How Some States Are Helping First-Time Home Buyers
Saving for a down payment is especially challenging for younger adults, who face rising rents and may be paying off student loan debt, said Christopher Coes, vice president for real estate policy and external affairs at Smart Growth America, a coalition promoting sustainable development
that has recommended the federal government establish mortgage savings accounts, among other policy changes to support home buyers.
Down payment accounts may be helpful, said Adriann Murawski, state
and local government affairs representative with the National Association of Realtors, because rising home prices have made it harder for buyers to come up with the money for them.
In some states, savers get a tax break for their contributions by deducting the amount they’ve saved that year from their state income tax returns.
Rules for the accounts vary by state but, in general, the measures allow first-time home buyers to save for a down payment —
and related expenses like closing costs — in dedicated savings accounts.
The typical down payment for first-time buyers this year was just 5 percent, the National Association of Realtors reported.
Some states limit the deduction to buyers who have never owned a home, while others offer it to those who haven’t
owned one in the past three years, a nod to potential buyers who may have lost a home in the Great Recession.
