Search “first-time home buyer tax credit” and you’ll find a lot of pages promising $15,000 back from the government. Here’s the straight answer before you get your hopes up: there is no federal first-time home buyer tax credit in 2026. The original credit expired in 2010, and while several new versions are floating around Congress, none has passed into law. The genuinely good news — the part those clickbait pages skip — is that a handful of very real tax breaks do exist right now, and most first-time buyers miss at least one of them. This guide covers exactly what’s real, what’s not, and how to claim every dollar you’re entitled to.
The federal first-time home buyer tax credit: where it really stands
The famous “$15,000 first-time homebuyer tax credit” comes from the proposed First-Time Homebuyer Act. It has been introduced in Congress but has not become law, so it cannot be claimed on your return. It’s one of several competing proposals, and it helps to know them so you can recognize marketing spin when you see it:
- First-Time Homebuyer Act — a refundable credit of up to $15,000, tied to income thresholds. Proposed, not passed.
- The MAHA Act — up to $5,000 for individuals or $10,000 for joint filers, with income limits. Proposed, not passed.
- American Homeownership Opportunity Act — a credit tied to your down payment, up to $50,000. Proposed, not passed.
All three are proposals sitting in committee. The vast majority of bills introduced in Congress never become law, and there’s no indication any of these is close. So when a website tells you to “claim your $15,000 first-time buyer credit,” treat it as marketing, not tax advice. If one of these ever passes, you’ll hear about it from the IRS and your tax preparer — not a banner ad.
The tax breaks you can actually claim right now
Even without a dedicated first-time buyer credit, buying a home unlocks several legitimate tax benefits. Here’s each one and how it works.
1. Mortgage Credit Certificate (MCC) — the real “first-time buyer credit”
This is the closest thing to an actual first-time buyer tax credit, and it exists in most states today. An MCC converts 20%–40% of your annual mortgage interest into a dollar-for-dollar federal tax credit, capped at around $2,000 per year — every year you keep the loan and live in the home. A tax credit is far more powerful than a deduction because it reduces your actual tax bill dollar for dollar, not just your taxable income.
The one rule that trips people up: you have to apply for an MCC before you close, through a participating lender or your state housing agency. Learn the details in our Mortgage Credit Certificate guide.
2. Mortgage interest deduction
If you itemize, you can deduct the interest on up to $750,000 of mortgage debt. This is most valuable in your early years as a buyer, when almost all of your monthly payment goes to interest. The catch is that you only benefit if your total itemized deductions beat the standard deduction — which, with today’s high standard deduction, isn’t automatic. Our mortgage interest deduction guide walks through exactly when itemizing wins.
3. IRA penalty exception
First-time buyers can withdraw up to $10,000 from a traditional IRA for a home purchase without the usual 10% early-withdrawal penalty (you’ll still owe income tax on it). A Roth IRA is often even more flexible — you can withdraw your contributions anytime tax- and penalty-free. See our guide on using a Roth IRA to buy your first home.
4. Property tax deduction
If you itemize, you can deduct state and local property taxes, subject to the SALT cap. Combined with your mortgage interest, this is often what pushes a first-time buyer’s itemized deductions above the standard deduction threshold.
5. Points deduction
If you paid discount points to lower your rate at closing, they’re often deductible — sometimes fully in the year you buy. Points are easy to overlook because they’re buried in your closing paperwork, so check your settlement statement.
6. State-level credits and programs
Beyond federal benefits, some states offer their own credits, deductions, or first-time homebuyer savings accounts with state tax breaks. Check your state’s department of revenue and state first-time buyer page.
Credit vs. deduction: why the difference matters
People use these words interchangeably, but they’re very different in your pocket:
- A tax credit reduces your tax bill dollar for dollar. A $2,000 credit saves you $2,000.
- A tax deduction reduces your taxable income. A $2,000 deduction saves you only your tax rate times $2,000 — maybe $440 in the 22% bracket.
This is why the MCC (a credit) is often more valuable to a first-time buyer than the mortgage interest deduction, especially if you’d otherwise take the standard deduction.
Don’t overlook down payment assistance
A tax credit reduces what you owe next April. Down payment assistance puts money in your pocket at closing — usually the bigger help for a first-time buyer, since the upfront cash is the hardest part. There are thousands of programs nationwide; start with our down payment assistance guide and the widely searched (but not-yet-real) $25,000 grant explained.
How to actually claim your homeowner tax benefits
- Apply for an MCC before closing if your state offers one — it can’t be added later.
- Keep your Form 1098 from your lender (mailed in January), which shows the mortgage interest you paid.
- Compare itemizing vs. the standard deduction. Add up mortgage interest, property taxes, points, and charitable gifts; itemize only if the total wins.
- File the right forms: Schedule A for itemized deductions, Form 8396 for the MCC credit.
- Keep records of improvements — they can reduce your capital gains taxes when you eventually sell.
A quick example
Imagine a first-time buyer with a $280,000 loan who paid $18,000 in mortgage interest in year one and has a 25% MCC. The MCC delivers a direct credit of $2,000 (the annual cap), lowering their tax bill by the full $2,000 regardless of whether they itemize. On top of that, if their itemized deductions (including the remaining interest and property taxes) beat the standard deduction, they deduct those too. That’s real money — and none of it required a bill that hasn’t passed.
Frequently asked questions
Is there a first-time home buyer tax credit in 2026?
Not a federal one. The original credit ended in 2010 and the proposed replacements have not passed. However, MCCs, the mortgage interest deduction, and the IRA penalty exception are all available now.
What is the $15,000 first-time homebuyer credit?
It’s a proposed refundable tax credit in the First-Time Homebuyer Act. It is not law and cannot currently be claimed.
Do any states offer a first-time buyer tax credit?
Yes. Mortgage Credit Certificates are administered at the state level, and some states offer additional credits, deductions, or savings-account tax breaks. Check your state housing finance agency.
Can I deduct my down payment or closing costs?
Your down payment isn’t deductible. Some closing costs, like points and prepaid property taxes or interest, may be. Keep your settlement statement and ask a tax professional.
What’s better, a tax credit or down payment assistance?
They serve different purposes. Assistance helps with upfront cash at closing; a credit lowers your taxes later. Many first-time buyers use both.
The bottom line
Don’t count on a federal tax credit that hasn’t passed — and don’t hand your information to any site claiming you can “apply” for one. Instead, ask your lender about a Mortgage Credit Certificate before you close, keep good records for the mortgage interest and property tax deductions, use the IRA exception if it fits, and explore down payment assistance in your state. Those are the tax and cash benefits first-time buyers can actually use in 2026, and stacked together they add up to real savings.