First-time homebuyers could soon get a new way to find $35,000 for a down payment

A new bipartisan bill aims to help first-time homebuyers find a way to access $35,000 for a down payment. The First-Time Homebuyer Empowerment Act, introduced in the Senate by Colorado Democrat Michael Bennet and Ohio Republican Jon Husted, would allow individuals with 529 education savings accounts to transfer up to $35,000 from their accounts for a down payment on their first home.

Currently, leftover money in 529 accounts is restricted to educational uses, but the new bill would permit the funds to be used for homeownership. This flexibility could prove valuable, especially for families who face financial barriers to homeownership due to strict rules and high fees associated with saving for higher education.

While other options exist, such as withdrawing up to $10,000 from an IRA for a down payment penalty-free, the proposed $35,000 limit would provide a more substantial boost to first-time homebuyers. The bill is part of a growing interest in housing relief, particularly in the lead-up to midterm elections. Senator Bennet highlighted the need for affordable homeownership, stating that the bill would allow young people and working families to put homeownership within reach.

The Senate bill is the counterpart to a House version introduced earlier this year, reflecting bipartisan cooperation on a pressing issue. The First-Time Homebuyer Empowerment Act builds upon another recent bill, the 21st Century ROAD to Housing Act, which revised key federal housing programs and aimed to increase mortgage lending power for community banks.

Both legislative measures seek to address the ongoing housing affordability crisis and support working families in achieving their goals.