529 college savings now unlock down payments for first-time homebuyers
H.R. 7393 — Save for Success Act · Filed by Jimmy Patronis (R-FL) · 2 cosponsors · Introduced Feb 5, 2026 · Referred to committee
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What it does
This bill allows families to withdraw money from 529 college savings plans (qualified tuition programs) to pay for a first-time home purchase, including down payments, closing costs, and mortgage payments, without the usual tax penalty. The change takes effect for withdrawals made after December 31, 2026.
Why we flagged it
The bill functionally expands the permitted uses of 529 savings accounts by carving out a new tax-exempt category (first-time home purchase) from the existing penalty structure. It is a straightforward tax-code amendment that broadens saver flexibility without creating new subsidies or restrictions.
What the text implies
- Reduces future tax revenue from 529 account holders who would have paid penalties on non-education withdrawals; the fiscal cost depends on adoption rates and account balances among first-time homebuyers.
- May incentivize higher 529 contributions by families planning homeownership, shifting savings behavior and potentially increasing state-level tax deductions (which vary by state).
The full analysis lists 3 implications of this text.
Who stands to gain
first-time homebuyers (tax savings on withdrawals); 529 plan administrators and custodians (potential increase in account activity and assets under mana