Bipartisan American Homeownership Opportunity Act of 2025

This bill aims to make buying and building modest homes more affordable. It creates two new tax credits: one for first-time homebuyers and one for builders of “starter” homes. First-time buyers could get a refundable tax credit equal to their down payment, up to $50,000. The credit starts to phase out at incomes of $300,000 for joint filers, $225,000 for heads of household, and $150,000 for single filers, with amounts adjusted for inflation after 2025. If you sell, lease, or stop living in the home as your main home within five years, you must add the credit amount back to your taxable income, with some exceptions.

Builders could get a tax credit worth 15% of labor and materials to build a small, lower-priced home, or 30% if the home is sold to a first-time buyer. To qualify, the home must be 1,200 square feet or less and sold for no more than 80% of the area’s median home price. States would receive yearly credit amounts and their housing finance agencies would award them to builders.

Key points:

• Who is affected: First-time homebuyers; builders of small, lower-priced homes; state housing finance agencies.
• What changes: Up to $50,000 buyer tax credit for down payments (with income limits and a five-year rule); 15%–30% builder credit for qualifying starter homes.
• When: Income limits for the buyer credit adjust each year after 2025; states receive annual builder-credit allocations to distribute.