Federal Down Payment Help May Soon Be Here!

Do you want to buy a home but don’t have the down payment? That may soon no longer be a problem.

Lack of money for a down payment is the number one obstacle to homeownership. Many would have no problem qualifying for a loan if they had the cash to put down on a purchase, and the majority would prefer to own versus rent if they had a choice. The federal government understands this and is trying to help.

There is a bipartisan supported bill proposed called the American Dream Down Payment Act, which would give first time buyers the opportunity to save for a home and receive tax benefits. It would allow them to open an American Dream savings account, which would be treated much like a 529 college account for tax purposes, allowing them to save a 20% downpayment towards a home purchase.

Funds from American Dream accounts would be able to be withdrawn without a federal tax penalty (although contributions to the account would not be tax deductible). Family and friends would be allowed to contribute to the account and the funds therein would be allowed to be used for closing costs.

Stay tuned for more as I follow this bill proposal!