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First-time Homebuyer Savings Account

What is a First-time Homebuyer Savings Account (FTHSA)?

Opening a First-time Homebuyer Savings Account (FTHSA) at State Savings Bank is a smart way to save for your first home. Our FTHSA is a tax-advantaged account available to qualified residents of Iowa living in Polk, Jasper, and surrounding counties.

What is the Purpose of a First-time Home Buyer Savings Account?

An FTHSA is a special type of savings account created by the Iowa legislature to help Iowans save for their first homes. It includes provisions that allow individuals, including those who already own a home, to make tax-deductible contributions into an account to be used by a designated person saving to own your first home.

What are the Benefits of a First-time Home Buyer Savings Account?

A first-time homebuyer savings account has several benefits including:

  • The account is interest bearing.

Click here to view the savings account interest rate

  • Account-holders may exclude from their Iowa adjusted gross income yearly deposits into First-time Homebuyer Savings Accounts (FTHSA) in amounts up to $2,181 on their 2023 taxes. Married taxpayers who file a joint return may exclude up to $4,363 on their 2023 taxes if the account is open and maintained as a joint account.
  • Income from interest earned on an FTHSA is not taxable on the state of Iowa tax returns.
  • There are no maximum deposit limits.
  • The state of Iowa tax deduction for account contributions is available for up to ten years.
  • Allowable deduction limits for contributions adjust annually for inflation.

What are Additional Benefits of a First-time Home Buyer Savings Account?

In addition to the benefits provided under the law, when you open your FTHSA at State Savings Bank, we provide you with a dedicated first-time homebuyer specialist to help you or your account beneficiary navigate all steps of the process. From account opening to loan pre-qualification, to help understanding mortgage options, the First-Time Homebuyer Savings Account in the Des Moines or Baxter metro is more than a deposit account or mortgage help, it's a relationship. And best of all, we do home mortgage financing which means from start to finish, you only need to work with us!

Additionally, we've put together a First Homebuyer Guide full of home financing resources and additional savings tips broken down in easy-to-understand-sections. 


What are First-time Homebuyer Savings Account Owner Responsibilities?

You are responsible for designating a beneficiary of the account and for ensuring the beneficiary's eligibility as a first-time homebuyer, ensuring that the funds are withdrawn in connection with a qualified home purchase, and for keeping receipts and records to support the account's contributions and distributions. The law indicates:

  • Account holders are responsible to indicate that they are the account holder and designate an individual as beneficiary of a first-time homebuyer savings account. Download Account Holder and Designated Beneficiary Form Here.
  • Account holders are responsible to fill out an Iowa Department of Revenue Annual Report Form and include it with their Iowa income tax return. Download Annual Report Form Here.
  • Account holders are responsible to submit a copy of IRS form 1099 if provided with their Iowa income tax return.
  • Account holders are responsible to provide a transaction report to the Iowa Department of Revenue when funds are withdrawn. This form must be submitted to the Iowa Department of Revenue within ninety (90) days of the date of any withdrawal of funds in any amount from the first-time homebuyer account.  Download Withdrawal Form Here.


Frequently Asked Questions

The following FAQs provide general answers to common questions about FTHSA. Please refer to the 2017 Iowa Acts Senate File 505 for definitive legal guidelines and instructions.

How does this law define a first-time homebuyer?

Iowa Senate File 505 defines a first time homebuyer as an individual who is a resident of Iowa and who does not own, either individually or jointly, a single-family or multi-family residence for a period of three years prior to the date on which the individual is named as a designated beneficiary of a first-time homebuyer savings account and the date of the qualified home purchase for which the eligible home costs are paid or reimbursed from a first-time homebuyer savings account.

Can I open an FTHSA even if I already own a home?

Yes, you may open a FTHSA even if you are a homeowner provided it was established for the purpose of paying or reimbursing a designated beneficiary's eligible home costs in connection with a qualified home purchase. You may not be the account's designated beneficiary; you must designate an eligible beneficiary who qualifies as a first-time homebuyer who must use the money for the purchase of a single-family residence in Iowa. The law includes penalties if the account is misused.

Can I open more than one FTHSA?

Yes. You may establish more than one account as long as each account has a different designated beneficiary.

Can I be the beneficiary of more than one FTHSA?

Yes. An individual may be both the account holder and the beneficiary of the same account and an individual can be the designated beneficiary of more than one account.

If I've already saved money toward a home purchase, why should I open a FTHSA?

While a regular savings or checking account may pay similar interest, only an account officially designated as a FTHSA allows you to deduct your contributions on your Iowa income tax return.

I already have a savings account at State Savings Bank, do I need to do something different?

If you want to take advantage of the benefits of a FTHSA, we recommend you keep funds you are saving for a home purchase in a separate account. You do not need to close your existing savings account but opening a FTHSA simplifies your record-keeping, lowers the chance of accidentally using the funds for an unqualified purpose and helps us ensure you get up-to-date information about this specialized account. This is an easy process and once we set you up, you can easily view and manage your FTHSA along with all your other accounts via online banking

How is this different than other first-time homebuyer programs?

A FTHSA is a deposit account created for the purpose of saving for a down payment. A variety of first-time homebuyer assistance programs exist for the purpose of obtaining or closing the mortgage such as grants that help with down payment or closing costs. It is possible an FTHSA beneficiary may also qualify for additional homebuyer assistance programs when ready to make a purchase. Your State Savings Bank mortgage specialist will explain available programs and guide you through the process.  

What type of home can I buy?

The law stipulates that the funds must be used for a qualified home purchase, defined as a single-family residence in Iowa. The law further indicates single-family residence means a single-family residence owned and occupied by a designated beneficiary as the designated beneficiary's principal residence, including but not limited to a manufactured home, mobile home, condominium unit, or cooperative.

What if I withdraw money from my FTHSA for something other than a qualified home purchase expense?

According to the Iowa Department of Revenue, any amount withdrawn from a FTHSA for a non-qualifying purpose during the tax year must be added to the account holder's Iowa net income for that year, to the extent the amount was previously deducted as a contribution. Any withdrawal that must be added to the account holder's net income is subject to a 10% penalty, unless the withdrawal was made due to the death of the account holder or due to a garnishment, levy, or other order. In calculating Iowa taxable income, a taxpayer must add back any amounts deducted at the federal level and paid or reimbursed for qualifying purposes from funds in an FTHSA.

How long can I deduct my contributions?

The deduction for contributions is subject to a lifetime limit of ten times the account holder's annual deduction limit. This would be reached in ten years if full allowable contributions were made yearly. We encourage you to seek the guidance of a tax or legal professional to ensure that you receive the full tax benefits available to FTHSA account holders.

When can a beneficiary use the funds?

The account must be open a minimum of 90 days before funds can be used toward a qualified home purchase.

How does the "gift tax" work with a First-time Homebuyer Savings Account?

The IRS currently allows a person to "gift" up to $15,000 tax-free. If a FTHSA owner gifts more than the maximum allowed in a given year to a beneficiary, the account owner will have to file a gift tax return to tell the IRS that a portion of their lifetime tax exclusion was used. If you are contemplating gifting your beneficiary a large gift of money toward a home purchase, we recommend you research gift tax limits for the year of the gift and seek the guidance of a tax or legal advisor.


Contact a First-time Homebuyer Specialist

Reach out to a first-time homebuyer specialist located in either Baxter, Iowa or Des Moines, Iowa.

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Please see the Home Mortgage section of our website for more homebuyer information.

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