On September 23, 2026, Senator Jeff Merkley (D-OR) unveiled the Homeownership Promise Act a legislative effort that would let qualifying savers receive a federal contribution of five dollars for every dollar they set aside for a down-payment. The proposal caps personal contributions at $10,000 and promises a matching grant of up to $50,000 from the Department of Housing and Urban Development (HUD), potentially delivering a total of $60,000 at the settlement table. Senator Ron Wyden (D-OR) co-sponsored the measure, which aims to revive the pathway to homeownership for younger Americans who face soaring prices and lingering student-loan debt.
How the Homeownership Promise Act would work
The bill creates Homeownership Promise Accounts special savings vehicles that must be hosted by a participating Community Development Financial Institution (CDFI) such as a credit-union-style bank. To open an account, a household must consist of one or two individuals aged 18 or older who have never owned a principal residence and who complete a HUD-approved housing counseling program. Once the account is established, savers may deposit up to $10,000 from any source – personal income, employer contributions, or charitable gifts. For every dollar contributed by the individual, HUD would contribute five dollars, but only the personal portion triggers the match; employer or nonprofit money simply counts toward the $10,000 ceiling.
Key financial limits
The legislation sets a ceiling on the purchase price: the home’s price, excluding closing costs, cannot exceed the median single-family home price for the local market as defined by HUD. In August 2026, that median stood at $429,100 nationwide. First-time buyers typically put down about 10 % of that amount – roughly $42,900 – according to the National Association of Realtors. A fully funded Homeownership Promise Account would therefore cover the average down-payment and leave a margin of roughly 14 % of the median home price for other costs.
Eligibility nuances and withdrawal rules
Notably, the bill does not impose an income ceiling, a rare omission in federal housing assistance programs. Up to two eligible families may apply their accounts to the same purchase, allowing, for example, a multigenerational household to pool resources. Participants retain the right to withdraw their personal contributions at any time and for any purpose, but the federal grant would only be released once the original balance, inclusive of the match, is restored at closing. This design seeks to balance flexibility for savers with protection of federal funds.
Where the accounts reside
All accounts must be held by a Community Development Financial Institution which is required to pay interest rates comparable to those on its unrestricted savings products. By routing the program through CDFIs, the legislation hopes to direct federal dollars toward institutions that already serve low- and moderate-income communities, potentially expanding credit access in underserved neighborhoods.
Potential impact on the housing market
The median age of first-time homebuyers has risen to 40 years, the highest level recorded, according to the NAR’s 2025 profile. Younger families, especially those burdened by student loans, frequently see debt-to-income ratios that limit mortgage eligibility. By turning a modest $10,000 personal saving into $60,000 at closing, the Act could enable a generation that has traditionally been priced out of the market to purchase a modest home before turning 30, which Senator Merkley cites as a core objective.
Economists have warned that broad down-payment assistance could inflate already hot markets. However, the Act’s cap at the local median price and the lack of an income test aim to target assistance toward households whose purchasing power aligns with prevailing market values, thereby reducing the risk of pushing prices higher.
Political landscape and comparable initiatives
While the Homeownership Promise Act enjoys bipartisan sponsorship in the Senate, it faces an uncertain path in a chamber where Republicans control the relevant committees. Without Republican backing, the proposal could expire with the 119th Congress in January 2027. Earlier bipartisan attempts have included a Senate bill allowing a tax-free withdrawal of up to $35,000 from a 529 plan for a first home, provided the account has been open for 15 years. Existing law also permits a $10,000 penalty-free IRA withdrawal for qualified home purchases, though that option requires pre-existing retirement savings.
Merkley’s effort follows a series of prior federal proposals, such as Rep. Maxine Waters’ “Downpayment Toward Equity Act,” which sought $100 billion in direct assistance but stalled in Congress, and former presidential nominee Kamala Harris’s plan to grant $25,000 to four million first-time buyers. Critics of those schemes warned that injecting large sums of aid could “throw gasoline on an already-on-fire housing market,” especially when supply constraints remain acute.
Recent legislative activity, including the passage of the 21st Century Road to Housing Act, demonstrates growing attention to both supply-side and demand-side levers for affordability. As the midterms approach, Democratic candidates have highlighted housing costs as a top voter concern, suggesting that, should control of Congress shift, the Homeownership Promise Act could gain the necessary momentum to advance.
