Senator Pitches American Dream Account To Help First-Time Homebuyers Save

Sen. Rick Scott pitched allowing banks to create specialized accounts for people saving for a down payment on a home.

The Florida Republican introduced a bill to create the American Dream Account, which would allow people to put money in a special savings account that is exempt from some taxes. Several states have their own versions of this account. Virginia created a homebuyer savings account in 2015, and Colorado followed in 2016. New Jersey is considering similar accounts, too.

As proposed, the account would let people under age 35 put away about $7,500 a year. Those over 35 would get a "catch-up" limit of $10,000 a year. The bill proposes a maximum contribution limit of $250,000.

Contributions would be exempt from some taxes. So would qualified distributions from the account that are used on a down payment on a new home. The bill allows one buyer $500,000 in qualified distributions. Two buyers purchasing a house jointly get $250,000 each.

Distributions from the account for other purposes would be subject to a 10% tax, similar to how retirement savings plans like a 401(k) work. And the bill would allow two people buying a house jointly to combine their distributions.

"Homeownership means stability and economic mobility," Scott said. "This bill will help first-time buyers save faster and their money go farther to ease the financial barrier to homeownership for families.”

The rising down payment

The bills in Virginia, New Jersey, and Colorado, which have bipartisan support, each feature slightly different terms for contributions and savings limits. But they all allow homebuyers to put money into a tax-advantaged account.

The latest Down Payment Report from Realtor.com® shows that the typical upfront amount required for a home rose to $30,400 in the third quarter of 2025. That's double the typical down payment in 2019. Based on home prices and savings habits, it now takes about seven years to save for a down payment for a home.

That's led to pessimism among buyers. While many agree that a home is essential to the American dream, most also believe it's getting less affordable to do so.

Lawmakers have floated a few different ideas to remove financial barriers to saving. President Donald Trump considered policies that would let people pull from their 401(k) accounts to invest in a home without the typical distribution limitations. But he later walked back that idea, because of how well those accounts perform when the stock market is good.

On the seller's side of the equation, a bipartisan effort in Congress could raise or eliminate a capital gains tax exclusion for homes. The hope is that it would encourage older people to sell their homes to younger ones without the same tax burden.