The New Jersey state Senate Community and Urban Affairs Committee advanced legislation that, if enacted, would create a tax-advantaged savings program aimed at helping residents afford their first home.

The bill, sponsored by Senators Troy Singleton and Vin Gopal, would establish the New Jersey First-Time Home Buyer Savings Account Program, designed to help prospective buyers save for down payments and other home-purchase expenses amid rising housing costs.

Under the proposal, the New Jersey Housing and Mortgage Finance Agency would certify eligible first-time buyers and coordinate with financial institutions to create dedicated savings accounts. Participants could contribute up to $15,000 annually, with a lifetime contribution limit of $75,000 and a maximum account balance of $150,000.

Account holders would receive a 5% state income tax credit on annual contributions, and interest earned on the accounts would be tax-free if the funds are used for qualified home-purchase expenses.

Gopal, a Monmouth County Democrat, said the legislation would help young professionals and working-class residents who are struggling to save while managing debt and rising rents. The program, he said, would provide “a clear, structured path to help them move toward homeownership.”

To qualify, applicants would need to earn less than $175,000 annually, have no recent history of homeownership, and complete a homebuyer education course. The program would require annual reporting to ensure funds are used for eligible purposes. Withdrawals for non-qualified expenses would face a 10% penalty, except in hardship cases such as death or disability.

The proposal is modeled on similar programs in states including Colorado and Virginia and is part of a broader effort by lawmakers to address declining first-time homeownership rates. According to the National Association of Realtors, first-time buyers accounted for just 24% of home purchases recently, down from a historic average of about 40%.