Legislation providing for a tax credit for first-time homebuyers was introduced in Congress in 2021, and again in 2024. Unfortunately, as of June 2025, it is still making its way through Congress — or trying to.
Unfortunately, since this piece of legislation hasn’t passed in any of its forms, there is currently no active federal tax credit for first-time homebuyers.
Here’s everything you need to know about the history of the First-Time Homebuyer Tax Credit Act, in hopes it — or another bill like it — may have a future.
Key Points
• The First-Time Homebuyer Tax Credit, initially $8,000 in 2008-2010, was proposed to increase to $15,000 in 2021 and 2024 but remains unpassed as of June 2025.
• Eligible buyers would need to have an adjusted gross income under 160% of the area median, and purchase a property not exceeding the area median price.
• The proposed tax credit would allow first-time homebuyers to receive up to $15,000, offsetting taxes owed and providing a refund for any excess amount.
• Alternative programs for first-time homebuyers include those from private lenders, which may offer down payments that are even lower than FHA loans.
• The maximum credit amount proposed for the First-Time Homebuyer Tax Credit is $15,000.
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What Is the First-Time Homebuyer Tax Credit Act?
The first-time homebuyer tax credit refers back to a tax credit given in tax years 2008, 2009, and 2010. Then, it was worth up to $8,000. New first-time homebuyer tax credits were introduced in 2021, and again in 2024.
The proposed First-Time Homebuyer Act of 2021 was a revamp of the 2008 first-time homebuyer tax credit. It proposed increasing the allowable dollar amount of the credit from $8,000 to $15,000. (Another bill, the Downpayment Toward Equity Act of 2021, provided financial assistance specifically to first-generation homebuyers to help them purchase a home to occupy. However, it did not receive a vote in the House and expired. The Downpayment Toward Equity Act of 2023 was also not enacted.)
The legislation was again updated under President Joe Biden in 2024. It was reintroduced as the Biden First-Time Homebuyer Tax Credit Act. This latest proposal states that homebuyers could be eligible to receive a tax credit equal to 10% of their home’s purchase price, with a cap of $15,000.
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First-Time Homebuyer Act of 2008
For first-time homebuyers who purchased a home between April 9, 2008, and May 1, 2010, a one-time tax credit of 10% of the purchase price, up to $7,500 in 2008 and increased to $8,000 in the next two years, was available. It was part of the Housing and Economic Recovery Act of 2008. The credit was for home purchases of up to $800,000 and phased out for individual taxpayers with higher incomes.
For home purchases made between April 9 and Dec. 31, 2008, the credit had to be repaid over 15 years, making it more of an interest-free loan than a true credit. Homebuyers taking advantage of the tax credit in the following years had repayment of the credit waived. Homebuyers who left the property before a three-year period were required to repay a portion of the credit back to the IRS.
Proposed First-Time Homebuyer Act of 2021
The First-Time Homebuyer Act of 2021 would allow qualified buyers a refundable tax credit of $7,500 for individuals and $15,000 for married couples filing jointly.
This bill amends the 2008 law to allow for higher purchase prices, revises the formulas for income, and revises rules pertaining to recapture of the credit and to members of the armed forces. It was introduced in the House by Rep. Earl Blumenauer of Oregon in April 2021 but is not yet law as of June 2023.
Proposed Biden First-Time Homebuyer Act of 2024
The legislation, revised and again proposed as a bill in 2024, says that homebuyers could receive a tax credit equal to 10% of the purchase price of their home, capped at $15,000. Homebuyers could claim this refundable tax credit immediately, at the home purchase closing, and apply it to their down payment, closing costs, or other fees.
This proposal did not pass into law. It may be reintroduced in a future Congressional session, but it’s just as likely it won’t be resuscitated.
What Can Be Deducted After Buying a Home?
Amounts that would be eligible for the proposed tax credit would include the purchase price of the home. The amount of the credit would be 10% of the purchase price.
Given that the maximum would be $7,500 per individual and $15,000 per married couple filing jointly, if you and your spouse purchased a home with a mortgage loan of $500,000, the 10% credit would amount to $50,000. You would receive a tax credit of $15,000 if you filed jointly.
If you purchased a home for $102,000 with a spouse, 10% of that would be $10,200. You would be able to claim $10,200 for the credit if you filed jointly.
Here are some possible deductions now for homeowners who itemize, though most taxpayers take the standard deduction instead:
• Mortgage interest on up to $750,000 of mortgage debt (or up to $375,000 if married and filing separately), including discount points paid to reduce the interest rate on the mortgage.
• Up to $10,000 of property taxes when combined with state and local taxes.
• Home office if you’re self-employed or a business owner but not an employee of a company.
If you sell your main home and have a capital gain, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 if you file a joint return with your spouse.
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Who Would Be Eligible for a First-Time Homebuyer Act?
First-time homebuyers purchasing a principal residence would be eligible for any tax credit passed. Not your first time buying a house? You may still be able to qualify.
A first-time homebuyer is defined as someone who has not owned an interest in a property for the past three years. So even if you had owned a home in the past, you could be eligible to receive this credit if it hadn’t been in the last three years.
Other qualifications might include:
• A modified adjusted gross income that is under 160% of the area median income.
• Purchase of a property that is not above a stipulated of the area median purchase price.
• Living in the home as your principal residence for the tax year.
• You must be over 18 years of age.
To note: If you claimed a first-time homebuyer credit under the 2008 law, you would be able to claim it again. But you could claim the new credit only once, for a first purchase. Also be aware that a copy of the settlement statement would need to be attached to your taxes.
How Does This Type of Tax Credit Work?
If a bill like this passed again, the new homeowner would file for the first-time homebuyer tax credit on their taxes. The credit would first be used to offset any taxes owed by the homebuyer. Then, as a refundable tax credit, the homebuyer would get money back on top of the amount of the credit after their tax bill had been paid.
For example, if you owed $4,000 in taxes after accounting for withholdings, and you qualified for a $15,000 tax credit, you’d apply that toward the amount you owe in taxes. You would get the rest back ($11,000) from the IRS.
Taxpayers would have to live in the home for the duration of the tax year in order to receive the credit. If the property is sold within four years, taxpayers might need to pay a portion of the tax credit back. The amount would be subject to a schedule, which is as follows:
• Dispose of property before the end of Year 1: Repay 100% of the credit
• Dispose of property before the end of Year 2: Repay 75% of the credit
• Dispose of property before the end of Year 3: Repay 50% of the credit
• Dispose of property before the end of Year 4: Repay 25% of the credit
Help for First-Time Homebuyers
Although new federal legislation hasn’t yet delivered support to first-time homebuyers, there are other first-time homebuyer programs that can help with costs.
A first-time homebuyers guide will walk you through the process of buying your first home and help answer questions.
Are you crunching numbers? Try this mortgage calculator tool. Keep in mind that some private lenders (like SoFi) allow a down payment for first-time buyers that may be even lower than FHA loans.
The Takeaway
A first-time homebuyer tax credit of up to $15,000 has been proposed for qualified buyers. At this point, it seems unlikely to pass Congress, but if it does some day, it would take some of the pressure of taking the plunge into homeownership.
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