What is the Biden Administration’s home buyer tax credit? (Podcast)

Paul Centopani
Paul Centopani
The Mortgage Reports Editor
July 25, 2022 - 3 min read

Is the $15,000 tax credit going to happen?

The First-Time Homebuyer Act was introduced in April 2021 and would give qualified borrowers up to $15,000 as a refundable tax credit.

The bill was one of President Biden’s key campaign promises, intended to both help more people build wealth through homeownership and make home buying more accessible in the face of high rent prices.

The home buyer tax credit has yet to be passed into law as of July 2022. But mortgage expert Ivan Simental is optimistic it will pass in the near future.

Simental explained the bill — and who would qualify for a home buyer tax credit — on a recent episode of The Mortgage Reports Podcast. Here’s what he had to say.

Listen to Ivan on The Mortgage Reports Podcast!

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The First-Time Homebuyer Act explained

Lawmakers proposed the First-Time Homebuyer Act — also known as the First-Time Homebuyer Tax Credit — to Congress on April 28, 2021. The bill would help provide wealth-building opportunities for people and communities who have been marginalized.

Eligible first-time home buyers would receive a refundable tax credit equal to 10% of the property’s purchase price. The credit amounts would max out at:

  • $15,000 for homes bought in 2021
  • $15,300 for 2022
  • $15,606 for 2023
  • $15,918 for 2024
  • $16,236 for 2025

Put simply, if and when the bill passes, many qualified borrowers should expect to get the full amounts given the way home prices have grown. The bill needs to pass votes by the House of Representatives and Senate before going to the president to be signed into law.

You don’t need to wait until the Act passes to buy a house. The law would be retroactive to anyone who bought their first home (and met all the requirements) starting Jan. 1, 2021.

Would the tax credit have to be repaid?

If the First-Time Homebuyer Act does go into law, qualified buyers wouldn’t need to take any additional action for the credit. They’d just file their annual tax forms as usual and it would be applied automatically.

First-time home buyers can only receive the credit once. If you’re married and file your taxes separately, you can only claim half of the total. Unlike a loan, the credit doesn’t have to be repaid and would get applied to your federal income tax bill or through a direct refund.

However, you will have to pay back some of the credit if you don’t stay in the house for at least four years. Those payback amounts are:

  • 100% repayable if you move in Year 1
  • 75% repayable in Year 2
  • 50% repayable in Year 3
  • 25% repayable in Year 4

Provided you remain in your home as a primary residence for longer than four years, you would not have to repay any portion of the tax credit.

How to qualify for the first-time home buyer tax credit

If it passes, the Act would not apply to all first-time home buyers. Borrowers would need to meet a handful of requirements to be eligible. The criteria are as follows:

  • Must be a first-time home buyer
  • Buyers may not have owned a home or co-signed on a mortgage within the 36 months previous to their home purchase
  • Home has to be a primary residence
  • Borrowers must be at least 18 years old
  • Can’t have purchased the home from a relative
  • Individual annual income must be under 160% of the median income for your location

Additionally, there is an income qualification limit. First-time home buyers cannot exceed 160% of the median income of their metropolitan area. For example, the median income in Las Vegas is $60,000, so you wouldn’t be able to make more than $96,000 as an individual to be eligible for the credit.

You don’t have to wait until the Act passes to get the credit

Simental is hopeful and optimistic the First-Time Homebuyer Act will eventually be signed into law. But don’t wait for the bill to pass before buying a house!

Aside from starting the clock on building home equity, the law would be retroactive to anyone who bought their first home (and met all the requirements) starting Jan. 1, 2021. The bill also has no termination date written into it but could feasibly end if another president doesn’t support the act.

Your accountant could help you with specifics on your taxes and potentially receiving this credit. If you’re ready to buy a home, reach out to your local mortgage lender and get the preapproval process started.


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