Biden says his $5K per year housing credit will help over 3.5M families buy their first home
President Joe Biden has proposed a new tax credit that would provide $5,000 per year — over two years — for first-time homebuyers.
The credit would offset the costs of purchasing a home — which are becoming increasingly unaffordable for middle-income Americans, amid high prices and mortgage rates.
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“I know the cost of housing is so important to you,” Biden said during his State of the Union speech on March 7.
“If inflation keeps coming down, mortgage rates will come down as well. But I’m not waiting.”
Who’s eligible?
Biden is calling on Congress to approve his “mortgage relief credit,” which the White House said will help more than 3.5 million middle-class families purchase their first home over the next two years.
An official told CBS MoneyWatch these credits — which will be split into $400 monthly payments — would be limited to households earning less than $200,000.
Biden is further proposing a one-year tax credit of up to $10,000 to middle-class families who sell their starter home (a home that is below the area median home price in the county) to another owner-occupant and help make more of these homes available to first-time homebuyers.
"Many homeowners have lower rates on their mortgages than current rates," the White House said. "This 'lock-in' effect makes homeowners more reluctant to sell and give up that low rate, even in circumstances where their current homes no longer fit their household needs."
Both of these credits would only be available to homebuyers who purchase properties in 2024 or 2025, CBS MoneyWatch reported.
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Biden wants to build more homes, too
The White House also mentioned a new Neighborhood Homes Tax Credit — which it said would lead to the “construction or preservation” of more than 400,000 starter homes across the country.
This would be beneficial to first-time homebuyers in particular, who are currently grappling with a shortage of affordable housing — with the average starter home price in America soaring to a record $243,000 last year, according to Redin.
Experts believe Biden’s proposal for new construction may actually be more helpful than the tax credits, CBS MoneyWatch reported.
"Ultimately, the president's most substantial comments made about housing were those related to new construction," LendingTree chief economist Jacob Channel told the publication in an email.
"High home prices in the United States are largely a function of the fact that we simply do not have enough housing supply to meet demand and bring prices down."
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
