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Remodeling a closet can be a great way to get organized while getting rid of clutter. But creating an inviting, functional space involves more than just buying a few new sweater boxes.

When planning a closet model, you’ll want to keep a few things in mind, including what you intend on storing there, how much space you have, and your budget. Ready to roll up your sleeves? Use this guide to help you get started.

Clear Out the Closet

If you can, start a remodeling project with a blank slate. In this case, that means clearing out whatever is in your closet now. You’ll appreciate the extra breathing room when it comes time to measure the space (more on that in a minute). Plus, you’ll have a chance to see exactly what will be stored in the closet after the remodel, which will help you determine what clothing rods, drawers, storage bins, and containers might be needed.

Recommended: How Much Does It Cost to Remodel or Renovate a House?

Size Up Your Space

Accurately measure the size of the closet and, if desired, see what potential extra space exists. The following tools can help you get the job done:

•   Measuring tool: This can be a 25-foot flat tape measure or, if preferred and needed, an electronic measuring tool. The latter can measure longer walls.

•   Acrylic square finders (two): With these, verify whether closet corners are actually square.

•   Angle finders for closets with slanted ceilings: This allows the angle of the roofline to be properly measured.

•   Paper: Record all numbers; graph paper can be especially helpful when sketching out measurements and closet remodel ideas.

New to measuring? Here are some tips to help you get the right figures the first time.

•   When doing a hard measurement, round down by the nearest quarter of an inch.

•   When doing soft measurements, round down to the nearest whole number.

•   Measure walls in three places and use the smallest of these measurements: near the top, in the middle, near the bottom.

•   Measure from top to bottom.

•   Check inside corners.

•   Check the angle of pitch for any sloped ceilings.

•   Note and measure any obstacles, which can include light fixtures and switches, trim, and vents.

Consider Closet Features You’d Like

Not sure what to include in your closet remodel? Here are some ideas to get your creative juices flowing.

Bright Lighting

From LED lights that shine on specific areas of the closet (like the furthest corners) to illuminated rods and shelves to lights that focus on cabinets, lights are popular closet features.

A Dressing Room

Because not every house has bedrooms with enough square footage for dressing room space, some homeowners are choosing to transform an extra bedroom — or even an underused dining or living room — into a walk-in closet/dressing room.

These rooms typically have some kind of seating and mirrors, and even pieces of art. They can range from reasonably simple rooms containing a makeup table and comfy seat to luxurious spaces.

Walls That Wow

People who have a more straightforward paint color or wallpaper pattern in their rooms are sometimes willing to experiment with bolder hues or eye-catching patterns on the walls in their closets.

Stylish Extras

If your budget and lifestyle allow, here are some features that are in demand today and may be worth considering. Some are DIY, while others may require the help of a contractor.

•   Ventilation systems to remove smells and dehumidifiers to remove moisture

•   Entire walls devoted to shoes or handbags

•   Crown molding

•   A sliding ladder

•   Built-in drawers, called cellarets, to keep socks, ties, and more well organized

•   Laundry cabinet storage with a removable liner to carry the load to the washer

•   Jewelry organizer with multiple compartments, some with locks

Closet Remodel No-Nos

The best remodel is one that allows you to make the most of your closet. As you’re making your plans, be mindful to avoid the following:

Dead Space

People often waste space above the top shelf in their closets. It’s true that you can fold and store clothes on that shelf or use the space for storing boxes. But keep in mind that the higher an item is, the more difficult it is to access. It may be best used for out-of-season items vs. clothes you want to wear regularly.

Wasted Space Behind Swing-in Doors

If possible, try to avoid closet doors that swing in, because shelves can’t be built there and clothes hung there will continually be banged into. But if this is your setup, fear not. The space can still be salvaged by the addition of a hook board where scarves, ties, and other thin objects can be placed.

Shallow Shelving

When shelves are too shallow, clothes hang over top of them and the closet can look sloppy or fall from their designated spot. Lots of closet systems have 12-inch shelves; make sure this is deep enough for your needs or choose other shelving with more depth.

What Will a Closet Remodel Cost?

