Empower Your Clients: Navigating the Uplifting First-Time Homebuyers Act of 2025 (H.R. 3526) in California.
Discover how the latest legislation can help you better support first-time homebuyers, making their dreams a reality while boosting your business success.
What Is the Uplifting First‑Time Homebuyers Act (H.R. 3526)? 🏡
H.R. 3526, introduced May 20, 2025 by Representatives Beth Van Duyne and Julia Brownley, proposes amending Section 72(t)(8)(B)(i) of the Internal Revenue Code. It would raise the penalty‑free IRA withdrawal limit for first-time homebuyers from $10,000 to $50,000 for qualified distributions used toward home purchase costs. This change applies to taxable years beginning January 1, 2025
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This adjustment recognizes that housing costs—especially in areas like Orange County and Santa Ana—have far outpaced that original cap set in 1997, when the median home cost was just around $115,000.
Why This Matters in Santa Ana
- High local home prices: Median home values in Santa Ana often surpass $800,000, making down payments a serious financial hurdle.
- $50K boost: Accessing up to $50,000 from an IRA—without facing the 10% early withdrawal penalty—could cover substantial portions of down payment, closing costs, or prepaid fees.
- Bipartisan support: The Act is supported by both Democrats and Republicans and endorsed by NAR as a commonsense update to match current market realities.
Pros & Cons for Orange County Buyers
| ✅ Advantages | ⚠️ Potential Drawbacks |
|---|---|
| Increases liquidity for down payment, avoiding high-interest borrowing | IRA withdrawals are still taxed as income |
| Improves competitiveness in offer-heavy markets | Reduces potential retirement savings growth |
| Minimal administrative burden—just a limit increase | No relief for supply-side issues like home price inflation |
How to Leverage This Legislation in Santa Ana
- Confirm eligibility — "First-time" means no home ownership in the past 3 years.
- Use smart timing — Distributions are allowed for tax years starting in 2025.
- Coordinate with local programs — Combine with CalHFA and Orange County down-payment assistance.
- Speak with a CPA — Ensure tax impacts are managed.
- Attend local homebuyer workshops — For example, those hosted by the Santa Ana Housing Authority or community credit unions.
Broader Impacts & Outlook
- Real market boost? The law won’t fix supply shortages, but it can open doors for more first-time buyers to enter the market.
- Retirement trade-off: Experts often caution using retirement assets early—especially if home values dip—so balance is key.
- Legislative path: The bill is in the House Ways & Means Committee. Its passage would mean House → Senate → President. Watch legislative trackers for updates.
Why Santa Ana Residents Should Care
Buying your first home here means facing steep costs. But being able to deploy up to $50,000 in IRA savings gives you a stronger financial footing—potentially avoiding private mortgage insurance or needing fewer high-interest loans. For mid-career professionals, educators, and healthcare workers in Santa Ana, that’s a meaningful advantage.
What to Do Next
- Talk to a CalHFA-approved lender in Orange County about combining IRA withdrawals with local aid.
- Plan early—start lining up your financial advisors and credit documentation now.
- Be ready at closing—distributions are best planned around your closing timeline.
Bottom Line
The Uplifting First‑Time Homebuyers Act offers a substantial update to help first-time buyers in high-cost regions like Santa Ana—raising the IRA distribution cap to $50,000. Smart planning and professional guidance can help you leverage this opportunity to enter the Orange County housing market with more confidence.