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The first-time homebuyer tax credit was a program that encouraged homeownership in 2008, 2009, and 2010. The credit worked as an interest-free loan for taxpayers who claimed the credit in 2008. Repayment was set to last 15 years in most cases. If you’re in the process of repaying the loan, there are some important points to consider.

What is the first-time homebuyer tax credit?

The first-time homebuyer tax credit was initially available to eligible homebuyers who purchased qualifying homes in 2008. The credit was worth up to 10% of the home’s purchase price, for a maximum credit of $7,500. It acted as an interest-free loan, so people who claimed the credit on their 2008 tax returns had to repay it over the course of 15 years, starting in 2010 and ending in 2024.

The tax credit was extended in 2009 to include home purchases through April 30, 2010, and buyers had until June 30, 2010 to close on homes. In 2010, the deadline for closing on a home purchase was changed to Sept. 30, 2010. If you bought a home in 2009 or 2010 and claimed the tax credit, you won’t have to repay it as long as the home was your primary residence for at least three years after the purchase.

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How can I repay the first-time homebuyer tax credit?

If you bought a home in 2008 and claimed the tax credit, repayment should have started in 2010. You add your installment payment to your tax balance on your federal income tax return. The payment amount is equal to 1/15 of your credit amount.

Example: If you claimed the maximum $7,500 tax credit, you’ll divide that amount by 15 (years):

$7,500 / 15 = $500

You’ll owe $500 a year from 2010 through 2024. These installment payments continue each year until you repay the entire balance.

What are the exceptions to the homebuyer tax credit?

In the following instances, you won’t have to repay the first-time homebuyer credit.


If a person claims the tax credit and then dies, the credit won’t need to be repaid. But if the person claimed the credit on a joint return, the surviving spouse will need to continue repaying their half of the credit.


You can also avoid repaying the credit if you get divorced and transfer the home to your ex-spouse as part of the settlement. In that case, your former partner would be responsible for paying back the remaining balance.

Government service employees

Selling your home won’t trigger full repayment if your federal government job requires you to move.

Condemnation or threat of condemnation

Another exception applies if your home is destroyed or you sell the home under threat of condemnation to someone who isn’t related to you. But if you don’t buy a new home within two years of either event, you may have to repay some of the balance.

When should I repay the homebuyer credit?

Homeowners who bought a property in 2008 and claimed the first-time homebuyer tax credit should have started repayment in 2010. Throughout the repayment period, you’ll need to file a federal income tax return each year, even if you would otherwise not be required to do so. Enter the installment payment on Form 1040, Schedule 2, line 10.

The IRS provides a First-Time Homebuyer Credit Account Look-up tool, which allows you to check:

  • Total amount of the credit you received
  • Amount you’ve repaid so far
  • A running balance of your first-time homebuyer credit
  • The annual installment amount

If you sell the home within the 15-year repayment period, you’ll need to pay the remaining credit balance in full. Fill out Form 5405, which alerts the IRS that your final payment is due and helps you calculate the amount. The same process applies if you start using the home as an investment property or vacation home during your repayment period.

First-time homebuyer credit repayment FAQ

When did the first-time homebuyer tax credit expire?

The first-time homebuyer tax credit was available to eligible homebuyers who closed on qualifying homes between April 8, 2008, and Sept. 30, 2010. You’ll need to repay the full credit amount only if you purchased the qualifying home between April 8, 2008, and Dec. 31, 2008.

Is there a newer version of the first-time homebuyer tax credit?

Yes, Congress introduced an updated first-time homebuyer tax credit in 2021. However, as of June 2023, it has not been passed. Under the proposed bill, the credit is worth 10% of the home’s value, up to $15,000, for qualified homebuyers.

Learn More: Programs for First-Time Homebuyers: Down Payment Assistance and More

Can I take advantage of other home-related tax breaks?

Yes, there are several tax benefits of owning a home. If you qualify, you may be able to take advantage of mortgage credit certificates, and deductions for mortgage points, mortgage insurance, and mortgage interest. You may also deduct the costs of using a home office for your business.

About the author
Kim Porter
Kim Porter

Kim Porter is an expert in credit, mortgages, student loans, and debt management. She has been featured in U.S. News & World Report,, Bankrate, Credit Karma, and more.

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