Joe Biden First Time Home Buyer: All You Need to Know About Home Buyer Act

During the race to the White House, then-Republican presidential candidate, Joe Biden, made a campaign promise that when elected into office. He will provide “help for hard-working Americans to buy or rent quality housing”. This included a $15,000 tax credit incentive to first-time homebuyers. Which became known as the Biden $15,000 first-time homebuyer act. And the Downpayment Towards Equality act. The tax incentive and the downpayment were to smoothen the process of owning homes and realizing the American dream. According to Joe Biden, “Tens of millions of Americans spend over 30% of their salary on housing”. Which leaves them with little or no room to save money, build wealth, and become financially independent.

The Biden first time homebuyer act will help those who are highly affected by the high cost of housing, especially people of color; blacks, and Latinos. The foundation to building sustainable wealth is by owning affordable homes. And the reason people of color are disadvantaged is that they lack the capacity to own homes. That, therefore, has caused a huge disparity between people of color and whites when it comes to building wealth. According to Biden, his administration will commit $640 million to the Biden first time homebuyer act to make sure that gap is bridged. And encourage wealth building among communities of color. His vision for the Joe Biden first time homebuyer act is to make sure “every American [regardless of race or color] has access to housing that is affordable…”

A few months into his presidency, President Joe Biden made good his word by initiating two bills. The First-Time Homebuyer Tax Credit Act, popularly referred to as the Biden $15,000 first time homebuyer act. And The Downpayment Toward Equity Act of 2021. These acts which were introduce by Congress in April this year. And are believe to be in their draft form contrary to popular news of its passage. When they are pass, the bills are expected to give financial assistance to first-time homebuyers. Which will address the shortfalls in housing among communities of color and the marginalized.
 

FIRST TIME HOME BUYER TAX CREDIT ACT

To understand this home buyer act, let’s take a cursory look at tax credit. A tax credit, unlike the regular tax deduction, reduces your actual tax bill. So if you are given a tax credit of say $5000 on your actual tax bill of say $7,000. Your new tax bill reduces to $2,000. You are, therefore, left with a reduced tax bill for that year. And that is exactly how the Joe Biden first-time homebuyer tax credit act will work. If it is passed into law. So, the bill will provide a tax credit of $15,000 to any first-time homebuyer to cover the federal taxes for that year. This is why it has been nicknamed the Biden $15,000 first time homebuyer act.

The icing on the cake is that the Biden first-time homebuyer tax credit is refundable. Meaning if the amount you owe in taxes is less than the tax credit. You’ll get the refund of the remaining balance after filing your tax returns. For example, if you owe $8,000 in taxes. You’ll get a refund of $7,000 out of the initial tax credit of $15,000.
 

THE IMPORTANCE OF THE BIDEN $15,000 FIRST TIME HOMEBUYER TAX CREDIT

The Joe Biden first-time homebuyer tax credit will help a lot of Americans, especially people of color, in more ways than one. For one, it will provide positive social benefits to households that fall within the bracket of moderate to low-income earning households. These positive social benefits include wealth building. The moderate and low-income earning households, which are predominant in communities of color. Would be able to build wealth by easily paying off their mortgage and gain home equity.

The Joe Biden first time homebuyer act will help to develop communities. It is believed that people who own their homes take a special interest in the development of the community in which they reside. This may lead to a low crime rate in the area. Since it is in every homeowner’s interest that the area develops and has a good reputation. Therefore, the Biden first-time homebuyer tax credit is a welcome incentive to people who may be struggling financially.
 

ELIGIBILITY FOR THE BIDEN $15,000 FIRST TIME HOME BUYER TAX CREDIT

Since the Biden first-time homebuyer tax credit incentive is in its ‘bill stage’, we can’t know for sure what the final criteria will be. But as things stand, here are the criteria of eligibility:

• Be a first-time homebuyer

According to the Joe Biden first time homebuyer tax credit act, a first-time homebuyer is anyone who has not owned a home in the past three years. So, if you’ve never owned a home or have lost your home under any circumstance in the past three years. You are considered a first-time homebuyer.

• Your income must not exceed 160%AMI of your area

AMI is short for Area Median Income which measures the income of households in an area. So, if your community’s AMI is $100,000, your yearly income should be either 160%(which is $160,000) or less. If your earnings exceed 160% of your community’s AMI. Then you’re simply ineligible for the Biden $15,000 first time homebuyer tax credit.

• You must occupy the property

The bill also requires that you need to reside in your property. And use it as your primary residence for four years. You may have other properties and may occupy them periodically. But your primary address should be the property you purchased with the Biden first-time homebuyers tax credit.

HOW THE BIDEN $15,000 FIRST TIME HOMEBUYER TAX CREDIT WORKS

So, if the bill is passed and you’re eligible. You are entitled to receive 10% of your home’s purchase price up to $15,000 in tax credits. This lowers the cost of housing to an appreciable level for middle-income and low-income earners. The good news is that you don’t have to pay back these funds, unlike ‘regular’ first-time homebuyers’ credit. However, you are required to reside in the property as your primary residence for, at least, four years. Failure to do so means you’d have to repay the funds.
 

THE DOWN PAYMENT TOWARD EQUITY ACT OF 2021

The next weapon in the Biden first time homebuyer arsenal is the Downpayment Toward Equity Act of 2021. The bill is still in its formation stage and therefore it is tentative. When it is passed, beneficiaries would receive up to $25,000 which they can use as a down payment for their homes. This will serve as a huge relief to over 4 million American renters.
 

ELIGIBILITY FOR THE DOWNPAYMENT TOWARD EQUITY ACT OF 2021

• You must be a first-time homebuyer

You need to be a first-time homebuyer if you are to qualify for any of the Joe Biden first time home buyer acts. This can’t be stressed enough because the bill was specially designed to address the housing needs of the underprivileged. And first-time homebuyers in America. The main goal is to push for equality in the housing market. Empower them to build wealth and become financially free.

• You must be a first-generation home buyer

To be eligible, your parents or legal guardians must not have owned a home during your lifetime. However, if you lived in foster care you qualify for the down payment even if your parents own a house.

• Your income must not exceed 120% AMI

The Biden first time home buyer act states that to qualify, your income must be 120% or below the Area Median Income of the place you’re living or the area in which you want to purchase the house. Therefore, if your income is equal to or below 120% of the AMI. Then you qualify for The Downpayment Toward Equality Act of 2020. However, if you want to purchase homes in “high-cost” areas. Then the income requirement will be 180% of the AMI for the area you want to buy your house.

• You must use a mortgage agency that is back by the federal government.

Also, the Joe Biden first time homebuyer act states that you need to subscribe to one of the five government-backed mortgage agencies. This is because these agencies permit no down payment, 3% or 3.5% down payment.

HOW THE DOWNPAYMENT TOWARD EQUITY ACT 2021 WORKS

Unlike the Biden $15,000 first-time homebuyer tax credit incentive. The Downpayment Toward Equity is a cash grant that is paid to eligible people. According to the bill, the regular down payment is $20,000. However, if you’re socially and economically disadvantaged. Meaning you have been a victim of racism, ethnicism, or cultural bias without considering your individual qualities. You are eligible to receive additional assistance of up to $5,000. With this money, you can either make a down payment or pay off your closing costs.

The Biden first time homebuyer bills are designe to assist, especially, people of color. Who have suffered various forms of discrimination and prejudice, to own their homes, build wealth, and eventually become financially independent. There are other ways in which you can become financially free as well. If you want a comprehensive program that’ll guide and empower you to become financially independent, try our GuardianWealth financial literacy program today.