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Author: Dan Green | Last Updated: November 15, 2022

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Are you buying your first home? The government wants to help.

Effective November 2022, many first-time buyers are eligible for an automatic mortgage rate discount that lowers mortgage rates by 1.75 percentage points.

Plus, there are now nine affordable housing programs in discussion within the chambers of Congress. The nine bills tackle home affordability and inclusion and make it easier for renters to buy their first home.:

• Three bills propose tax credits for first-time buyers
• Two bills offer cash grants to first-time buyers
• Two bills cut first-time buyer mortgage rates to ultra-low levels
• One bill forgives existing student loan debt for first-time buyers
• One bill gives tax breaks for savings for a down payment 

Bills follow a path before becoming law.

First, first-time home buyer legislation is introduced as a bill. The bill is debated and brought to a vote if there’s excitement for it. 

Suppose the vote passes both the House of Representatives and the Senate. In that case, the bill is handed to the President, whose signature ratifies and passes the bill into law.

This article tracks the nine first-time home buyer programs and their progress into law and other first-time buyer programs meant to make homes affordable.

First-Time Home Buyer Mortgage Programs [November 2022 Update]

Table of Contents

• →  1. [NEW] FHFA First-Time Home Buyer Mortgage Rate Discount
• →  2. First-Time Homebuyer Act
• →  3. Downpayment Toward Equity Act
• →  4. Uplifting First-Time Homebuyers Act of 2021
• →  5. First-Time Homebuyer Refundable Credit via The DASH Act
• →  6. First Generation Down Payment Assistance
• →  7. Build Back Better Act
• →  8. Low-Income First Time Home Buyer Act (LIFT)
• →  9. Transforming Student Debt to Home Equity Act Of 2022
• →  10. American Dream Downpayment Act or 529(b)
• →  Can’t Wait For Laws To Pass?

1. [NEW] FHFA First-Time Home Buyer Mortgage Rate Discount

• Status: Announced October 22, 2022
• Effective: Mortgages funding on or after December 1, 2022

The FHFA First-Time Home Buyer Mortgage Rate Discount is an automatic interest rate reduction for eligible first-time buyers. The rule is sponsored by Fannie Mae and Freddie Mac and lowers conventional mortgage rates up to 1.75 percentage points. 

Program eligibility standards include:

• Must be a first-time home buyer
• Must be purchasing a primary residence
• Must agree to move in within 60 days of the closing
• Must be a low- or middle-income wage earner relative to the area
• Must finance with a conventional mortgage

The Bottom Line for First-Time Home Buyers

Eligible first-time home buyers receive the FHFA mortgage rate discount automatically. Share your income and credit information as part of your mortgage pre-approval to get your total discount size.

Check your mortgage eligibility.

2. First-Time Homebuyer Act

• Status: Introduced to the House, awaiting a vote
• Originally Introduced: April 28, 2021
• Latest Action Taken: April 28, 2021 – Referred to the House Committee on Ways and Means

The First-Time Homebuyer Act, also known as the $15,000 First-Time Home Buyer Tax Credit, grants first-time home buyers a refundable federal tax credit of up to $15,000.

The program’s minimum eligibility standards include the following:

• Must be a first-time home buyer
• Must not exceed income and purchase price limitations
• Must be purchasing a primary residence – second homes and rental properties are not allowed
• Must be at least 18 years of age or married to a person who is 18 years of age
• Must be purchasing a home from a non-relative

The Bottom Line for First-Time Home Buyers

The $15,000 First-Time Home Buyer Tax Credit has been introduced and still needs to receive a vote. The first-time home buyer tax credit is unavailable to buyers as of today.

Check your mortgage eligibility.

3. Downpayment Toward Equity Act

• Status: Introduced to the House, awaiting a vote
• Originally Introduced: April 14, 2021
• Latest Action Taken: June 22, 2022 Hearings held by the Committee on Banking, Housing, and Urban Affairs.

The Downpayment Toward Equity Act, also known as the $25,000 First-Time Home Buyer Downpayment Grant, gives first-time buyers a cash grant of up to $25,000 toward purchasing a home. Grant cash can pay for any purchase-related line item, including down payment, interest rate reduction, mortgage, real estate closing costs, and other general expenses.

