First-time home buyer savings bill creates road to homeownership for Michiganders
New legislation makes saving for a home in Michigan easier for first-time homebuyers
BRIGHTON, MI (February 10, 2022) — The Michigan First-Time Home Buyer Savings Program Act (Senate Bill 145 sponsored by Sen. Kenneth Horn R-Frankenmuth and House Bill 4290 sponsored by Rep. Mari Manoogian D-Birmingham), was signed into action by Governor Whitmer on February 9, 2022. Lake Trust Credit Union (Lake Trust), a community-based credit union serving nearly 200,000 members and businesses throughout Michigan, supported the Michigan Association of Realtors and legislators in the development of this policy.
“A decade of low-interest rates coupled with a significant shortage in inventory has created a seller’s market–making it much more complicated for Michigan first-time homebuyers to win in the competitive market,” said Lake Trust CEO David Snodgrass. “With this legislation, our next generation of homeowners will have greater incentive and support to purchase their first home, which supports Michigan communities and the economy.”
The First Time Home Buyer Savings Program acts as a meaningful savings tool to grow homeownership and asset building in Michigan–supporting the state’s long-term infrastructure. This newly signed legislation allows funds to be saved in an account designated for the down payment and closing costs assistance related to first-home purchases.
“This new law sets up the state’s first dedicated savings vehicle for a new home purchase. These accounts will help young families achieve the dream of homeownership, retain talented college graduates and promote financial literacy” said 2022 Michigan Realtors® President James Iodice.
Through the Michigan First-Time Home Buyer Savings Program, qualified first-time homebuyers are able to open a new incentivized savings account, either jointly or individually, to save and grow funds for homeownership in Michigan. In addition, the legislation allows the account holder, such as parents, grandparents or guardians, to open and designate the account for a qualified beneficiary.
Similar to education saving plans, this savings account provides investment deductibility off the account holder’s state income tax–allowing the interest on the designated account to grow tax-free. The account has a contribution cap of $50,000, subject to an earnings exception.
Use of the account is self-directed by the account holder, meaning that financial institutions are not required to administer or report based on the account’s designation as a first-time homebuyer account. The account holder can track the account for reporting on their annual state taxes and provide the Michigan Department of Treasury with the necessary validations that the account is properly maintained.
About Lake Trust Credit Union
Lake Trust Credit Union strives to support members and communities in their journey toward wellbeing. Lake Trust understands that harnessing the power in all of us is key to building stronger communities and helping Michiganders reach their goals. Lake Trust currently serves nearly 200,000 members—including both individuals and business owners—across the state of Michigan. With branches in more than 20 cities, towns and villages throughout the state, Lake Trust forges strong and enduring connections and is an integral and influential force for building stronger and healthier Michigan communities. To learn more, visit Lake Trust at www.laketrust.org.
