What Is the Biden First-Time Home Buyer Tax Credit?

By: Ryan Tronier Reviewed By: Paul Centopani
June 3, 2024 - 9 min read

Will you qualify for this proposed $15,000 tax credit?

The dream of homeownership may soon become more attainable for many Americans thanks to a proposed initiative known as the Biden First-Time Home Buyer Tax Credit.

This potential tax credit aims to provide financial assistance to those looking to purchase their first home, easing one of the most significant barriers to entry in the housing market. While the legislation has yet to become a reality, the promise of support could open doors for countless aspiring homeowners.

If you are eager to buy a home, it is important to know that you do not have to wait for this proposed tax credit. Here’s what you can expect.

Check your home buying eligibility. Start here


In this article (Skip to...)


What is the Biden First-Time Home Buyer Act?

The Biden First-Time Homebuyer Act of 2021 is a bill that would provide a refundable tax credit of up to $15,000 for first-time home buyers.

The proposed law seeks to revive and update a 2008 tax credit that has since expired. Under Biden’s new proposal, eligible home buyers could receive a tax credit equal to 10% of the purchase price of their home, capped at $15,000. Unlike a loan or cash grant, this refundable tax credit would be applied directly to your tax bill after purchasing your first home.

Verify your home buying eligibility. Start here

Should the home be sold or the owner relocate within the first year of ownership, the entire tax credit must be repaid. Otherwise, this repayment obligation decreases by 25% annually over four years, with exceptions for situations like divorce, death, or military relocations.

It’s also important to keep in mind that, if passed, the First-Time Homebuyer Act of 2021 would take effect on December 31, 2020. This means that qualifying homeowners could amend their tax returns for the previous year and still be entitled to a cash payment from the U.S. Treasury.

Has the Biden First-Time Home Buyer Act been passed?

As of June 2024, the Biden First Time Home Buyer Act has not been passed into law, so the tax credit is not available.

The House of Representatives passed the proposed legislation in March 2021, but the Senate must approve it too before the President signs it into law. Although Democrats currently control the Senate, it’s not clear if they have enough votes to pass the proposal.

There is no set timeline for Biden’s first-time home buyer tax credit to pass. It is possible that it could be passed in the near future, but it is also possible that it could be delayed or even defeated.

Requirements for the first-time home buyer tax credit

As the bill is still under consideration and has not been enacted into law, the final requirements remain subject to change. However, some likely stipulations for the Biden tax credit include:

  • The prospective home buyer must not have owned or co-signed a mortgage on a home within the past three years
  • The buyer’s modified adjusted gross income must not exceed 60% above the area median income (AMI), with variations in income thresholds for joint filers
  • The purchase price of the home must not exceed the median price for the area
  • The property must serve as the buyer’s primary residence

These potential requirements provide a glimpse into the framework of the proposed tax credit, reflecting an effort to make homeownership more accessible to a broader range of Americans.

Check your home buying eligibility. Start here

As the legislative process unfolds, further details and final provisions will become clearer, offering a more definitive path for first-time homebuyers seeking to benefit from this initiative.

What about Biden’s $25,000 home buyer grant?

The First-Time Homebuyer Act isn’t the only housing-related bill moving through Congress right now.

Another piece of proposed legislation is the Downpayment Toward Equity Act. If it becomes law, first-time home buyers may be eligible for a $25,000 cash grant to help with their purchase.

In July 2021, the House of Representatives introduced a bill popularly known as the $25,000 First-Time Home Buyer Home Grant, but Congress has not yet approved it. If the bill does become law, it would be funded by the Department of Housing and Urban Development (HUD).

The Downpayment Towards Equity Act is designed to help first-time buyers overcome the high cost of down payments, which can be a major barrier to homeownership. The grants would be available to home buyers who meet certain income and eligibility requirements, including:

  • Have a modified adjusted gross income of no more than $125,000 for individuals or $250,000 for married couples filing jointly
  • Purchase a home that is the home buyer’s primary residence
  • Purchase a home for no more than the area median purchase price
  • Complete a home buyer education course
Check your home buying options. Start here

Democrats and Republicans both support the Downpayment Towards Equity Act, which is a bipartisan measure. The bill is seen as a way to help address the affordable housing crisis and make homeownership more accessible to all Americans.