The program’s minimum eligibility standards include the following:

• Must be a first-time home buyer
• Must meet income and purchase price limitations
• Must be purchasing a primary residence – second homes and rental homes are not allowed
• Must use a government-backed mortgage such as a conventional loan, FHA loan, or USDA loan
• Must have parents or legal guardians who have not owned a home in your lifetime unless (1) they lost their home to foreclosure or short sale, or (2) you lived in foster care at any point in your lifetime

The Bottom Line for First-Time Home Buyers

The $25,000 Downpayment Toward Equity Act is introduced and still needs to receive a vote. Cash grants are unavailable to buyers as of today.

Check your mortgage eligibility.

4. Uplifting First-Time Homebuyers Act of 2021

• Status: Introduced to the House, awaiting a vote
• Originally Introduced: June 24, 2021
• Latest Action Taken: June 24, 2021 – Referred to the House Committee on Ways and Means

The Uplifting First-Time Homebuyers Act is a tax-incentive bill that lets home buyers use more of their 401(k) toward purchasing a home.

Under current law, first-time home buyers can early-withdraw up to $10,000 from their 401(k) retirement fund penalty-free if that money is used to purchase a home. Under The Uplifting First-Time Homebuyers Act, Congress doubles the limit to $20,000.

The program’s minimum eligibility standards include the following:

• Must be a first-time home buyer
• Must be withdrawing money from a tax-exempt 401(k) retirement account
• Must use the cash for a home purchase transaction

The Bottom Line for First-Time Home Buyers

The Uplifting First-Time Homebuyer Act has been introduced and still needs to receive a vote. Its additional tax incentives are unavailable to first-time home buyers as of today.

Check your mortgage eligibility.

5. First-Time Homebuyer Refundable Credit via The DASH Act

• Status: Introduced to the Senate, awaiting a vote
• Originally Introduced: August 18, 2021
• Latest Action Taken: September 23, 2021 – “Read twice” and Referred to the Committee on Finance

The Decent, Affordable, Safe Housing for All Act (DASH Act) resembles the First Time Homebuyer Act but with more straightforward qualification standards. Specifically, the DASH Act emphasizes income and the first-time buyer’s home purchase price less.

The DASH Act provides up to $15,000 in refundable tax credits to first-time home buyers who meet minimum eligibility standards:

• Must be a first-time home buyer
• Must meet purchase price limitations
• Must be at least 18 years of age or married to a person who is 18 years of age
• Must be a U.S. citizen
• Must have an adjusted gross income of $100,000, or $200,000 for married couples filing jointly

The Bottom Line for First-Time Home Buyers

The DASH Act is introduced and still needs to receive a vote. The $15,000 tax credit is not yet available to first-time home buyers.

Check your mortgage eligibility.

6. First Generation Down Payment Assistance

• Status: Introduced to the House
• Originally Introduced: July 16, 2021
• Latest Action Taken: July 22, 2021 – The bill’s sponsor made introductory remarks on the measure

The First Generation Down Payment Assistance program is embedded within the Housing is Infrastructure Act of 2021. It awards $25,000 cash grants to first-time buyers toward their home purchases.

The First Generation Down Payment Assistance program is similar to the Downpayment Toward Equity Act but with more specific qualification standards. The program changes the “first-generation home buyer” definition to include all first-time buyers whose parents or legal guardians currently don’t own a home.

The program’s minimum eligibility standards include the following:

• Must be a first-time home buyer
• Must meet income and purchase price limitations for the area
• Must be purchasing a primary residence – second homes and rental properties are not allowed
• Must use a government-backed mortgage such as a conventional loan, FHA loan, or USDA loan
• Parents or legal guardians may not own a home currently unless you lived in foster care at any point in your lifetime

The Bottom Line for First-Time Home Buyers

The First Generation Down Payment Assistance program is introduced and still needs to receive a vote. The $25,000 cash grant is not yet available to first-time home buyers.

Check your mortgage eligibility.

7. Build Back Better Act

• Status: Passed House vote, Awaiting Senate vote
• Originally Introduced: September 27, 2021
• Latest Action Taken: November 19, 2021 – Motion to reconsider laid on the table

The Build Back Better Act is a wide-reaching stimulus program that touches housing, education, climate change, and more.

The Build Better Back Act gives first-time, first-generation home buyers cash grants of up to $25,000 for any purchase line-item cost, including down payment, closing costs, and mortgage rate reductions. The bill defines “first-generation home buyer” as all first-time buyers whose parents or legal guardians currently don’t own a home.

