First-Time Home Buyer Savings Accounts: A Smart Way to Save for Your Dream Home
If you’re planning to buy your first home in Oregon, the First-Time Home Buyer Savings Account (FTHBSA) might be just the tool you need to save smarter and reduce your tax burden. This guide will walk you through everything you need to know about opening, using, and benefiting from this account.
What Is a First-Time Home Buyer Savings Account?
The First-Time Home Buyer Savings Account is a special account designed to help you save for your first home while enjoying tax benefits. Oregon allows you to subtract deposits and earnings on your FTHBSA from your taxable income, making it a powerful savings tool for aspiring homeowners.
Key Benefits:
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Tax Savings: Deduct contributions and earnings from your state taxable income.
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Flexible Usage: Use funds for qualifying home-buying expenses.
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Support for Others: Save on behalf of someone else planning to buy their first home in Oregon.
How to Set Up a First-Time Home Buyer Savings Account
Creating an FTHBSA is simple:
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Open an Account: Visit any financial institution and open a savings account. The institution doesn’t need to know it’s an FTHBSA.
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Fill Out Form OR-HOME: Designate the account as your FTHBSA by completing Form OR-HOME.
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Keep Records: Retain Form OR-HOME, account statements, and related tax documents for your records. These may be required later.
Who Can Open an Account?
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Anyone planning to purchase a home in Oregon.
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Individuals saving on behalf of a qualified beneficiary (someone buying their first home).
How to Use Your First-Time Home Buyer Savings Account
Funds in your FTHBSA must be used within 10 years for qualifying costs of buying a single-family home.
Qualifying Expenses Include:
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Down payment
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Title insurance and closing costs
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Realtor commissions
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Appraisal and inspection fees
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Loan origination fees
Important Rules:
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The homebuyer (you or your beneficiary) cannot have owned a home in the three years prior to the purchase.
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Funds withdrawn for non-qualifying purposes may incur penalties.
How Much Can You Save?
For 2025, the maximum deductible amounts are:
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$6,125 for individual filers
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$12,245 for joint filers
You can deduct contributions and earnings for up to 10 years or until you’ve reached:
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$50,000 for individuals
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$100,000 for joint filers
Note: Income limits apply, and deductions may be reduced if your income exceeds certain thresholds.
Penalties for Non-Qualified Withdrawals
If you withdraw funds for purposes other than buying a home, you’ll face a 5% penalty on the withdrawn amount. Additionally, any previously deducted contributions will need to be added back to your income for that tax year.
Exceptions:
Penalties won’t apply if funds are withdrawn due to:
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Death of the account holder
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Bankruptcy
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Permanent disability
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Withdrawals made after 10 years (though deductions will still be added back to income)
Transferring Funds Between Accounts
You can transfer funds to another FTHBSA without penalties, but:
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The original account must be closed.
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Transfers must occur within 60 days.
Joint accounts can also be split into individual accounts under specific guidelines.
Frequently Asked Questions
What Is a Qualified Beneficiary?
A qualified beneficiary is the person designated to use the funds for buying their first home. They cannot:
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Have their own FTHBSA
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Be a beneficiary on another account
Can I Open More Than One FTHBSA?
No, you can only have one active FTHBSA at a time.
Start Saving Today
The First-Time Home Buyer Savings Account is an excellent opportunity for first-time buyers in Oregon to save efficiently while reducing their tax liabilities. If you’re ready to take the first step toward homeownership, visit your preferred financial institution and set up an account today. Don’t forget to fill out Form OR-HOME and keep your records organized to maximize your benefits.
For more personalized advice on buying your first home, feel free to contact me at 360-909-4781. Let’s make your dream of homeownership a reality!
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