Alternative help for first-time home buyers

Buying a home for the first time is a significant milestone, and it comes with its fair share of challenges. But there’s no need to wait for the Biden first-time home buyer tax credit. You might get a house sooner than you think if you take advantage of existing housing assistance programs.

Some borrowers may be eligible for statewide assistance that comes in the form of special mortgage loans or help with down payments and closing costs. Others may qualify for popular low-down-payment loans that also offer flexible approval guidelines.

First-time home buyer loans

A first-time home buyer loan is a specialized mortgage loan, often featuring more favorable terms such as lower down payments or reduced interest rates.

Verify your low-down-payment loan options. Start here

These loans aim to make homeownership more attainable for first-time buyers by easing some of the financial challenges associated with the home-buying process.

ProgramMinimum Credit ScoreDown Payment RequirementOther Requirements
FHA Loans580 (with 3.5% down)3.5%-10%Mortgage insurance is required. Property must meet certain standards
Conventional 976203%At least one borrower must be a first-time home buyer. Private Mortgage Insurance may be required
Home Possible6603%Income limits apply. Homeownership education required
HomeReady6203%Income limits apply. Homeownership education required
USDA Loans6400%Must be in a USDA-eligible rural area. Income limits apply
VA LoansVaries by lender0%Available to veterans, active-duty service members, and certain members of the National Guard or Reserves
  • FHA loans: Due to the lower credit score and down payment requirements, FHA loans — backed by the Federal Housing Administration — are popular among first-time buyers.
  • Conventional 97 Loans: Because they have Fannie Mae’s backing and call for a lower down payment, Conventional 97 loans are popular with first-time buyers.
  • Home Possible: Freddie Mac’s Home Possible program is designed to assist low- to moderate-income borrowers with flexible credit terms.
  • HomeReady: Similar to Home Possible, this Fannie Mae program focuses on low- to moderate-income borrowers.
  • USDA Loans: Backed by the U.S. Department of Agriculture, USDA loans are designed for rural home buyers and offer the possibility of no down payment.
  • VA Loans: VA mortgages are available to veterans and active-duty military and offer benefits like no down payment and competitive interest rates.

Additionally, every state offers some form of first-time home buyer program tailored to the local housing market. Your state may also work closely with local lenders, developers, and housing agencies to create opportunities for first-time buyers. This collaboration can lead to innovative solutions and additional resources that cater to the unique needs of the community.

To find out about financial assistance in your area, read our guide to home buyer programs in every state.

Down payment assistance programs

In addition to first-time home buyer loans, another integral part of the home buying process that goes hand-in-hand with these loans is down payment assistance (DPA). This assistance can be a game-changer for many buyers, as it lowers the upfront costs of buying a home.

Verify your low-down-payment loan options. Start here

Various forms of down payment assistance are available, including grants, interest-free loans, and employer programs. Some are tailored specifically to first-time buyers, while others may be available to repeat buyers.

  • Grants: Funds that are given as a gift and don’t require repayment at any point.
  • Loans: These function as second mortgages, and they are paid on a monthly basis alongside your primary mortgage.
  • Deferred loans: Another second mortgage, but their payments are postponed, only becoming due if you move, sell, or refinance the property.
  • Forgivable loans: Another form of second mortgages, these are gradually forgiven over a predetermined period, such as five or possibly up to 15 or 20 years. Repayment is only necessary if you move, sell, or refinance the property too early.

Finding down payment assistance can be done through local housing agencies, lenders, and state and city websites. Many states and local communities offer programs tailored to their residents’ specific needs.
If you’re interested in exploring your DPA options further, don’t hesitate to check out our comprehensive guide to down payment assistance in all 50 states. It’s a valuable resource designed to help you navigate the opportunities available in your area and take the next step toward homeownership.

How to get approved for a mortgage

Navigating the path to mortgage approval can be a complex process, but understanding the key steps can make it more manageable.

