Biden Promises Credits to Help First Home Buyers

In 2020 and 2021, mortgage lenders began offering some of the lowest interest rates in history in response to the COVID-19 pandemic and the economic crisis it triggered. But over the past few years, the cost of signing a mortgage has become much higher. And between high interest rates and home prices, many buyers, especially first-time buyers, have had a difficult time entering the housing market.

President Joe Biden acknowledged the challenges faced by first-time buyers in his recent State of the Union address. And he pointed out that he has a plan that could really help those listening.

Is the New Homebuyer Tax Credit on the way?

In 2008, the First Home Buyer Credit was made available in response to the then-emerging housing crisis. These days, there’s no official first-time homebuyer tax credit on the books. But that may change.

In his 2024 State of the Union address, President Biden said, “I know housing costs are so important to you. Inflation continues to fall. Mortgage rates are going to fall, and the Fed recognizes that.”

“But I’m not waiting. I want to give Americans an annual tax credit that would give them $400 a month for the next two years when they buy their first home or make a small transaction when mortgage rates go down. And more room.”

Now, to be clear, Biden’s proposal is simply a proposal. But such a move could be a good thing for buyers and help open up an otherwise tight market.

The biggest reason many buyers have difficulty purchasing a home these days is a lack of inventory. And inventory remains stagnant because existing homeowners don’t want to give up the record-low mortgage rates they locked in years ago.

Biden’s proposal could achieve two very important purposes. First, it can help first-time buyers enter the market. But Biden’s language also suggests that his credit isn’t just assigned to newbies. Rather, it could potentially include existing homeowners looking to upsize.

This is huge because if more people can afford to scale up, it could start to bring starter homes to the market. This is the type of property that first-time buyers tend to target. This is because they are inherently smaller (i.e. easier to maintain) and less expensive.

You may already be able to get help.

There is currently no tax credit available to first-time homebuyers, but if you are a first-time homebuyer, you may be eligible for a down payment assistance program through your state or local housing authority. For example, New York City’s HomeFirst down payment assistance program offers qualified homebuyers up to $100,000 toward the purchase of a home.

You may also be able to get a loan to help with down payment. Eligibility for this program is based on your income and credit history and may vary depending on where you live.

With any luck, President Biden will succeed in providing meaningful relief to first-time (and existing) homebuyers and homeowners. This can be a huge help during particularly difficult times in the housing market.

NOTE: Our top-tier cashback cards now offer a 0% introductory APR through 2025.

This credit card isn’t just good. A truly outstanding card that our experts use personally. Features a long 0% intro APR period, cash back rates of up to 5%, and no annual fee!

Click here to read the full review for free and apply in just 2 minutes.