Unlocking Homeownership Act | ChamberLight

IN COMMITTEE· 119TH CONGRESS

House BillHR 7402Taxation

Unlocking Homeownership Act

INTRO FEB 5· LAST ACTION FEB 5

READING

5MIN

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STEP 2 / 8

Introduced

In Committee

Reported

Passed House

Passed Senate

Conference

To President

Became Law

WHAT THE BILL DOES

AI-written

This bill matters because it addresses a significant financial hurdle for many Americans: the challenge of affording a first home. With rising housing prices and the burden of student loan debt, saving for a down payment can be incredibly difficult. By allowing penalty-free withdrawals from 529 plans for first-time home purchases, this bill provides a new avenue for families to access capital for a major life investment.

If this bill becomes law, it could help more people achieve the dream of homeownership by unlocking funds that might otherwise be tied up exclusively for education, potentially reducing the need for other types of loans or delaying home purchases. If it does not become law, 529 funds will continue to be primarily restricted to educational expenses, and using them for a home purchase would still trigger taxes and penalties on the earnings, limiting financial flexibility for families facing both educational and housing costs.

KEY PROVISIONS

5AI-extracted

PROVISION 01

Allows tax-free and penalty-free withdrawals from 529 qualified tuition programs for first home purchases.

This is the central change, providing a new, flexible way to use education savings for homeownership without financial penalties.

PROVISION 02

Defines 'first-time homebuyer' as an individual (and spouse, if married) who hasn't had a principal residence ownership interest in the past two years.

This clarifies who is eligible to benefit from this new provision, ensuring it targets those truly purchasing their first home.

PROVISION 03

Permits the designated beneficiary or their spouse, child, grandchild, or ancestor to use the funds for 'qualified acquisition costs' of a principal residence.

This expands the scope of who can benefit from the 529 funds beyond just the primary beneficiary, encompassing immediate family members.

PROVISION 04

Includes special rules for handling funds if a home purchase is delayed or cancelled, allowing transfers to other qualified accounts or recontributions within certain timeframes.

These rules provide financial protection and flexibility, preventing penalties if unforeseen circumstances prevent the immediate use of the funds for a home.

PROVISION 05

Specifies additional rules for recontributions for homes in qualified disaster areas that could not be purchased or constructed due to the disaster.

This provides further flexibility and relief for individuals impacted by natural disasters, allowing them to preserve their savings.

SPONSORSHIP

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ACTION TIMELINE

2 EVENTS

FEB 5

Introduced in House

INTROREFERRAL

FEB 5

Referred to the House Committee on Ways and Means.

HOUSE · INTROREFERRAL

BILL INFO

TypeHouse Bill

NumberHR 7402

Congress119th

StatusIn Committee

IntroducedFeb 5, 2026

Last actionFeb 5, 2026

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IN COMMITTEE· 119TH CONGRESS · WAYS AND MEANS COMMITTEE · INTRODUCED FEB 5, 2026

House BillHR 7402Taxation

Unlocking Homeownership Act

INTRODUCED FEB 5, 2026· LAST ACTION FEB 5, 2026

PASSAGE CHANCES

—%

READING

5 min

COSPONSORS

COMPLEXITY

Moderate

Call my reps Congress.gov

LEGISLATIVE PROGRESS

STEP 2 OF 8

Introduced

In Committee

Reported

Passed House

Passed Senate

Conference

To President

Became Law

Introduced
In Committee
Reported
Passed House
Passed Senate
Conference
To President
Became Law

WHAT THE BILL DOES

AI-written

KEY PROVISIONS

AI-extracted

high

Allows tax-free and penalty-free withdrawals from 529 qualified tuition programs for first home purchases.

This is the central change, providing a new, flexible way to use education savings for homeownership without financial penalties.

med

Defines 'first-time homebuyer' as an individual (and spouse, if married) who hasn't had a principal residence ownership interest in the past two years.

This clarifies who is eligible to benefit from this new provision, ensuring it targets those truly purchasing their first home.

med

Permits the designated beneficiary or their spouse, child, grandchild, or ancestor to use the funds for 'qualified acquisition costs' of a principal residence.

This expands the scope of who can benefit from the 529 funds beyond just the primary beneficiary, encompassing immediate family members.

med

Includes special rules for handling funds if a home purchase is delayed or cancelled, allowing transfers to other qualified accounts or recontributions within certain timeframes.

These rules provide financial protection and flexibility, preventing penalties if unforeseen circumstances prevent the immediate use of the funds for a home.

low

Specifies additional rules for recontributions for homes in qualified disaster areas that could not be purchased or constructed due to the disaster.

This provides further flexibility and relief for individuals impacted by natural disasters, allowing them to preserve their savings.

DEADLINES & DATES

AI-extracted

An AI model extracted this from the bill’s official record and can make mistakes. Check the official text ↗ (opens in new tab)

120 days after receipt

Funds must be used to pay qualified acquisition costs before the close of the 120th day after the distribution is received.

After the date of enactment

The amendment applies to distributions made after the date of enactment.

Period beginning on the first day of the incident period of such qualified disaster and ending on the date which is 180 days after the applicable date with respect to such disaster

For qualified distributions in a disaster area that were not used due to a disaster, recontributions can be made during the 'applicable period.'

GLOSSARY

AI-written

Qualified tuition program (529 plan): A tax-advantaged savings plan designed to encourage saving for future education costs.
Designated beneficiary: The individual on whose behalf a 529 plan or ABLE account is established, and who is eligible to receive the funds.
Qualified first-time homebuyer distribution: A withdrawal from a 529 plan that is used to pay for costs associated with buying a first principal home, made without incurring taxes or penalties on the earnings.
Qualified acquisition costs: Eligible expenses related to buying, building, or rebuilding a principal residence, such as down payments, closing costs, and other costs defined by tax law.
First-time homebuyer: An individual who has not had an ownership interest in a principal residence during the two-year period ending on the date of acquisition of the home.
Principal residence: The main home where a person lives, as defined by tax law (similar to how it's used for home sale exclusions).
Internal Revenue Code of 1986: The primary body of federal tax law in the United States.

ACTION TIMELINE

2 EVENTS

FEB 5

Introduced in House

INTROREFERRAL

FEB 5

Referred to the House Committee on Ways and Means.

INTROREFERRAL

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Unlocking Homeownership Act

LEGISLATIVE PROGRESS

WHAT THE BILL DOES

KEY PROVISIONS

SPONSORSHIP

ACTION TIMELINE

BILL INFO

READER REACTIONS

Discussion

Unlocking Homeownership Act

LEGISLATIVE PROGRESS

WHAT THE BILL DOES

KEY PROVISIONS

DEADLINES & DATES

GLOSSARY

ACTION TIMELINE

SPONSORS

READER REACTIONS

What do you think?

Discussion

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