On average, a closet renovation costs around $2,300 to $6,700, with an average of $4,100, according to the home improvement website Angi. Other sources, like Thumbtack, put the price closer to an average of $771, so there’s obviously a range of costs possible.

A good rule of thumb is that the cost per linear foot is $125. Add-ons will affect the cost. Here are some amounts that someone might expect to spend:

•   Professional organization services: $40 to $60 an hour

•   New lights and outlets: $55 to $65 an hour

•   New door: $180

•   Paint job: $200

Designing a custom closet costs between $1,500 and $2,500 on average, according to HomeAdvisor.com. The materials used, organization elements included, permits, and whether a wardrobe is added affect the pricing. Of course, if you’re looking to sell a home, a custom closet design may be of more value to a buyer than an off-the-shelf closet organizing product.

Another factor is whether the closet is a reach-in or walk-in type. Reach-in closets are typically smaller, but when organized well can be functional. Remodeling these closets, which are often found in smaller bedrooms and hallways, may cost less than redoing a walk-in closet.

How to Afford a Closet Remodel

When it comes to paying for a closet remodel, homeowners have several options. Examples include using your personal savings, using a credit card and then paying the balance in full to avoid high interest charges, or taking out an unsecured personal loan.

When used for home renovation projects, these are typically called home improvement loans. They provide a lump sum of cash, which is then paid back (typically over a couple or several years) with interest in installments. The rates are usually considerably lower than those of credit cards.

Recommended: A Guide to Unsecured Personal Loans

The Takeaway

A closet remodel can cost hundreds or thousands of dollars, depending on how extensive it is, how luxurious the materials you choose are, and how much customized work is done. Plan exactly what you want — first deciding whether to expand the space or enhance what you have — and then carve out a budget for that vision. A home improvement loan, a kind of personal loan, can help you finance this type of project.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How much does a closet remodel cost?

A closet remodel typically costs a few thousand dollars, but for smaller spaces or less extensive renovations (primarily cosmetic), you may be able to get the job done for less than $1,000.

What is the rule of 3 for cleaning closets?

The rule of three says that if you can’t imagine wearing an item three different ways or to three different occasions, you should probably find it a new home, either giving it to a friend or relative, donating it, or selling it.

Is it worth it to remodel a closet?

Whether a closet remodel is worth it is a personal decision. Some people feel it’s definitely an improvement, making it easier and more enjoyable to get dressed and store their clothes. Others think it isn’t worthwhile to spend money on a small space, especially if it’s working fairly well as-is.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q225-079

Regular home maintenance can help you avoid major household repairs (and their expense), keep your property functioning optimally, and maintain or even build your property value.

For instance, regularly monitoring, cleaning, and caring for your roof, windows, plumbing, and appliances could help avoid costly leaks and breakdowns and make your home more energy-efficient.

Not sure what needs to be done or when to do it? Check out the suggestions on this ultimate house maintenance checklist.

House Maintenance Checklist for Every Season

Many of the tasks on this list should be pretty easy to do yourself. Others might require phoning a friend with the proper tools and know-how. And there’s nothing wrong with calling in a pro if the job is too time-consuming or beyond your capabilities.

Monthly Home Maintenance Tasks

If the only time you remove the gunk from your gutters, garbage disposal, and dryer vent is when you notice they’re no longer working properly, you could be facing a hefty bill to fix the problem and repair any damage to your home.

Doing a little upkeep every month, instead of once or twice a year, can help keep small tasks from becoming major projects. Here are some things that can benefit from monthly maintenance:

