American Housing and Economic Mobility Act of 2025

This bill aims to lower housing costs, expand homeownership, and keep homes in community hands. It pours major funding into affordable housing, helps first‑time, first‑generation buyers with down payments, and encourages cities to update zoning so more homes can be built. It also sets guardrails for sales of foreclosed homes and certain mortgage pools so they favor owner‑occupants and community partners, not just large investors. The bill strengthens the Community Reinvestment Act (CRA) so banks and credit unions better serve low‑ and moderate‑income neighborhoods. It also updates several estate and gift tax rules used by very wealthy households.

Key points

• Who is affected
  • Renters and homebuyers, especially first‑time, first‑generation buyers eligible for new down payment help.
  • Homeowners and neighborhoods where homes are worth less than the cost to build or fix (“appraisal gap”) and borrowers with negative equity.
  • Cities, states, and Tribal partners seeking grants to build, preserve, or make it easier to add affordable homes.
  • Banks and credit unions under a stronger CRA framework.
  • Certain direct descendants of deceased veterans from the WWII–Vietnam era, who would temporarily qualify for VA home loans if they are first‑time, first‑generation buyers.
• What changes
  • Big, multi‑year funding to build and preserve affordable homes, including the Housing Trust Fund ($48B per year for 2025–2034), Capital Magnet Fund ($3B per year for 2025–2034), and a major one‑time boost for public housing repairs ($70B in 2025), plus support for rural, Tribal, and Native Hawaiian housing.
  • New down payment grants for first‑time, first‑generation buyers, up to 3.5% of the home’s appraised value; can be combined with other aid; no FHA loan required; lenders can advance funds at closing; repayment only if you leave within 5 years (with hardship exceptions).
  • “Middle Class Housing Emergency Fund” grants to build or buy affordable homes (up to 120% of area median income) and prevent tenant harassment and displacement.
  • A state grant program for “appraisal gap” areas to help homeowners catch up on payments, clear tax or utility liens, pay off small mortgages or second liens, fund repairs, and buy/rehab vacant or distressed homes ($5B in 2025).
  • Local “innovation” grants to cut red tape—such as zoning updates, less parking mandates, smaller lot minimums, accessory dwelling units, and tenant protections—to lower building costs ($2B per year for 2025–2029).
  • Rules so most FHA‑owned foreclosed homes (at least 75%) go to owner‑occupants or community partners, with exclusive listing windows for them; limits on risky land‑contract resales; stronger borrower notice, protections, and public reporting for Fannie Mae/Freddie Mac loan sales, with penalties for buyers who don’t comply.
  • Stronger CRA: more public data on consumer and community‑development lending, periodic rule reviews, broader assessment areas, and tougher merger reviews that require community benefit plans and public input.
  • Credit unions get clearer authority to serve “underserved areas,” and banks can put more capital into community‑benefit investments based on their capital and CRA ratings.
  • Estate and gift tax changes: limits on family‑transfer valuation discounts and on “step‑up” in basis for certain grantor trusts; a simpler annual gift exclusion; tighter generation‑skipping rules and new grantor‑trust provisions.
• When
  • Most housing funds start in fiscal year 2025; several programs and guidelines must be set within one year of enactment; many tax changes take effect upon enactment, and some trust rules key off January 1, 2026.