Key Highlights

  • 27.4% of renter households could afford homeownership with $15K in down payment assistance
  • 63% renters said saving for down payment was barrier to homeownership
  • $15K tax credit could count as minimum down payment in 40 of 50 largest metros

Biden’s $15,000 Tax Credit for First-Time Buyers Could Make Homeownership Doable

Candidate Joe Biden, during the 2020 presidential campaign, proposed a $15,000 advanced tax credit for first-time home buyers to help cover the cash required for a minimum down payment.

It turns out that this proposal would make homeownership possible for approximately 9.3M renter households (27.4% nationwide) in some 40 of the 50 largest metros in this country.

Assuming a 3.5% down payment (the minimum needed for an FHA-insured mortgage on a 30-year fixed-rate mortgage at 3% interest), such a $15K advanced tax credit could turn renters into homeowners.  Those renters would not have to spend more than 30% of their income in order to buy a median-priced house.

Homeownership in Affordable Metros Could Be Possibility

Nearly 40% of renters in the relatively affordable Midwest could become homeowners.    Even 10 – 17% of renters in California could become homeowners with  a $15,000 redeemable, advanced tax credit for first-time homebuyers.

Take a look:

– Pittsburgh PA                      40.5%

– Cincinnati OH                      39.7%

– Cleveland OH                       39.0%

– Virginia Beach VA                 38.9%

– St. Louis MO                        38.5%


– Sacramento CA                    17.3%

– San Francisco CA                  16.3%

– San Diego CA                       12.8%

– San Jose CA                         12.1%

– Long Beach/Anaheim            10.1%

Barrier to Homeownership is Down Payment, Not Monthly Costs

For most renters, the challenge of homeownership is saving enough to make a dent in the amount required for a down payment.  According to Moody’s Analytics, it’s estimated that renter households save 2.45% of their income per year.  At that rate, it would take a renter 14 years to save $15,000.

An immediate $15,000 tax credit all by itself  could be enough for an entire down payment in many affordable metros, or 40 of the 50 largest metros in this country.

If/When Broadening Access to Credit Happens, Next Barrier to Homeownership Becomes Higher Prices

Let’s just assume the obvious…down payment assistance would lead to more demand in an environment that already has off-the-charts demand. More demand in such an environment would  translate into even more off-the-charts home prices and sales activity.

Zillow research indicates that sales can continue to grow in this as is sales environment BUT technology tools and access to technology tools would also have to grow in order to assist more buyers. Likewise, supply would have to grow as well so that first-timers would have a chance in competing with better-qualified or faster-acting/ tech-enabled peers.


Thanks to Zillow.


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