  • Assess your financial health: Before applying for a mortgage, review your credit score, debt-to-income ratio, and overall savings. A strong credit history and manageable debt levels will make you a more attractive candidate to lenders.
  • Gather your paperwork: Collecting documents like proof of income, employment history, and personal identification early can expedite the application process. Having these documents ready shows lenders that you’re organized and serious about the home-buying process.
  • Get loan preapproval: Obtaining preapproval from a lender not only gives you an idea of what you can afford but also demonstrates to sellers that you’re a committed buyer. Preapproval can give you a competitive edge in a hot housing market.
  • Explore loan options: Different mortgage products suit different financial situations. Working with a mortgage professional to understand various loan options, such as fixed-rate or adjustable-rate mortgages, can help you find the best fit for your long-term goals and current financial standing.
  • Submit your application: Completing the application with your chosen lender requires careful attention to detail. Be honest and thorough in providing all requested information and documentation, as inaccuracies can lead to delays or even denial.
  • Wait for approval: After submitting your application, the lender will review all the information. This process can take time, and you may be asked for additional information or clarification. Patience and responsiveness during this phase can be key to a smooth approval process.
Get preapproved for a mortgage. Start here

Navigating the mortgage approval process is a critical step on the path to homeownership. By understanding these stages and preparing adequately, you can approach the process with confidence.

If you’re ready to take the next step, don’t hesitate to explore our guide on how to prepare to buy a home. It’s filled with insights and tips to help you move closer to the keys to your dream home.

FAQ: The Biden First-Time Home Buyer Act

What is Biden's $15,000 First-Time Homebuyer Act?

Biden’s $15,000 First-Time Homebuyer Act is proposed legislation aimed at reducing the homeownership gap, especially among first-generation home buyers and low-income families. If it becomes law, the act will offer financial assistance in the form of a refundable tax credit, up to 10% of the new home’s purchase price or a maximum of $15,000. This credit is designed to help with closing costs and make homeownership more accessible in housing markets throughout the U.S.

Did Biden pass the first-time home buyer tax credit?

As of June 2024, the first-time home buyer tax credit has not become law. Despite being one of the White House’s campaign promises, the bill is still under consideration. It reflects Biden’s commitment to supporting renters transitioning to homeownership and addressing challenges in the real estate market.

Why does Biden want to help first-time home buyers?

Biden’s interest in helping first-time home buyers stems from a desire to bridge the homeownership gap, particularly among low-income and first-generation home buyers. By offering financial assistance, the Biden administration aims to make real estate more accessible, stabilize housing markets, and promote economic growth.

What are the benefits of being a first-time home buyer?

First-time home buyers often have access to special mortgage rates, down payment assistance programs, and mortgage interest deductions. Lenders, including Fannie Mae and Freddie Mac, may offer favorable terms to encourage homeownership. These benefits can make the transition from renting to owning more manageable, especially in competitive real estate markets.

What is the difference between a first-time home buyer and a new home buyer?

A first-time home buyer is typically defined as someone who has not owned or co-signed a mortgage loan in the last three years. This category may include renters, those in foster care, or individuals benefiting from first-time home buyer programs. A new home buyer, on the other hand, may have owned property in the past but is purchasing a new home. While first-time buyers may qualify for specific benefits like reduced interest rates or IRS credits, new home buyers may not have access to these same advantages.

Explore your home-buying options

Many Americans in low- and middle-income brackets may be able to get a tax credit for buying a home if the Biden First-Time Homebuyer Act of 2021 is passed. Furthermore, unless the house is sold within the first four years of ownership, this tax credit might not need to be repaid.

Meanwhile, those looking to buy their first home should explore existing options such as low-down payment loans and down payment assistance. These financial aids can make becoming a homeowner a reality sooner than you might have thought possible.

Ready to begin your home-buying journey today? Get preapproved and compare rates to find the best fit for your financial situation. Your dream home could be just a few clicks away!

Time to make a move? Let us find the right mortgage for you


Ryan Tronier
Authored By: Ryan Tronier
The Mortgage Reports Editor
Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.