EXCLUSIVE: Lawmakers introduce bipartisan bill to help first-time homebuyers, lower cost of down payments

A bipartisan group of lawmakers will introduce legislation to empower first-time homebuyers by allowing them to use leftover tax-free 529 plan funds to buy or build their first homes, giving buyers more options to use tax-advantaged savings.

The First-Time Homebuyer Empowerment Act, a copy of which was obtained exclusively by the Washington Reporter, will be introduced by Reps. Tracey Mann (R., Kansas), Mark Alford (R., Mo.), Tom Barrett (R., Mich.), Lou Correa (D., Calif.), James Moylan (R., Guam), John McGuire (R., Va.), Russ Fulcher (R., Idaho), Sharice Davids (D., Kansas), and Nancy Mace (R., S.C.). It comes among a bipartisan push to lower the cost of housing — especially for first-time homebuyers. Lawmakers want to remove barriers for first-time homebuyers, especially when it comes to putting down large down payments.

“Homeownership is the heart of the American Dream,” Mann told the Reporter. “The ability to provide a safe, stable place to raise a family is so important for the future of our country. Today, too many young Americans feel that owning a home continues to become more and more out of reach. Our legislation gives people more flexibility on how to use their savings, opening up pathways for more Americans to own equity in their homes.”

“Too many families can’t afford homes that work for them, plain and simple,” Barrett said. “An easy first step towards changing that reality is to let homebuyers tap into unused college savings in their 529 accounts and put them towards purchasing their first home. I’m proud to join my colleagues on this legislation to incentivize saving for the future and help the next generation achieve homeownership.”

The bill is supported by a suite of organizations in the housing industry, including the National Association of Realtors, National Association of Homebuilders, Mortgage Bankers Association, Institute of Real Estate Management, Kansas Association of Realtors, Missouri Realtors, Iowa Association of Realtors, Michigan Association of Realtors, and the California Association of Realtors.

“NAHB commends Reps. Mann, Alford and Correa for introducing the First Time Home Buyer Enhancement Act, legislation that would allow first-time home buyers to use funds from their 529 savings accounts to buy their first home,” Buddy Hughes, the chairman of National Association of Home Builders, said. “Saving for a down payment is a major barrier for first-time home buyers and this bill would help hard-working families to get a toe hold on the homeownership ladder.”

Rep. Alford added that “every American deserves a fair shot at owning a home. Too many first-time buyers are working hard and saving yet still can’t reach the down payment. This commonsense bill gives families more flexibility to use their existing savings in tax advantaged accounts, opening the door to the American Dream.”

The importance of lowering costly down payments is one of the reasons that Bill Killmer, the Senior Vice President of Legislative & Political Affairs at Mortgage Bankers Association, said that his group backs this bill. “Down payment hurdles continue to block many families from owning a home,” Killmer said. “The First-Time Home Buyer Empowerment Act provides a common-sense solution that empowers first-time buyers to use their own savings — at no cost to taxpayers. MBA looks forward to supporting this and other efforts in Congress to expand sustainable homeownership.”

Correa explained that the bipartisan bill “would give hard-working American taxpayers on Main Street greater flexibility to put the money they’ve earnestly saved toward one of the largest investments they can make — buying a home.”

“In Orange County and across our state, housing has only become more unaffordable,” Correa added. “This would mark an important step toward giving aspiring home-owners across the country the tools they need to build and sustain financial stability — for themselves and their children.”