What Is the Biden Administration’s Home Buyer Tax Credit? (Podcast)

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.

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.

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.

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.

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.

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.