•  Check the shower, tub, and sink drains for clogs. (If hair is your main headache, you may want to do this every week or more. Or you might want to consider purchasing a hair catcher for problematic drains.)
•  Clean showerheads and faucet aerators (that little mesh screen the water pours through) to keep sediment from slowing the flow. While you’re at it, check if any faucets are dripping when they shouldn’t and replace washers if necessary.
•  De-gunk the garbage disposal.
•  And give the dishwasher a deep cleaning. Good Housekeeping recommends using dishwasher cleaning tablets according to the label’s directions. Prefer the DIY route? Place a dishwasher-safe bowl filled with one cup of distilled vinegar on the top rack of an empty dishwasher, and run it through the pots-and-pans or heavy (hot) cycle.
•  Check and clean air conditioner and furnace filters, and kitchen and bathroom exhaust fans.
•  Make sure the dryer vent is free of debris. Doing so can help keep it running efficiently. And if there’s a bird’s nest or lint blocking hot air from escaping, it could become a fire hazard. You also may want to have your dryer duct inspected and cleaned once a year. (Most manufacturers recommend cleaning your lint screen, the piece near the door that’s easy to remove, after every dryer load.)
•  Vacuum HVAC registers and vents. Regular maintenance can keep some dust from building up, but you may want to call in a pro for a more thorough duct inspection if you suspect mold or if you have pets.
•  Test smoke alarms and carbon monoxide detectors. Test safety equipment every month and replace the batteries twice a year. (Many people use the change to and from daylight saving time as a reminder.) According to statistics from the National Fire Prevention Association, nearly three out of every five home fire deaths result from fires in properties without working smoke alarms.
•  Check electrical cords and outlets for damage. Replace or repair cords that are showing wear. And if an outlet cover is cracked, the prongs on an electrical cord won’t sit firmly in the outlet, or if the outlet is loose, don’t use it until you have a chance to repair it.

Seasonal Maintenance: Fall Tasks

Spring gets all the love when it comes to going all-in on sprucing up a house, but fall can also be a good time to take care of tasks both inside and out.

•  Do a top-to-bottom tour of the home’s exterior. If it’s a cool, sunny, and dry day, head outside and check out the roof for damaged or missing shingles or tiles. Inspect the exterior of the house (siding or stucco) and the foundation for any problems.
•  Check the chimney for exterior damage and clean the fireplace flue.
•  Give windows a once-over. Seal gaps, and if the windows are old and drafty, it might be time to replace them with a more energy-efficient model. (Keep in mind that you may need to get a building permit to install new windows that are bigger than what you had.)
•  Make sure exterior doors aren’t letting any cold air inside. You can get DIY weatherstripping materials at your local hardware store.
•  Wash windows and siding. If you notice any cracks or gaps during your walking tour, it may help to fix those first, especially if you’re pulling out the power washer. And if you see mildew or a buildup of dirt, check if it’s a symptom of a more serious problem.
•  Clean those gutters. If you’re ladder-phobic, there are pros out there who will be happy to clean your gutters and windows.
•  Winterize exterior plumbing. Drain hoses and sprinkler systems if you live in a colder climate. And drain, clean, and cover your swimming pool.
•  Remove and store or insulate window air conditioning units.
•  Give carpets and floors a thorough cleaning, and get your home ready for the holidays. If you haven’t cleaned your garbage disposal or dishwasher lately, this might be a good time to give them some love. And if you’re hosting Thanksgiving, maybe do a quick check to be sure all appliances are ready for the challenge.
•  Winterize your garden and lawn equipment. Depending on your climate and the type of grass you have, fall (not spring) may be the right time to fertilize your lawn. Bring in any delicate plants you hope to save from the cold. (Make sure no insects come along for the ride.) Clean garden tools. Empty gas-powered equipment before storing.
•  How’s your curb appeal? Raking leaves, aerating the lawn, patching the driveway or walkway, and touching up the exterior paint are fairly simple tasks that can make you house proud, improve your property, deter pests, and keep your family and visitors safe.
•  Flush the water heater and check for leaks. Manufacturers generally recommend flushing your water heater at least once per year to avoid sediment buildup.
•  Reverse ceiling fans to a clockwise rotation. This can help move the cooler air off the floor of your home and push warmer air down. Look for the switch on the fan’s housing, or you may be able to make the change with a remote or by giving the correct command to a smart device.
•  Remember to change the smoke detector batteries.

Seasonal Maintenance: Winter Tasks

If winter weather is a factor in your neck of the woods, prepare to hunker down.

