New LIFT Homebuyers Act Launches 20-Year Mortgage Program Targeting First-Generation Homeowners

The new LIFT Homebuyers Act of 2025 creates the LIFT HOME wealth-building home loan program, a specialized mortgage initiative run jointly by the Federal Housing Administration (FHA) and the Rural Housing Service (RHS). Think of this as a highly targeted, government-backed effort to help a specific group of people buy their first house before December 31, 2027.

What’s the big deal? This program is designed to create a new, attractive type of 20-year mortgage. The goal is to make these loans affordable—the monthly principal and interest payment must be between 100% and 110% of what a standard 30-year mortgage would cost. The government is backing this by setting up a complex financial dance where the Treasury Department buys securities backed by these new mortgages, which is supposed to make lenders eager to offer them. It’s all about creating a reliable market for these loans so more people can access them.

The Double-Check: Who Actually Qualifies?

If you’re looking at this program, you have to hit a very specific sweet spot. This isn't just for first-time homebuyers; it’s for first-time AND first-generation homebuyers. The bill defines a first-generation homebuyer as someone whose parents (or guardians) don't currently own a principal residence. If your parents passed away, they couldn't have owned a home when they died. Plus, your household income must be at or below 120% of the area median income (AMI), or 140% AMI if you live in a high-cost area.

This dual requirement is a major gatekeeper. It’s clearly aimed at closing the generational wealth gap, targeting those who didn't inherit the financial stability that comes with parental homeownership. If your parents are homeowners, even if you’ve never bought a house yourself, this program isn't for you.

The 'Heir Property' Fix

One provision in the LIFT Act is a crucial update for certain families. Often, when property passes down without a will, it becomes 'heir property' owned by multiple family members. Under existing rules, owning a share of this property could disqualify you as a first-time buyer. The LIFT Act explicitly says that owning 'heir property' doesn't count against you when determining if you qualify as a first-time homebuyer. This is a smart move that recognizes the realities of inherited, often complicated, family assets, particularly in rural or historically underserved communities.

Shorter Term, Less Risk, Faster Equity

The core product here is a 20-year fixed-rate mortgage. Why 20 years instead of the standard 30? A shorter term means you pay significantly less interest over the life of the loan, and you build equity much faster. For a first-generation buyer, building that wealth cushion quickly is critical. However, while the bill tries to keep the monthly payment low (near that 30-year payment level), a 20-year loan will always require a higher monthly payment than a 30-year loan with the same interest rate. The affordability hinges entirely on the Secretaries of HUD and Agriculture successfully setting the pricing to keep those monthly costs manageable for lower-income buyers.

What Lenders Get Away With

There’s a small but significant provision for the lenders involved. When determining if a borrower meets the income or first-generation status, the lender can rely solely on the borrower’s signed statement. If the lender relies on that statement in good faith, they are protected—they won't be penalized, forced to repay federal agencies, or required to repurchase the loan if it turns out the borrower was actually ineligible. For lenders, this reduces the risk and paperwork burden associated with verifying complex eligibility requirements, which should encourage them to participate in the program.