Bill Proposes Billions for Housing, First-Gen Buyer Aid, and Major Estate Tax Overhaul

This hefty piece of legislation, the American Housing and Economic Mobility Act of 2025, dives deep into making housing more affordable and tackling the lingering effects of past housing discrimination. It aims to do this by injecting billions into housing programs, creating new pathways for first-time, first-generation homebuyers, significantly rewriting estate tax rules, and broadening fair housing protections.

Unlocking Local Housing Solutions & Funding Boosts

Title I focuses on the supply side. It sets up competitive grants (Sec 101) totaling $2 billion annually for five years (FY2025-2029) for states, local governments, and tribes. The catch? They need to show they're actively reforming local rules – think streamlining permits, allowing accessory dwelling units (ADUs), revising parking requirements, or tackling restrictive zoning – to make building affordable housing easier. Funded construction projects must pay local prevailing wages.

Beyond grants, Sec 102 proposes massive annual funding increases for established programs through FY2034: $48 billion for the Housing Trust Fund, $3 billion for the Capital Magnet Fund, plus significant bumps for Public Housing ($70 billion in FY2025), Indian and Native Hawaiian Housing Block Grants, and various Rural Housing programs. It also creates a new $4 billion Middle Class Housing Emergency Fund (Sec 102) for FY2025, targeting areas where housing costs have outpaced income growth, funding affordable units for those earning up to 120% of area median income, with a requirement for permanent affordability and prevailing wages.

Finally, Sec 103 puts new rules on how HUD, Fannie Mae, and Freddie Mac sell foreclosed homes and non-performing loans. The goal is to get more properties into the hands of people who will actually live there or community partners committed to affordable housing, requiring at least 75% (for FHA) or 90% (for purchasers of troubled loans) of single-family homes to go this route, rather than to large investors. It also restricts predatory resale tactics like land contracts and requires buyers of troubled loans to offer borrowers meaningful payment relief options.

Opening Doors for New Buyers & Reinvesting in Communities

Title II aims to address historical inequities. A standout is the down payment assistance program (Sec 201) for first-time homebuyers whose parents don't own a home (first-generation). Eligible buyers earning up to 120% of area median income (140% in high-cost areas) could get a grant for up to 3.5% of the home's value. You'd generally need to live there for 5 years to avoid repaying part of the grant.

Sec 202 introduces a $5 billion formula grant program for FY2025 targeting neighborhoods with an "appraisal gap" – where home prices are lower than the cost to build or fix them up. Funds could help homeowners with repairs, pay off liens, or support programs to rehab vacant properties.

The bill also significantly beefs up the Community Reinvestment Act (CRA) (Sec 203). Banks would now be evaluated on how they serve all communities where they lend or take deposits, not just where they have physical branches. This includes examining partnerships with non-bank lenders and adding requirements for community benefit plans and data collection on lending patterns. There's even a provision allowing deductions for financing fossil fuel expansion, offset by financing climate resiliency in underserved areas. Institutions with poor CRA ratings could face growth restrictions. Similar rules are extended to large nonbank mortgage lenders. Credit unions also see changes (Sec 204) to encourage service in underserved areas.

Lastly, Sec 206 offers a temporary window (10 years after regulations are set) for certain direct descendants of veterans who served between 1944-1968 (and didn't use VA housing benefits) to become eligible for VA home loan guarantees, provided they are first-time, first-generation buyers.

Expanding Fair Housing Rules

Title III broadens the scope of the federal Fair Housing Act (Sec 301). It explicitly adds protections against housing discrimination based on "source of income" (including housing vouchers), veteran status, sexual orientation, gender identity, and marital status. This means, for example, a landlord generally couldn't refuse to rent to someone solely because they use a Section 8 voucher. The bill clarifies that programs specifically designed to help veterans are still allowed.

Sec 302 pushes public housing agencies, particularly in metro areas, to analyze where voucher holders live and develop strategies to help families access neighborhoods with better opportunities, requiring regular analysis and public reporting.

Big Changes for Big Estates

Title IV introduces major reforms to estate and gift taxes, primarily affecting very wealthy individuals. Key changes include:

• Lower Exemption & Higher Rates (Sec 402): The amount exempt from federal estate tax drops significantly to $3.5 million per person (down from over $13 million currently). A new 10% surtax kicks in for estates valued over $1 billion.
• Clamping Down on Tax Strategies: Several sections target techniques used to minimize estate and gift taxes. This includes stricter rules for Grantor Retained Annuity Trusts (GRATs, Sec 403), treating assets in certain "grantor trusts" as part of the owner's estate or as taxable gifts (Sec 404), eliminating the Generation-Skipping Transfer (GST) tax exemption for transfers to distant descendants (Sec 405), limiting valuation discounts for transfers of nonbusiness assets within families (Sec 408), and preventing a "step-up in basis" for assets held in certain grantor trusts not included in the taxable estate (Sec 407).
• Gift Tax Simplification (Sec 406): Sets the annual gift exclusion at $10,000 per recipient but adds a cumulative limit for certain less-liquid gifts.
• Surcharge on Trust/Estate Income (Sec 409): Adds a new surcharge (5-8%) on the income of estates and trusts with modified adjusted gross income over $200,000.
• Increased Valuations (Sec 410, 411): Increases the maximum value reduction allowed for qualified farm property and the exclusion limit for land under conservation easements.

These changes generally apply to estates, gifts, and transfers made after the bill's enactment, with some specific effective dates noted.

Doubling Down on Accessibility

Finally, Title V (Sec 501) addresses accessibility. For housing projects receiving funds under this Act through HUD, it effectively doubles the number of required accessible units for people with disabilities compared to standard requirements.