•  Cover the barbecue or store it in the shed or garage.
•  Cover your outdoor air conditioning unit.
•  Store patio furniture and cushions in the garage or shed. If you prefer to leave heavy pieces in place, try to keep them covered.
•  Inspect the roof, gutters, and downspouts for damage after a heavy snow.
•  Check the basement for dampness or leaks when there’s a thaw.
•  Clear the driveway and walkways of snow so passersby can get by safely.
•  Focus on indoor tasks when you’re trapped by the weather. Clean the attic, caulk the tub, paint a room, and/or clean the refrigerator (inside and out, including the drip pans and coils).

Seasonal Maintenance: Spring Tasks

Shake off the winter blues, stow the alpaca throws, and get ready to enjoy warmer weather. Spring is for cleaning up, inside and out.

•  Throw those fall tasks into reverse. As soon as the last of the cold weather is past, uncover the outside air conditioning unit and have it serviced. If you have window air conditioning units, clean and return them to their rightful rooms. Bring the barbecue out from hibernation and make sure it’s in good working order. Prep the pool and outdoor sprinkler system for warm weather use. Return ceiling fans to a counter-clockwise rotation to bring cool air down. (And while you’re up there, maybe give those fans a good dusting).
•  Set up a termite inspection. There’s no wrong time of year to have your house inspected for termites, but since spring is when they tend to swarm, it may be a good way to tell if there’s a problem. It’s also an opportune time to check for carpenter ants, which can damage a home.
•  Clean and refinish the deck.
•  Look into any necessary lawn care. If you live in a warmer climate and have Bermuda, St. Augustine, or some other warm-season grass, it may be time to fertilize your turf.
•  Clean up fallen branches or leaves you missed in the fall. And clean out gutters and downspouts.
•  Inspect the roof, chimney, and siding for any winter damage.
•  Inspect indoor plumbing.
•  Check the attic for uninvited guests. Critters can invade your space almost any time of year, but squirrels, raccoons, bats, and rats are most likely to show up in the spring.
•  Wash windows and screens.
•  Clean patio furniture and cushions.
•  Call a professional about inspecting and pumping the septic tank. Some pros recommend emptying the tank every three to five years, but larger households may need more frequent pumpings.
•  Clear the clutter, and do a traditional spring cleaning. Dust everything. Polish furniture. Clean out closets, and donate or sell anything you no longer need. Clean the refrigerator, pantry, and cabinets. Scrub the floors, or have the carpets cleaned to get rid of late-winter’s muddy mess. Scrub the bathrooms and laundry room. As you go, you can check to see if anything is damaged and needs to be repaired or replaced.
•  Inspect and maintain the garage door opener. Listen for grating noises, and look for a jerky motion when the door goes up and down. Make sure the tracks are clear of debris. Some maintenance may be simple for DIYers (including spraying moving parts with lubricant, or repairing damaged weatherstripping). But if you suspect there’s an operational problem, you might want to bring in a pro.
•  Clear the garage of clutter and possible food sources. The garage may be another home for critters. Clean out the clutter and look for damage from pests, including rodents and ants.
•  Time to change the smoke detector batteries. (Yes, we listed it three times. It’s that important.)

Seasonal Maintenance: Summer Tasks

Because summer is so hot in many parts of the country, it can be a good season for inside repairs and outside jobs that might involve getting wet. For example, you could:

•  Pressure-clean the house, driveway, and walkways.
•  Inspect the pool and pool equipment to be sure everything is clean and running well.
•  Check the sprinkler system to minimize water waste and maximize the benefits to the landscape.
•  Plant trees or shrubs to provide shade for your home, deck, and patio. Or consider installing a canopy or some other type of shade structure.
•  Install curtains, shades, or window film to minimize sun damage to indoor furnishings.
•  Inside, check for leaks around kitchen cabinets, bathroom vanities, and toilets.
•  Keep your air conditioner clean, and consider upgrading for better energy efficiency. Change the filter. Clean air ducts. Make sure nothing is blocking the outside unit.

