What the first-time home buyer tax credit actually pays

The federal government does not currently offer a tax refund or credit specifically for buying your first home. The First-Time Homebuyer Credit that existed from 2008 to 2010 has expired, and there is no active replacement program at the federal level.

What you may be thinking of are mortgage interest deductions and property tax deductions, which reduce your taxable income if you itemize deductions on your tax return. These are not refunds—they lower the amount of income you owe tax on. The actual dollar value depends on your income, your mortgage amount, your property tax bill, and whether itemizing saves you more money than the standard deduction.

Some states and cities do run first-time buyer programs, but these are usually down payment assistance loans or grants, not tax refunds. The money comes through a separate application, not through your tax return.

Key Takeaways

  • The federal First-Time Homebuyer Credit expired in 2010 and has not been reinstated, so there is no current federal tax refund for first-time buyers.
  • Mortgage interest and property tax deductions reduce your taxable income only if you itemize, and the benefit depends on your total income and deduction amount.
  • State and local first-time buyer programs exist in many places but are separate from taxes—they are down payment help, not tax refunds.
  • The mortgage interest deduction is only available if your mortgage is $750,000 or less (or $1 million if you took out the loan before December 16, 2017).

How mortgage interest deductions work on your tax return

If you have a mortgage and you itemize deductions on your tax return, you can deduct the interest you paid that year. This means if you paid $8,000 in mortgage interest and you are in the 22% tax bracket, the deduction is worth roughly $1,760 in tax savings—not a refund, but a reduction in what you owe.

You can only use this deduction if itemizing saves you more money than taking the standard deduction. For 2024, the standard deduction is $14,600 for single filers and $29,200 for married filing jointly. If your mortgage interest plus property taxes, state and local taxes, and charitable donations add up to less than that, itemizing does not help you.

The deduction applies only to mortgage debt of $750,000 or less (or $1 million if you took out the loan before December 16, 2017). Interest on home equity lines of credit is no longer deductible unless the money was used to buy, build, or improve the home.

Property tax deductions for homeowners

Once you own the home, you can also deduct property taxes paid that year—but again, only if you itemize. This deduction is capped at $10,000 per year (combined with state and local income taxes), so in high-tax states it may not cover your full bill.

Like the mortgage interest deduction, this only helps if your total itemized deductions exceed the standard deduction. Many first-time buyers in lower-cost areas find that itemizing does not save them money in the first few years of ownership.

State and local first-time buyer programs

Many states, counties, and cities run down payment assistance programs for first-time buyers. These are not tax refunds—they are separate grants or forgivable loans that you receive when you close on the home. The amount varies widely by location and program.

Common sources include your state housing finance agency, your county assessor's office, and nonprofits like NeighborWorks. Some programs cover 3% to 5% of the purchase price; others are flat amounts like $5,000 or $10,000. A few states have tax credits (not refunds) that reduce your state income tax, but these are rare and usually apply only to homes in specific areas or price ranges.

To find out what is available where you live, contact your state housing finance agency directly or search your state's name plus "first-time homebuyer programs." Your lender or real estate agent may also know what programs cover your area.

Why the federal credit expired and what replaced it

The First-Time Homebuyer Credit was a temporary stimulus measure created during the 2008 financial crisis. It allowed first-time buyers to claim a credit of up to $8,000 (or $6,500 for some buyers) on their tax return. The program ended in 2010 and was not extended.

Congress has not passed a replacement federal credit since then, despite periodic proposals. Some states created their own credits in response, but these are uncommon and usually limited to specific income levels or home prices. If you see an advertisement for a "federal first-time homebuyer tax refund," it is either referring to an expired program or is misleading.

How to know if you will actually save money on taxes as a new homeowner

The only way to know whether homeownership will reduce your taxes is to run the numbers for your specific situation. You need to know your total income, your mortgage amount and interest rate, your property tax bill, and your other deductions (charitable giving, state and local taxes, medical expenses).

A tax professional or tax software can show you the difference between itemizing and taking the standard deduction. Many first-time buyers are surprised to find that the standard deduction still saves them more money, especially in the first year when the mortgage balance is highest but they may not have other large deductions.

If you do itemize, the tax savings appear when you file your return the following year—not when you close on the home. There is no refund check; the savings reduce the amount of tax you owe or increase your refund if you overpaid through withholding.

Frequently Asked Questions

Is there a federal tax refund for first-time home buyers in 2024?

No. The federal First-Time Homebuyer Credit expired in 2010. There is currently no federal tax refund or credit for buying your first home. Mortgage interest and property tax deductions exist, but these reduce your taxable income only if you itemize deductions.

Can I get money back from the government for buying a house?

Not through taxes. However, many states and cities offer down payment assistance programs that are separate from taxes. These are grants or forgivable loans you receive at closing, not tax refunds. Contact your state housing finance agency to learn what programs cover your area.

How much will I save on taxes if I buy a house?

It depends on your income, mortgage amount, property taxes, and other deductions. You only save money if itemizing deductions (mortgage interest plus property taxes plus other deductions) exceeds the standard deduction. Many first-time buyers find the standard deduction still saves them more. Use tax software or consult a tax professional to calculate your specific situation.

Does the mortgage interest deduction apply to all mortgages?

Only if the mortgage is $750,000 or less (or $1 million if taken out before December 16, 2017), and only if you itemize deductions. You must also own the home and live in it as your primary residence. The deduction does not apply to second homes or investment properties in most cases.

When do I get the tax savings from buying a home?

Not until you file your tax return the following year. If you buy a home in 2024, you claim the deduction on your 2024 tax return, which you file in 2025. The savings appear as a reduction in taxes owed or an increase in your refund, not as a separate payment.