A bipartisan group of lawmakers in both chambers of Congress has introduced companion bills that would let first-time homebuyers put up to $35,000 in leftover 529 college savings toward a down payment, tax-free β a proposal aimed at one of the biggest hurdles to buying a home: coming up with cash upfront.
The House version, H.R. 7468, the “First-Time Homebuyer Empowerment Act,” was introduced Feb. 10, 2026, by Reps. Tom Barrett (R-Mich.), Tracey Mann (R-Kan.), Mark Alford (R-Mo.) and Lou Correa (D-Calif.), and was referred to the House Ways and Means Committee. A Senate companion bill carrying the same name was introduced Aug. 5, 2026, by Sens. Michael Bennet (D-Colo.) and Jon Husted (R-Ohio), according to Bennet’s official Senate press release. Neither bill has been voted on in committee or on the floor.
How 529 plans work today
Under current law, money in a 529 education savings account grows tax-deferred and can be withdrawn tax-free for qualified education expenses such as tuition, fees, books and room and board. Families who end up with unused balances β because a child got scholarships, chose a cheaper school or skipped college altogether β have limited options: change the beneficiary to a relative, pay income tax and a 10% penalty on non-qualified withdrawals, or roll up to $35,000 over a lifetime into the beneficiary’s Roth IRA, a option created by the 2022 SECURE 2.0 Act for accounts open at least 15 years.
The new bills would add a third option using that same 15-year, $35,000 framework: letting savers redirect unused 529 funds toward a first home instead of retirement. First-time buyers continue to face a market where the number of home purchasers has fallen to record lows even as prices keep climbing in most U.S. metros, and surveys routinely cite the down payment β not the monthly mortgage payment β as the top barrier for renters who want to buy.
What the bill would require
Per the House bill text and sponsor statements, the account would need to have been open for at least 15 years, and contributions made in the five years before the withdrawal (along with their earnings) would not qualify. Funds would need to be used within 60 days of distribution to buy or build a principal residence for the account’s designated beneficiary, who must be a first-time homebuyer. The $35,000 cap is a lifetime limit shared with the existing Roth IRA rollover provision β savers could not claim $35,000 for a home purchase on top of a separate $35,000 retirement rollover.
Sponsors framed the bill as a low-cost way to widen access to homeownership. “This bill would allow first-time homebuyers to use the savings they already have” toward a down payment, Bennet said in his release. Husted said the measure “gives first-time homebuyers another tool” by “freeing up existing resources.” In the House, Barrett said “too many families can’t afford homes that work for them, plain and simple,” while Correa, in a separate statement, said the bill would give “hard-working American taxpayers on Main Street greater flexibility to put the money they’ve earnestly saved toward one of the largest investments they can make.” The bill has drawn backing from the National Association of Realtors, National Association of Home Builders, Mortgage Bankers Association and Institute of Real Estate Management, along with several state Realtor groups.
What it means
These are the facts as reported by the bills’ sponsors: two companion bills, one in each chamber, propose a new tax-free use for unused 529 funds capped at $35,000 per beneficiary over a lifetime. Everything beyond that is still speculative. Neither bill has been scored by the Joint Committee on Taxation, and no hearing or committee vote had been scheduled as of publication. The House bill has picked up roughly a dozen cosponsors since February but has not advanced out of Ways and Means in six months, which is typical for standalone tax bills that lack leadership priority. Bipartisan sponsorship in both chambers β and backing from major real estate and homebuilding trade groups β improves the bill’s odds of eventually being folded into a larger tax or housing package, but it is not, on its own, a sign that passage is imminent.
Nothing here should be read as financial, legal or tax advice. Families with 529 balances should not assume they can use this provision; it does not yet exist in law, and its final form β if it passes at all β could change during the legislative process.
What to watch
The next steps are committee action: the House Ways and Means Committee would need to mark up H.R. 7468, and the Senate Finance Committee β where Bennet is a senior member β would need to take up the companion bill. Given the current focus on broader tax legislation in Congress, watch for either bill to be introduced as a stand-alone amendment or absorbed into a larger year-end tax package, which is the more common path for narrow provisions like this one. Status updates for the House bill are tracked on its Congress.gov bill page.