Recommended: Home Improvement Cost Calculator

You’ll Probably Need Some Tools

Even if you plan to hire pros to take care of most of your home maintenance tasks, it can be a good idea to keep a few basic tools around for DIY jobs. Here are some items that could come in handy:

Basic Tools for Home Maintenance

•  Step ladder or fold-up work platform. Why risk falling off a wobbly chair when a step ladder can give you extra height and stability?
•  Extension ladder. If you’re planning to clean your gutters or get up on the roof, you’ll likely want to borrow or purchase an extension ladder to safely get the height you need.
•  Tape measure.
•  Hammer and assorted nails.
•  Screwdrivers and assorted screws. Both flat-head and Phillips-head screwdrivers (in a few different sizes) will likely get plenty of use; or you can pick up one screwdriver with interchangeable heads.
•  Drill and assorted drill bits. A light-duty, battery-operated drill and a set of bits should be able to handle most beginner-level repair jobs.
•  Indoor and outdoor extension cords.
•  Hacksaw or reciprocating saw. For quick cuts on wood, metal, PVC pipes, tree limbs, and more.
•  Putty knife. You can use it for patching holes, applying drywall mud, and for scraping away paint or dirt.
•  Pliers. Great for holding, bending, or reaching in to grab something.
•  Sandpaper. The grit or coarseness of the paper will vary depending on the job and the results you’re looking for. It may save time to have a few different types on hand.
•  Safety goggles and gloves. These basic pieces of safety equipment could protect you from a DIY disaster.

Paying for Home Improvements

One great reason to keep up with regular home maintenance is to avoid the high cost of major repairs or replacements. But from time to time, you may find you have to — or want to — take on a bigger project.

According to a 2024 study from the home services website Angi, homeowners spent an average of $1,750 on home maintenance projects and $978 on unexpected repairs. If your budget can’t handle those kinds of expenses right now, you may want to look into a home improvement loan, especially if you don’t have a lot of equity built up in your home.

A home improvement loan is an unsecured personal loan that can be used to cover the costs of renovations, upgrades, or repairs. It’s different from a home equity loan or home equity line of credit (HELOC), because you don’t have to use your home as collateral. Instead, the interest rate and amount you qualify for are based largely on the applicant’s credit history, income, and employment.

If you need to move quickly on a project or repair and need to borrow a small sum, such as $3,000 or $5,000, a home improvement personal loan can be especially appealing. The application process is less involved than for a home equity loan or HELOC.

Note that repayment terms are typically shorter than with the other options and will vary with the lender. You may find terms of anywhere from one to seven years or possibly longer. Make sure you understand these details before applying for a personal loan.

Recommended: How Much Does It Cost to Remodel or Renovate a House?

The Takeaway

Maintaining a home is a year-round job, one made easier by taking on a set number of tasks each month or season. The regular monitoring, care, and cleaning of the interior and exterior of your house doesn’t just keep your place looking good — it can also help prevent costly breakdowns and protect your investment. However, even the most vigilant homeowner will likely take on a costly repair at some point. If your budget can’t handle the extra expense, a home improvement personal loan might be a good option.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What regular home maintenance should be done on a house?

There are many home maintenance moves needed to keep a property in good condition. Some of the most important are checking smoke detectors, looking over the HVAC system and cleaning its filters, examining for termites, inspecting for leaks and roof damage, and cleaning the gutters.

What is the 1% rule of home maintenance?

This rule says that you should set aside 1% of your home’s value for home maintenance every year. For instance, if your home is worth $500,000, you will probably spend $5,000 on home maintenance in a typical year.

How do I create a home maintenance schedule?

To create a home maintenance schedule, list all the tasks that you should do to keep your house well cared for. Then, either divide those into monthly or quarterly lists of tasks to handle. Some people prefer a quarterly, or seasonal, approach, while other people prefer to break home maintenance down into potentially easier-to-tackle monthly action items.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q225-080

The latest figures put the average honeymoon cost at about $5,000, Brides.com reports, adding that the average honeymoon lasts around seven days.

There are plenty of ways to save on or save for a honeymoon, though.

Here’s what you need to know about the average honeymoon cost and paying for a trip you’ll never forget.

