Heinrich introduces first-time homebuyer tax credit

U.S. Sens. Martin Heinrich (D-N.M.) and Sheldon Whitehouse (D-R.I.) and Reps. Jimmy Panetta (D-Calif.) and Earl Blumenauer (D-Ore.) introduced the First-Time Homebuyer Tax Credit Act Wednesday, legislation to support homeownership among lower- and middle-income Americans by establishing a refundable tax credit worth up to 10% 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,” Heinrich said. “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.”

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. In 2022, first-time homebuyers made up just 26% of all homebuyers nationwide compared to 38% 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% of area median income and for those buying a house with a purchase price above 110% of the area median purchase price. Additionally, the credit is limited to home purchases financed through federally backed mortgages.

“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.”