First Time Homebuyers Could Save Up Quicker Under New Bill

First‑time homebuyers struggling to afford a down payment could get a new tax‑advantaged way to save under a new bill introduced this week.

The Homeownership Savings Act, introduced in the House of Representatives by Democrat Haley Stevens as H.R. 8709, would create a new type of savings account designed specifically to help first‑time buyers set aside money for down payments and closing costs more quickly.

"For too many Michiganders, the American Dream of owning a home is slipping away," Stevens said in a statement. "Families are working hard just to keep up with everyday costs while homeownership moves further out of reach. This bill is about making sure the next generation of Michiganders can afford to live in the communities they call home."

Why It Matters

With housing affordability worsening nationwide, the bill could help many renters become homeowners by tackling one of the biggest hurdles to homeownership: saving enough cash up front. While it would not directly lower home prices, supporters argue the proposal could help first‑time buyers reach the starting line sooner.

What To Know

At the center of the proposal are Homeownership Savings Accounts, which are a new class of tax‑advantaged accounts.

Under the bill, eligible first‑time buyers could:

• Save money in a dedicated account for home-buying expenses
• Deduct contributions from their taxable income (up to annual limits)
• Allow savings to grow tax‑free
• Withdraw funds tax‑free when used for qualifying home purchase costs

The accounts would be limited to first‑time homebuyers, and funds could be used only for approved expenses such as a down payment or closing costs.

“The Homeownership Savings Act addresses a real barrier by allowing first-time buyers to save in a tax-advantaged account specifically earmarked for a down payment, which could meaningfully shorten the savings timeline for moderate-income households who are otherwise competing against rising prices and high rates," Hannah Jones, senior economic research analyst at Realtor.com, told Newsweek.

"That said, demand-side subsidies like this have a mixed track record. Without a corresponding increase in housing supply, the most likely long-term effect in increasing housing demand is that any purchasing power gained by buyers gets absorbed into higher prices.”

How Much Buyers Could Save

The legislation sets both lifetime and annual contribution caps.

The lifetime contribution limit is up to $40,000 per buyer, while annual tax‑deductible contributions vary from up to $3,000 for married couples filing jointly and up to $2,500 for heads of household. For single filers, that limit would be up to $2,000.

The bill also allows employers to voluntarily contribute to an employee's account, potentially accelerating savings for workers receiving that benefit.

Who Would Qualify

Eligibility depends on key criteria:

• Must be a first‑time homebuyer
• Income limits apply, with tax benefits phasing out for higher earners
• Funds must be used for a principal residence
• Accounts close once a home is purchased, preventing repeated use

The bill is designed to focus benefits on working‑ and middle‑class households, according to Stevens' office.

"With home prices up 60 percent nationwide between 2019 and 2025, it is increasingly difficult for young families to achieve the dream of homeownership," Steven's office said in a release.

Why Lawmakers Say It's Needed

Housing affordability has been a central concern for millions of Americans, and Stevens said this bill would help mitigate some of the challenges renters face in becoming homeowners. The average age of a first‑time homebuyer has climbed to about 40, according to recent data from the National Association of Realtors, and saving for a down payment has become the biggest obstacle for many buyers.

Still, some question whether the bill would actually help homeowners.

Drew Powers, the founder of Illinois-based Powers Financial Group, said the proposal was "functionally useless."

"This does nothing to address affordability, which is the real issue in housing. The current median new home price is nearly $400,000," Powers told Newsweek. "After saving $3,000 per year to a $40,000 cap, a decade has passed, and the saver would have barely 10 percent down payment on today's prices, let alone what home prices will be 10 years later."

How This Compares to Other Savings Accounts

The proposed Homeownership Savings Account would function differently from traditional savings vehicles.

Compared with regular savings accounts:

• Contributions could be tax‑deductible
• Investment growth would be tax‑free
• Withdrawals for qualified home-buying costs would not be taxed

Unlike retirement accounts, the funds are purpose‑restricted to homeownership expenses.

The Homeownership Savings Act has already drawn support from several industry groups, including the Mortgage Bankers Association, the Michigan Bankers Association and the Community Economic Development Association of Michigan.

So far, the bill has no cosponsors and has been referred to the House Ways and Means Committee for review.

What Happens Next

H.R. 8709 is in the early stages of the legislative process.

Next steps include:

• Committee consideration and potential hearings
• Possible revisions to income limits or contribution caps
• A House vote, followed by Senate consideration if it advances

There is no timeline yet for a vote, and the bill could change as lawmakers debate its details.

It could face pushback from lawmakers who think the larger issue in housing affordability is actually the supply of homes available, said Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com.

"In a market where the core problem is that supply is 4 to 7 million units short of demand, helping more buyers save faster could simply accelerate competition for the same insufficient inventory," Ryan told Newsweek.

"Pushing prices higher for the very buyers the bill is designed to help. It’s a necessary piece of the housing affordability solution. But it’s not sufficient on its own."

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This story was originally published May 13, 2026 at 1:40 PM.