The Build Back Better Act’s minimum eligibility standards include the following:

• Must be a first-time home buyer
• Must meet income and purchase price limitations for your area
• Must be purchasing a primary residence – second homes and rental properties are not allowed
• Must use a government-backed mortgage such as a conventional loan, FHA loan, or USDA loan
• Must have parents or legal guardians who don’t currently own a home unless you lived in foster care at any point in your lifetime

The Bottom Line for First-Time Home Buyers

The Build Back Better Act passed a House vote and did not pass a Senate vote. 

Check your mortgage eligibility.

8. Low-Income First Time Home Buyer Act (LIFT)

• Status: Introduced to the House
• Originally Introduced: September 22, 2021
• Latest Action Taken: September 22, 2021 – Referred to the Committee on Banking, Housing, and Urban Affairs

The LIFT Act, also known as the LIFT Homebuyers Act, provides below-market mortgage rates to first-generation renters of modest means. The program reduces mortgage interest paid, so homes pay off in 20 years instead of thirty with the same monthly payment, which builds wealth faster.

Home buyers can combine the LIFT Act with other first-time buyer programs, including the $15,000 First-Time Home Buyer Tax Credit and the $25,000 Downpayment Toward Equity Act.

The program’s minimum eligibility standards include the following:

• Must be a first-time home buyer
• Must meet income and purchase price limitations for the area
• Must use an FHA-backed mortgage loan
• Must have parents or legal guardians who don’t currently own a home unless you lived in foster care at any point in your lifetime

The Bottom Line for First-Time Home Buyers

The LIFT Act is introduced and still needs to receive a vote. Its reduced mortgage rates are unavailable to first-time home buyers as of today.

Check your mortgage eligibility.

9. Transforming Student Debt to Home Equity Act Of 2022

• Status: Introduced to the House
• Originally Introduced: April 1, 2022
• Latest Action Taken: April 1, 2022 – Referred to the Committee on Financial Services

The Transforming Student Debt To Home Equity Act helps first-time buyers with monthly student loan payments. The bill lowers mortgage rates for buyers, provides discounts on government-owned homes and makes down payment assistance available.

The program’s minimum eligibility standards are

• Must be a first-time home buyer
• Must be approved for a mortgage
• Must agree to own and live in the new home for three years
• Must have federal student loans not in default
• Must agree to take a homeownership class

The Bottom Line for First-Time Home Buyers

The Transforming Student Debt to Home Equity Act is introduced and still needs to receive a vote. Its reduced mortgage rates and discounted homes are currently unavailable to first-time buyers.

Check your mortgage eligibility.

10. American Dream Downpayment Act or 529(b)

• Status: Introduced to the House
• Originally Introduced: February 25, 2021
• Latest Action Taken: August 2, 2022 – Introduced in the U.S. Senate

The American Dream Downpayment Act authorizes a tax-advantaged downpayment savings account. The bill is based on Internal Revenue Code Section 529, which permits tax-advantaged tuition savings accounts. The American Dream Downpayment Act would occupy section 529(b) of the tax code and create savings accounts for buying your first home. 

Cash added to a 529(b) down payment savings account can be withdrawn with no taxes due on gains.

Withdrawals from a 529(b) are allowed anytime if buyers use the proceeds to help purchase a home. Buyers can use withdrawals to make a down payment, pay for mortgage and real estate closing costs, pay state and local taxes, and pay other home-buying expenses due at closing.

• Contributions must be cash
• Contribution total limit is $129,400 (which is twenty percent of the base conforming mortgage loan limit)
• Contribution limits adjust with inflation

The Bottom Line for First-Time Home Buyers

The American Dream Downpayment Act still needs to receive a vote. 529(b) savings accounts are yet to be available. 

Check your mortgage eligibility.

Can’t Wait For Laws To Pass?

Don’t let Congress make you wait. The FHFA First-Time Home Buyer Mortgage Rate Discount is available and will save you money.

Plus, buyers can use low- and no-money-down mortgages to purchase homes and combine them with local first-time home buyer programs and grants.

Dan Green is a former mortgage loan officer and an industry expert. He's appeared on NPR and CNBC, and in The Wall Street Journal, Bloomberg, and dozens of local newspapers. Dan has helped millions of first-time home buyers get educated on mortgages, real estate, and personal finance. Have mortgage questions? Ask Dan in the chat.

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