Ohio Senator Jon Husted has introduced legislation in Washington that would let first-time homebuyers redirect up to $35,000 in unused college savings toward a down payment, tax-free. The bill arrives as home affordability has become a defining issue in Husted's tight reelection race against former Democratic Senator Sherrod Brown.
The First-Time Homebuyer Empowerment Act would allow people to transfer leftover 529 plan savings tax-free to buy a first home, according to Cleveland.com. Traditionally, 529 plans allow funds to be used for education-related expenses or transferred to a retirement account, but this bill would carve out a new use tied directly to homeownership. Husted, a Columbus-area Republican, said too many Ohioans have worked hard, saved responsibly, and still struggle to afford a down payment.
“This bipartisan bill would give first-time homebuyers another tool to pursue homeownership,” Husted said, per the same report. He has also blamed Brown's policies for higher costs hitting Ohioans, while Brown has in turn blamed Husted's policies for the same cost pressures — a dispute the two candidates have not resolved as the campaign continues.
What the Bill Actually Requires
Under the proposal, a 529 account must be maintained for at least 15 years to qualify for the tax-free transfer, and contributions made within the prior five years are excluded from eligibility, according to Ascensus. Funds transferred for a first-time home purchase must be used within 60 days or recontributed within 120 days if the purchase falls through, the firm notes. The bill also includes a five-year clawback: if a buyer sells or converts the home before five years of residency, the tax exemption shrinks by 20 percent for each full year already lived in the home, according to Whitestone Real Estate.
The $35,000 cap is not a standalone allowance — it shares a combined lifetime limit with the existing 529-to-Roth IRA rollover rule created under the SECURE 2.0 Act of 2022, per Whitestone. That 2022 law already lets 529 account holders roll unused education savings into a Roth IRA tax-free, subject to annual IRA contribution limits. That means savers weighing a home purchase against retirement savings will need to decide how to split a single pool of tax-advantaged transfer capacity between the two goals.
How It Compares to Existing IRA Rules
The proposed $35,000 figure dwarfs the existing option available to first-time buyers today. Under current IRS rules, qualified first-time homebuyers can withdraw up to a $10,000 lifetime maximum from a Traditional or Roth IRA penalty-free, a limit that has remained unchanged since 1997, according to AmeriSave. Traditional IRA withdrawals under that exception still avoid the 10 percent early-withdrawal penalty, but the distributions remain subject to ordinary income tax, the lender notes.
Cleveland.com reports the Senate bill, S. 5227, was referred to the Senate Finance Committee. A companion measure, H.R. 7468, is pending before the House Ways and Means Committee after being introduced in February 2026 by Kansas Republican Representative Tracey Mann and Representative Tom Barrett. Mann said bipartisan and bicameral cooperation can give people more flexibility in using their savings and open pathways to home equity, adding that owning a home is becoming more out of reach for young Americans, per Cleveland.com's report.
Bipartisan Pairing, Industry Backing
Husted co-sponsored the Senate bill with Colorado Democratic Senator Michael Bennet, an unusual pairing of a conservative Ohio Republican and a liberal Colorado Democrat that reflects shared pressure both states face over rising starter-home prices. Bill Killmer, senior vice president of legislative and political affairs at the Mortgage Bankers Association, said down payment hurdles block many families from home ownership. Killmer said the act empowers first-time buyers to use their own savings at no cost to taxpayers, according to Cleveland.com. The Mortgage Bankers Association is among the trade groups backing the bill, alongside the National Association of REALTORS® and the National Association of Home Builders, which officially endorsed it upon introduction, per the Washington Reporter.
The legislation lands amid a stark shift in who is actually buying homes. First-time buyers fell to an all-time low of 21 percent of all home purchases in 2025, while their median age climbed to a record 40 years old, according to the National Association of REALTORS®. Before the 2008 financial crisis, first-time buyers typically made up roughly 40 percent of the market, the trade group's historical survey data shows.
A Tension in Who Benefits
Whether the bill's beneficiaries will actually be the buyers most squeezed out of the market is an open question. Studies by the U.S. Government Accountability Office and the Brookings Institution have found that 529 plan savings are concentrated among wealthier households, with 529-owning families holding roughly 25 times the median financial assets of non-owners, according to the GAO. Brookings Institution research separately found that nearly 70 percent of families using federal 529 tax breaks earn six-figure incomes.
Total assets held in state-sponsored 529 plans have swelled from $388 billion in December 2022 to more than $575 billion in early 2026, according to Federal Reserve data cited by TIAA. TIAA attributes the surge partly to market gains and legislative expansions of what counts as a qualified 529 expense. The First-Time Homebuyer Empowerment Act was introduced alongside other major 2026 congressional housing efforts, including the 21st Century ROAD to Housing Act, which passed in July 2026 to revise federal housing programs and expand mortgage lending power for community banks, as reported by Fast Company.
Cleveland.com's Sabrina Eaton reported on the bill's introduction and its political stakes as affordability has become central to Husted's campaign. The dynamic echoes earlier scrutiny of Husted's record, including Husted's closed-door Randazzo meeting before HB 6 surfaced. For now, the bill remains before committee, with no timeline given for a floor vote in either chamber.