The Honeymoon Tab

The Knot, a wedding-planning platform, cited a pre-pandemic average honeymoon cost of $5,000, based on an internal study of more than 27,000 couples who married in 2019. That is atop the average cost of a wedding, which The Knot put at $33,000.

The average cost of a honeymoon has increased since then, reflecting couples’ desire for more experiential travel, The Knot says, with 59% of American couples traveling outside the continental U.S. for their honeymoon.

Of course, the honeymoon outlay could be much higher if a couple goes on a luxury getaway or takes an extended trip.

Big-Ticket Honeymoon Items

The cost of a honeymoon can depend on location, amenities, and even the season couples decide to travel. Typically the cost will include:

• Plane, train, or automobile travel

• Accommodations

• Any excursions

• Food and beverages

• Taxes, tips, and fees

Essentially, it’s the same as any other big trip. The only extras may come because you want to make this trip the best it can be (and we don’t blame you).

Ways to Cut Honeymoon Expenses

There are still plenty of ways to save money on a honeymoon. As mentioned, location can play a major factor in the cost of the trip, but there is a secret a lot of travel insiders know and don’t share: Shoulder season.

Shoulder season is that awkward time between the high and low seasons of different destinations. It’s not necessarily that a place is less desirable to visit, but merely a less popular time to go.

The shoulder season in the Caribbean is the early fall (in the Northern Hemisphere, September to November), which is the midst of hurricane season, meaning fewer people tend to book during this time. Honeymooners could score great deals on flights and accommodations, and find more restaurant and excursion reservations available.

Hawaii, a perennial honeymoon destination favorite, has shoulder seasons of April through June, after all the school breaks end, and September to December, right before the holiday travel rush.

Check to see when your desired location’s shoulder season may fall, and if you wish, book in this window for the chance to save a little money.

Two other ideas:

Forage for great fares. Another way to cut back on typical honeymoon expenses is to hunt for the best flights possible if you’re traveling by air. This can be done by signing up for newsletter or alert services like Next Vacay, which sends daily emails with cheap flight deals, or similar services like Going and Skyscanner.

Use points or miles. One more way to lessen the financial strain of a honeymoon is to dig into credit card rewards such as points or miles. Check to see if your points can be used on flights, accommodations, or activities, and use them as you please. Don’t forget to check on any of those frequent flyer miles you’ve got hanging around either.

Paying for a Honeymoon

There are a number of ways couples can finance their honeymoon. Here are a few.

Join a honeymoon registry. The first, and perhaps most festive for a wedding, is to ask your friends and family to get involved with a honeymoon registry.

A honeymoon registry is a new twist on the wedding registry tradition. Rather than ask for gifts like china that comes out of the closet once every 10 years, couples can instead ask their guests to gift them money that they may use toward their honeymoon.

Some couples take the honeymoon registry a step further by registering at places like Honeyfund or Zola for specific honeymoon items rather than a blanket ask. This can include a specific hotel stay or merely an upgrade, scuba lessons or ski tickets, or dining at one special restaurant during the trip.

Carve out a honeymoon savings fund. Another way to finance your honeymoon is by starting your own honeymoon budget. Once you’ve decided as a couple where you’d like to travel on your first trip as the newly betrothed, you can estimate how much the trip will cost.

From there, you can start a fund where you put in a little each day, week, or a month from income or through any cutbacks you’re willing to make to your personal budgets to turn this dream trip into a reality.

Decide to camp out in Uncle Jeremy’s backyard. And grill hot dogs for days. It will be unforgettable. Just sayin’.

Take out a personal loan. A personal wedding or honeymoon loan can be used for just about anything you want. Yes, that means it can be used to cover any and all costs of a honeymoon.

The Takeaway

The average honeymoon costs around $5,000. But clearly, that number can vary greatly depending on when and where honeymooners travel, for how long, and the level of luxury. With more couples lusting for experiential travel, the average tab has grown.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

Photo credit: iStock/DragonImages

SOPL-Q225-084

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.

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.

Recommended: The Cost of Living By State

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.

Recommended: Mortgage Interest Deduction Explained

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.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

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