The "First-Time Homebuyer Tax Credit Act of 2025" introduces a new refundable tax credit designed to assist first-time homebuyers. This credit allows an eligible individual to claim 10 percent of the purchase price of a principal residence, with a maximum credit amount of $15,000. To qualify as a first-time homebuyer, an individual (and their spouse, if married) must not have had an ownership interest in any residence during the three-year period prior to the purchase and must be at least 18 years old.

The credit is subject to several limitations, including a reduced maximum of $7,500 for married individuals filing separately. It also features a phaseout based on modified adjusted gross income, which begins when income exceeds 150 percent of the applicable Area Median Income. Additionally, the credit is reduced if the purchase price of the home exceeds 110 percent of the area median purchase price, ensuring the benefit is targeted.

A significant provision is the recapture rule, which requires taxpayers to repay a portion of the credit if the home is sold or ceases to be their principal residence within a four-year recapture period. However, exceptions to this recapture exist for events such as the death of a taxpayer, involuntary conversions, transfers between spouses, and dispositions related to qualified official extended duty service or certain employment changes.

A unique feature allows taxpayers to elect to transfer the credit to their mortgage lender. In exchange, the lender must provide an upfront payment to the taxpayer equal to the credit amount at the time of purchase. These payments are not considered taxable income for the homebuyer and are not deductible for the lender, with the Secretary authorized to establish a program for advance payments to eligible lenders.

The bill applies to principal residences purchased after its enactment date, and the Secretary of the Treasury, in consultation with the Secretary of Housing and Urban Development, is tasked with issuing necessary regulations and guidance. Certain errors related to claiming this credit can be treated as mathematical or clerical errors for administrative purposes.