Heinrich Introduces First-Time Homebuyer Tax Credit to Bring Homeownership Within Reach for More Working Families in New Mexico
WASHINGTON - U.S. Senators Martin Heinrich (D-N.M.) and Sheldon Whitehouse (D-R.I.) and Representatives Jimmy Panetta (D-Calif.) and Earl Blumenauer (D-Ore.) introduced the First-Time Homebuyer Tax Credit Act, legislation to support homeownership among lower- and middle-income Americans by establishing a refundable tax credit worth up to 10 percent of a home’s purchase price – up to a maximum of $15,000 – for first-time homebuyers.
“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 Americans right now. With this legislation, we’re changing that,” said Heinrich. “I’m proud to introduce the First-Time Homebuyer Tax Credit Act to ease the financial burden on aspiring homeowners to give every working family an equal opportunity to realize the American dream of owning a home.”
“Owning a home is at the core of the American dream, and it has been pushed further out of reach for more families over the last few years,” said Whitehouse. “Our legislation will make homeownership, which provides a stable foothold in the middle class and a straightforward way to build wealth, a reality for more Rhode Islanders.”
In New Mexico, a study commissioned in 2022 by the New Mexico Mortgage Finance Authority (MFA) revealed a shortage of 32,000 affordable units for low-income households in New Mexico. Additionally, the typical the typical age of a first-time homebuyer has reached a record high of 36, up from 29 in 1981.
In 2022, the median sale price for a home in the U.S. was 5.6 times higher than the median income, a ratio that is higher than during the years immediately preceding the 2007 mortgage crisis and is the highest disparity on record.
Housing unaffordability is uniquely problematic for young people, who are struggling to reach the same milestones as their parents did at their age. Nationally, the typical age of a first-time homebuyer reached a record high of 36 in 2022, up from 29 in 1981. In 2022, first-time homebuyers made up just 26 percent of all homebuyers nationwide compared to 38 percent in 1981.
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 percent of area median income and for those buying a house with a purchase price above 110 percent 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.) and Peter Welch (D-Vt.).
The legislation is also endorsed by Cooperative Credit Union Association, Rhode Island Association of REALTORS®, and the CALIFORNIA ASSOCIATION OF REALTORS®.
“There is a huge demand for down payment assistance, and the First-Time Homebuyer Tax Credit Act would be another advantage for those the New Mexico Mortgage Finance Authority serves through its existing homeownership programs,” said New Mexico Mortgage Finance Authority (MFA) CEO/Executive Director Isidoro Hernandez. “We have witnessed firsthand how these types of incentives provide the opportunity for homeownership – and, in turn, wealth – to so many people who may feel left behind in the current market. This legislation would work well with the programs MFA currently offers. The First-Time Homebuyer Tax Credit Act would be a great resource for New Mexicans who want to become homeowners.”
“NAHB strongly supports tax incentives to promote homeownership, and enacting this legislation would help alleviate one of the biggest barriers for first-time buyers--accumulating enough savings to cover the initial costs of buying a home,” said National Association of Home Builders Chairman Carl Harris, a custom home builder from Wichita, Kansas. “I want to thank Senators Whitehouse and Heinrich and Representatives Panetta and Blumenauer for making homeownership a national priority.”
A summary of the bill is available here. The bill text is available here.
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