Congress unlocks college savings for first-home buyers—but mainly helps the wealthy
H.R. 7402 — Unlocking Homeownership Act · Filed by Tim Moore (R-NC) · 1 cosponsor · Introduced Feb 5, 2026 · Referred to committee
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What it does
This bill allows people to withdraw money from 529 college savings accounts to buy their first home, without the usual 10% tax penalty. The withdrawal must be used within 120 days to pay for a home purchase, and the bill also includes a special provision allowing disaster victims to recontribute withdrawn funds if their home purchase was delayed or cancelled due to a declared disaster.
Why we flagged it
The bill's core function is to expand the permitted uses of 529 education savings accounts to include first-home purchases, removing a tax penalty that previously discouraged this use. This is a straightforward tax-code amendment with a clear public-benefit intent.
What the text implies
- Reduces the effective cost of homeownership for families with 529 accounts, potentially widening the homeownership gap between higher-income households (more likely to have 529 savings) and lower-income households (less likely to have accumulated education savings).
- May reduce future tax revenue from 529 account withdrawals, though the magnitude depends on adoption rates and account balances.
The full analysis lists 4 implications of this text.
Who stands to gain
First-time homebuyers with 529 accounts; Real estate developers and home sellers (increased buyer pool); Residential real estate investment trusts (REITs) and property management companies