H.R. 10084: First Time Homebuyer Debt Reduction Act

This bill would direct the Federal Housing Finance Agency to require Fannie Mae and Freddie Mac to treat certain payments made toward a homebuyer’s federal student loans as a financial concession when someone is buying a home.

What counts as a covered payment

The bill covers a payment made by an “interested party” toward the buyer’s student loan debt. In plain terms, this means a third party involved in the home sale, such as a seller or other related party, could pay down the buyer’s federal student loans as part of the transaction.

How the payment would be treated

Under the bill, these student loan payments would generally be counted the same way as other seller or interested-party concessions in a home sale. That matters because mortgage programs often limit how much of a sale price can be covered by concessions.

The bill includes one limitation: if the student loan payment is more than $25,000, only the amount above $25,000 would be treated as a sales concession.

Which homes and loans are affected

The bill applies only to the purchase of a newly constructed principal residence, meaning a newly built home that the buyer will use as their main home. It also applies only to payments toward student loans defined under Title IV of the Higher Education Act, which generally refers to federal student loans.

What the bill would not do

The bill would not directly cancel student debt, change repayment terms, or create a new student loan forgiveness program. It would also not apply to all home purchases, only newly constructed primary residences. Instead, it changes how these payments are classified in mortgage underwriting rules used by Fannie Mae and Freddie Mac.

Relevant Companies

• FAF - Fannie Mae could need to adjust its mortgage underwriting and concession rules to reflect the new treatment of student loan payments in qualifying home sales.
• FMCC - Freddie Mac could need to update its mortgage standards and systems to classify certain student loan payments as financial concessions.