Values for America · Brief for congressional offices

To the office of U.S. Representative Darin LaHood

Re: HR 10075 (119th Congress), First-Time Homebuyer Affordability Act · Latest action (2026-08-10): Referred to the House Committee on Ways and Means.
VFA SI Solution #252 · published 2026-08-13 · https://www.valuesforamerica.com/solutions/252
Office of record (Congress.gov): 503 Cannon House Office Building, Washington, DC · (202) 225-6201

Temporary Targeted Qualified Mortgage Bond Volume Cap Expansion Act of 2025

The measure, as described from the official record: Increase the supply of affordable mortgage credit by allowing states to issue more tax-exempt qualified mortgage bonds without being limited by the existing state annual volume cap.

The proposal

This Act amends Section 143 of the Internal Revenue Code of 1986 to allow each state, for a five-year period, to issue qualified mortgage bonds in an amount up to 25% above the current annual state volume cap. The additional volume may only be used to finance owner-occupied residences for first-time homebuyers whose household income does not exceed 120% of the area median income (or 140% for addresses in high-cost housing areas). Each state must allocate at least 50% of the additional bond volume to residences located in qualified housing shortage areas, defined as areas where the Secretary of Housing and Urban Development certifies that the rental vacancy rate is below 5% and home prices grew faster than the national average over the preceding three years. States must submit an allocation plan to the Secretary of the Treasury before issuing any additional bonds, and the Treasury Secretary must establish a report on the affordability outcomes achieved with the added volume. To offset the estimated $2.1 billion reduction in federal tax revenue over five years, this Act also extends for two years the limit on excess business losses under Internal Revenue Code Section 461(l), which otherwise expires after 2025, preserving about $2.1 billion in federal revenue. The authority granted under this Act sunset five years after enactment, and the Secretary of the Treasury, in consultation with the Secretary of Housing and Urban Development, must submit a cost-benefit analysis to Congress within six months of the sunset date. Enforcement will be carried out by the IRS under existing private activity bond rules; any bond issued above the authorized allocation will be reclassified as taxable and subject to a 5% penalty on the excess principal.

Operative provisions (VFA proposal)

funding source
Extension of the Section 461(l) excess business loss limitation for two years (revenue raiser)
funding amount
Revenue offset of $2.1 billion over five years; additional bond volume capped at 25% above current state ceilings
sunset years
5 years
oversight body
Secretary of the Treasury, in consultation with the Secretary of Housing and Urban Development and the Internal Revenue Service
enforcement mechanism
IRS enforcement under existing private activity bond rules; bonds exceeding the authorized allocation are reclassified as taxable and subject to a 5% penalty on the excess principal
effective date
January 1, 2026

Constitutional basis

Why both sides can back it (VFA’s assessment)

This honors Democratic priorities by expanding funding for affordable homeownership, especially for first-time and low-income buyers, and directing resources to high-cost areas. It honors Republican priorities by including a revenue offset, a five-year sunset, state-driven allocation plans (federalism), and targeted use of tax-exempt financing to avoid a broad addition to the federal debt.

Values for America is a nonpartisan, constitution-first SI think tank. This brief is informational. It is a policy proposal, not law, and it does not support or oppose any candidate or party. Full analysis and sources: https://www.valuesforamerica.com/solutions/252 · Methodology: https://www.valuesforamerica.com/methodology