# What the Bipartisan American Homeownership Opportunity Act Actually Does

This bill creates two tax credits aimed at making it easier for people to buy their first home and for builders to construct affordable starter homes. Think of these as government incentives to help solve the housing affordability crisis.

The first part is a tax credit for first-time homebuyers. If you're buying your first home, you can get a credit worth up to $50,000 of your down payment. This means if you put down $40,000, you'd get a $40,000 credit on your taxes. The catch is that this credit phases out if you earn too much money—it starts disappearing if you make more than $150,000 (or $225,000 if you're a head of household, or $300,000 if you're married filing jointly). You also have the option to get the money upfront, deposited into an escrow account before you close on your home, which could help you actually make the purchase. To qualify, you need to have not owned a home in the past 10 years, and you must get a mortgage from a commercial lender—you can't buy from a family member or inherit the property.

The second part helps builders construct small, affordable homes. Builders get a tax credit worth 15 percent of their construction costs for homes under 1,200 square feet that sell for no more than 80 percent of the area's median home price. If the home is sold to a first-time homebuyer, the credit doubles to 30 percent. This incentivizes developers to build the kind of modest, affordable housing that's in short supply in many communities.

There's an important catch to the homebuyer credit: if you sell the home within five years, you have to pay back the credit. The main exceptions are if you're buying a new primary residence, if you die, if you get divorced, or if you're in the military and receive orders for extended duty. The bill also includes inflation adjustments so the dollar amounts increase over time to keep pace with rising costs.

Bipartisan American Homeownership Opportunity Act of 2025

Fitzpatrick, Brian K.

Bipartisan American Homeownership Opportunity Act of 2025This bill provides a new refundable tax credit for first-time homebuyers and a new tax credit to home builders for the construction of starter homes, both subject to limitations.First-time homebuyers may claim a tax credit equal to the amount of the down payment up to $50,000, subject to income limitations. The tax credit begins to&nbsp;phase out when a homebuyer’s income exceeds $300,000 for joint filers or surviving spouses, $225,000 for head of household filers, and $150,000 for single filers. The amounts are adjusted annually for inflation after 2025.&nbsp;&nbsp;The bill requires homebuyers to add the amount received as a tax credit to taxable income if, within five years from the purchase, the house is sold, leased, or is no longer used as the principal place of residence. (Some exceptions apply.)The bill also provides a tax credit for home builders of up to 15% of construction costs (materials and labor) incurred to build a home that is no larger than 1,200 square feet and is sold for an amount that does not exceed 80% of the median home prices for the area. The amount of the tax credit increases to 30% if the home is sold to a first-time home buyer.Finally, under the bill, each state receives an annual allocation for the tax credit for the construction of starter homes, for allocation by the state’s housing finance agency to builders (similar to the administration of the low-income housing tax credit).&nbsp;