Bicameral First-Time Homebuyer Tax Credit Act would help make homeownership a reality for young Americans amidst skyrocketing housing costs
WASHINGTON, D.C. — U.S. Senator Peter Welch (D-Vt.), a member of the Senate Finance Committee, joined U.S. Senators Sheldon Whitehouse (D-R.I.), Martin Heinrich (D-N.M.) and 10 Democratic Senators in reintroducing the First-Time Homebuyer Tax Credit Act, legislation that aims to support middle-class Americans purchasing their first home. The Senators’ legislation would establish a refundable tax credit worth up to 10% of a home’s purchase price—up to a maximum of $15,000—for first-time homebuyers.
“Everyone should have a fair chance to experience the joy of buying their first home–it’s a pillar of the American Dream. But skyrocketing housing prices have pushed that dream out of reach for folks in red and blue states alike,” said Senator Welch. “Our legislation will provide a financial boost to first-time homeowners to give more hardworking Americans a fair shot at buying their first home.”
“Owning a home is at the core of the American dream, but too many young families have been priced out of homeownership in recent years because of the housing supply crunch. And Trump’s chaotic tariff regime has increased homebuilding costs, forcing developers to pause construction on much-needed new units,” said Senator Whitehouse. “Our tax credit for first-time homebuyers would help make the American dream a reality for more of the young Americans left behind in Trump’s billionaire-first economy.”
“Buying your first home is more than just owning property: It’s a source of pride, stability, and hope for the future. Unfortunately, buying a home is out of reach for many families right now. We’re changing that with my First-Time Homebuyer Tax Credit Act,” said Senator Heinrich. “I’m proud to reintroduce this bill to ease the financial burden on aspiring homeowners and give every working family an equal opportunity to realize the American dream of owning a home.”
In 2022, the median sale price for a home in the U.S. was 5.6 times higher than the median income, a higher ratio than during the years immediately before the 2007 mortgage crisis, and the highest disparity on record. An NBC News analysis earlier this month found that the cost of building a single-family home could soon rise by more than $4,000 thanks to President Trump’s tariff agenda, which is expected to increase the costs of many of the materials used to build houses.
In Vermont, which faces a housing shortage and has the fourth-highest rate of homelessness in the country, an estimated 7,000 new homes will need to be built each year for the next 25 years to help alleviate the crisis. Nationwide, the shortage of affordable housing opportunities costs the American economy an estimated $2 trillion each year. High housing costs reduce disposable income and economic mobility, stifling economic opportunities for those who can no longer afford housing in their communities.
Housing unaffordability is especially harmful to younger Americans, who are struggling to reach the same milestones their parents did at their age. In 2024, the typical age of a first-time homebuyer reached a record high of 38, up from 29 in 1981. And first-time homebuyers, as a percentage of all homebuyers nationwide, fell from 38% to 24% over that same period, the lowest percentage ever recorded.
Under the First-Time Homebuyer Tax Credit Act, taxpayers would have the option of receiving the credit at the time of purchase by working with their mortgage issuer. Alternatively, taxpayers could elect to treat the purchase of their home as occurring in the prior taxable year to receive the credit before tax season if they are unable to qualify for the credit at point of sale.
The credit phases out for those making above 150% of area median income and for those buying a house with a purchase price above 110% of the area median purchase price. Additionally, the credit is limited to home purchases financed through federally backed mortgages.
The First-Time Homebuyer Tax Credit Act is cosponsored by U.S. Senators Tammy Baldwin (D-Wis.), Jack Reed (D-R.I.), Tina Smith (D-Minn.), Jacky Rosen (D-Nev.), Richard Blumenthal (D-Conn.), Chris Van Hollen (D-Md.), Lisa Blunt Rochester (D-Del.), Andy Kim (D-N.J.), Ruben Gallego (D-Ariz.), and Angela Alsobrooks (D-Md.). U.S. Representatives Jimmy Panetta (D-CA-19) and Mike Thompson (D-CA-04) led the reintroduction of the legislation in the House of Representatives.
The legislation is endorsed by the National Association of REALTORS (NAR), National Association of Home Builders (NAHB), Cooperative Credit Union Association, Mortgage Bankers Association, Rhode Island Executive Office of Housing, Rhode Island Association of REALTORS, RIHousing, Housing Network of Rhode Island, HousingWorksRI, Rhode Island Builders Association, Rhode Island Mortgage Bankers Association, Santa Clara County REALTORS, Santa Cruz County REALTORS, and Monterey County REALTORS.
Read and download the full text of the bill.
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