TRENTON- The Senate Community and Urban Affairs Committee has advanced legislation sponsored by Senators Troy Singleton and Vin Gopal to establish the New Jersey First-Time Home Buyer Savings Account Program. The bill would provide tax incentives to help residents save for purchasing their first home, a step vital to expanding access to homeownership in a challenging housing market.

“Far too many hard-working people in our state are locked out of homeownership due to rising housing costs and the difficulty of saving for a down payment,” said Senator Troy Singleton (D-Burlington). “This not only puts financial security further out of reach for many families, but also weakens the foundation of our communities. Homeownership is one of the most effective ways to build generational wealth and long-term stability. This proposal provides first-time homebuyers with a practical, tax-advantaged way to save, making it easier for more people to achieve the dream of owning a home and invest in their future.”

The bill, S-1391, would authorize the New Jersey Housing and Mortgage Finance Agency to certify eligible first-time buyers and work with financial institutions to create special savings accounts. Certified participants could contribute up to $15,000 annually, with a lifetime contribution cap of $75,000 and a total account balance cap of $150,000. Account holders would receive a five percent income tax credit on annual contributions and would not pay taxes on interest earned if the funds are used for eligible home purchase expenses.

“Buying a home has become increasingly out of reach for too many families, especially young professionals and working-class residents who are struggling to save while paying off debt or managing rising rents,” said Senator Vin Gopal (D-Monmouth). “This bill provides a clear, structured path to help them move toward homeownership. It levels the playing field by boosting first-time buyers and encouraging long-term financial planning.”

To qualify, applicants must earn less than $175,000 annually, have no recent homeownership history, and complete a homebuyer education course. The program requires annual reporting to ensure funds are used for eligible purposes. Withdrawals made for non-qualified reasons would incur a 10 percent penalty, except for hardship events like death or disability.

Modeled after similar programs in states like Colorado and Virginia, the bill is part of a broader effort to address declining rates of first-time homeownership. According to the National Association of Realtors, first-time buyers now represent just 24 percent of all home purchases, down from a historic average of 40 percent.