Big Real Estate Bill Breakdown: How $3.4 Trillion Impacts Housing, Mortgages & Investors - BTG # 13

The real estate and mortgage world has been buzzing about a new $3.4 trillion spending package. Some are calling it the biggest housing-related bill in U.S. history. Others are raising concerns about debt, inflation, and long-term consequences.

No matter which side of the aisle you’re on, one thing is clear: this bill has massive implications for homebuyers, homeowners, real estate agents, and investors.

In this post, we’re breaking it all down — without the political noise. By the end, you’ll understand how the changes could affect you, whether you’re buying your first home, refinancing, or building a real estate portfolio.

1. Why This Bill Matters for Real Estate

Most legislation gets buried in political debates. But this bill stands out because it directly touches the housing market — from affordable housing development to mortgage tax deductions and investor incentives.

Some of the biggest highlights include:

• A boost to the Low-Income Housing Tax Credit to encourage more affordable rentals.

• Permanent reinstatement of the mortgage insurance deduction.

• An increase in the SALT deduction cap (state and local taxes).

• Adjustments to mortgage interest deductions for high-value loans.

• Tax incentives for real estate investors and small business entities.

That’s a lot to unpack, so let’s walk through each one.

2. Affordable Housing: Will It Finally Ease the Shortage?

One of the most talked-about changes is the expansion of the Low-Income Housing Tax Credit (LIHTC).

• The bill increases the 9% credit by 12%.

• It lowers the bond financing threshold for 4% projects from 50% to 25%.

In plain English, these changes make it easier for developers to finance affordable housing projects. The goal is to create over a million new rental units between 2026 and 2035.

The Impact

• Renters benefit because more affordable units could relieve pressure in overheated rental markets.

• Investors benefit because tax credits make multifamily projects more attractive.

• Communities benefit by keeping service workers, teachers, and first responders closer to where they work.

But here’s the big question: are we treating the symptom or the cause? If construction costs remain high, landlords may still raise rents — even with incentives.

3. Homebuyers: Relief Through Mortgage Insurance Deductions

The bill permanently reinstates the ability to deduct mortgage insurance premiums. For many first-time homebuyers and buyers with smaller down payments, this could mean a tax break averaging around $2,364 per year.

Why It Matters

• First-time homebuyers, who often put less than 20% down, carry mortgage insurance.

• Being able to deduct that expense makes owning a home slightly more affordable.

However, critics point out that buyers still need to qualify for the home first before the deduction helps. Affordability remains a hurdle, especially with home prices and interest rates where they are today.

4. The SALT Deduction Cap: Relief for High-Tax States

The bill raises the SALT deduction cap from $10,000 to $40,000 through 2030.

This primarily benefits homeowners in states like:

• California

• New York

• New Jersey

• High-tax pockets in states like Illinois and even Iowa

The Impact

• In expensive states, this could re-ignite housing demand by making property ownership more tax-efficient.

• For middle markets (like much of Florida or Alabama), the effect will be muted except in luxury housing.

5. Mortgage Interest Deduction: Stability for High-Value Loans

The bill makes the $750,000 mortgage interest deduction cap permanent.

For homeowners with larger mortgages, this creates certainty in tax planning. Instead of guessing whether deductions will change year to year, they now have a stable baseline.

What This Means for Borrowers

• High-value borrowers can plan long-term with more confidence.

• Refinancing strategies become easier to map out without worrying about sudden rule changes.

6. Real Estate Investors: Tax Benefits That Encourage Growth

One of the most investor-friendly provisions is the increase in the Qualified Business Income (QBI) deduction for pass-through entities.

• It jumps from 20% to 23%.

• Active real estate investors who self-manage or actively run their rental businesses qualify.

• Passive investors using property management companies likely will not.

Why This Matters

• Encourages small and mid-sized investors to expand portfolios.

• Creates more incentive to buy and self-manage properties, particularly rentals.

• May spark new LLC formations as investors seek to maximize tax savings.

For many, this extra 3% could be the difference between a deal that cash flows and one that doesn’t.

7. Interest Rates, Inflation, and Debt Concerns

Here’s the elephant in the room: this bill adds $3.4 trillion to the federal deficit.

That raises the risk of inflation, which could push interest rates higher — bad news for mortgage borrowers.

At the same time, political pressure is building on the Federal Reserve to lower rates to avoid a housing market freeze. It’s a tug-of-war:

• Raise rates → fight inflation, but choke affordability.

• Lower rates → stimulate housing, but risk more inflation.

The Likely Outcome

For now, most signs point to rates holding steady or dropping slightly in the near future. The housing market simply can’t sustain another round of hikes. But the long-term debt picture remains concerning.

8. Cryptocurrency and Real Estate: A Quiet Shift

Buried in the bill are references to cryptocurrency regulation and taxation. This could open the door for:

• Crypto assets being used in mortgage qualification.

• More investors moving money into real estate as a hedge against inflation.

• Stablecoins potentially playing a role in how we transfer and value money.

It’s early days, but if crypto becomes mainstream in real estate finance, this bill could be remembered as the moment it started.

9. Winners and Losers

Like any legislation, there are trade-offs.

Winners

• First-time homebuyers (through tax deductions).

• Affordable housing developers (with new financing incentives).

• Small and mid-sized investors (via QBI deductions).

• High-tax state homeowners (thanks to SALT relief).

Losers

• Taxpayers in general, with $3.4 trillion added to the national debt.

• Passive investors, who won’t qualify for QBI perks.

• Would-be buyers in markets where prices continue to climb despite affordability programs.

10. What This Means for You

Every homeowner, buyer, or investor will experience this bill differently. Here’s a quick guide:

• If you’re buying your first home: Talk to your loan officer about mortgage insurance deductions and how they may impact your affordability.

• If you’re refinancing or own a high-value home: Factor the permanent interest deduction into your long-term tax planning.

• If you’re an investor: Consider whether structuring as a pass-through entity makes sense for your portfolio.

• If you live in a high-tax state: The SALT deduction change may put more money back in your pocket.

11. Final Thoughts

The $3.4 trillion real estate bill is huge — in size, scope, and potential impact. While it offers opportunities for buyers and investors, it also raises big questions about debt, inflation, and long-term stability.

At Creative 1st Mortgage, our job is to cut through the noise and help you understand how these changes impact your real-world decisions. Whether it’s buying, refinancing, or investing, we’re here to guide you.

Next Steps

✔️ Curious how this bill affects your personal situation?
✔️ Want to explore financing options or refinancing under the new rules?

👉 Contact us at Creative1stMortgage.com to schedule a free, no-obligation consultation.