Tax Credit Expansion Offers Up to $15,000 for First-Time Buyers

The Senate Banking Committee on April 15 voted 16-7 to advance legislation that would create a federal first-time homebuyer tax credit worth up to $15,000. The measure now proceeds to the full Senate, where Majority Leader Chuck Schumer has not yet scheduled floor consideration.

The bill, titled the First-Time Homebuyer Tax Credit Act of 2026, would offer a refundable credit equal to 10% of the purchase price, up to $15,000. The credit would phase out for individuals earning above $100,000 adjusted gross income ($150,000 for joint filers), and would not apply to purchases over 150% of the local FHA loan limit. Eligible buyers must not have owned a principal residence in the past three years.

Sponsor Senator Sherrod Brown (D-Ohio) said the credit addresses the historic gap in first-time buyer entry that has opened over the past five years. "First-time buyer market share has hit a record low. Federal policy should respond," Brown said in a statement after the committee vote. The bill drew five Republican co-sponsors, including Senators Rob Portman of Ohio and Joni Ernst of Iowa.

The Congressional Budget Office scored the credit as costing $14.8 billion over 10 years, assuming a 33% participation rate among eligible households. The CBO note accompanying the score cautioned that credit programs historically produce modest price increases in markets where supply is constrained, which could partially offset the affordability benefit.

The bill differs from prior federal homebuyer tax-credit programs in two important ways. First, the credit would be applied at closing through a lender advance rather than at tax filing, making funds available for down payment or closing costs. Second, clawback provisions apply only if the buyer sells within 36 months, as compared with the 36-month clawback in the 2008-2010 first-time buyer credit.

National Association of Realtors CEO Nykia Wright said the group supports the proposal but advocates for additional inventory measures to accompany it. Wright pointed to the Affordable Housing Credit Improvement Act, a separate measure expanding the Low-Income Housing Tax Credit, as complementary legislation.

Policy analysts expressed mixed views. Laurie Goodman of the Urban Institute supported the targeted design but said implementation challenges remained. "The ten-percent cap keeps the credit meaningful in lower-cost markets where participation should be highest," Goodman said. Jim Parrott of the Urban Institute and former Obama administration housing advisor raised concerns that eligible home prices could be pushed modestly upward in tight markets.

The measure has not yet been scored by the Joint Committee on Taxation for its budgetary impact beyond 2035. Scoring disputes contributed to the delay in advancing an earlier 2024 version of the bill, which died in the previous Congress. Senator Brown's office said the JCT analysis is expected before floor consideration.