the same as the Downpayment Toward Equity Act?
No. The $15,000 First-Time Home Buyer Tax Credit is different from the Downpayment Toward Equity Act, which provides cash grants instead of tax credits.
Can I combine the $15,000 credit with other programs?
Yes. The $15,000 First-Time Home Buyer Tax Credit can be combined with other assistance programs, grants, or loans if you meet eligibility requirements for each.
How do I know if my income is too high?
To qualify for the $15,000 First-Time Home Buyer Tax Credit, your household income must be below 170% of your area’s median income. If it is above that level, you do not qualify.
Can I use the credit to buy a multi-unit home and rent out the other units?
Yes. The $15,000 First-Time Home Buyer Tax Credit can be used on a multi-unit property as long as one unit is your primary residence.
Is the Downpayment Toward Equity Act the same as this credit?
No. The Downpayment Toward Equity Act is a separate cash grant program giving $20,000 cash or more to home buyers. The $15,000 First-Time Home Buyer Tax Credit is a tax credit. If both become law, buyers may be able to use both together.
Are there other tax credits for first-time buyers?
Yes. In addition to the $15,000 First-Time Home Buyer Tax Credit, the DASH Act has also proposed a $15,000 credit for first-time buyers.
Do newly built homes qualify?
Yes. Newly built homes qualify for the $15,000 First-Time Home Buyer Tax Credit as long as you occupy the home as your primary residence and use federally backed financing.
What financing qualifies for newly built homes?
For the $15,000 First-Time Home Buyer Tax Credit, eligible financing includes federally backed loans such as FHA, VA, USDA, and conforming conventional loans. Cash and private loans do not qualify.
Can I use a construction-to-permanent loan?
Yes. A construction-to-permanent loan may qualify for the $15,000 First-Time Home Buyer Tax Credit if it is federally backed—such as an FHA construction-to-permanent loan—and you occupy the home as your primary residence.
When will the $15,000 First-Time Homebuyer Tax Credit Act pass?
The $15,000 First-Time Home Buyer Tax Credit must be passed by Congress and signed into law before it becomes available. As of now, the bill has been introduced but not enacted.
