- In 2024, the average U.S. tax refund came in at $3,145—enough to help a lot with key homebuying costs.
- 26% of first-time homebuyers used their tax refunds toward purchasing a home, per NAR.
- Tax refunds can help a lot with or pay for down payments, closing costs, and appraisals.
- Buyers who use their refund early in the year can often find better chances before the busiest time.
- FHA and VA loans mean you need less money upfront, especially when combined with tax refunds and local grant programs.
Tax season brings W-2s and paperwork, but it can also help you buy a home. If you’re buying for the first time or looking in Las Vegas, your tax refund can help make buying a home happen. This guide will show you how to use your tax refund to buy a house and the best ways to do it. Using a tax refund for home buying is a good idea, and many people do it.
Why Tax Time Gets Buyers Moving
Each spring, the IRS sends out tax refunds. This money comes just in time for the busy home-buying season. In fact, for many people, their tax refund is the most money they get at one time all year. The timing is good. The average refund in 2024 was about $3,145. Some buyers see this as a good chance to handle one of life’s biggest costs: buying a home.
Also, instead of waiting longer to buy a home or taking on expensive debt, many buyers use their refunds smartly to lower the first costs of buying a home. In a busy market like Las Vegas, when having money available quickly is important, this cash boost can change what a person can afford to buy.
What’s the Average Tax Refund and Why It Matters to Homebuyers
The average tax refund in 2024 was $3,145. That’s a good amount of money when buying a home, even though some people think you need a lot of savings. You can make that refund go further with low-down-payment home loans, grants, and help with closing costs.
Consider some popular loan types:
- FHA loans require as little as 3.5% down.
- VA loans offer zero-down options for veterans and military service members.
- Conventional 97 loans allow 3% down for qualified first-time buyers.
If you plan well, your refund can be a key part of how you pay for a home. You can add it to a down payment, pay for closing costs, or cover inspections and appraisals. Using a tax refund to buy a home is much more useful than spending it on shopping or a vacation.
Breaking Down the Costs of Buying a Home
When you plan to buy a home, you need to know about the many costs you have to pay at the start. Most people think about the down payment, but there are other costs that buyers might not expect and that can affect their budget.
Here’s a breakdown of costs:
- Down Payment: Traditionally ranges from 3% to 20% of the purchase price. Government-backed loans like FHA allow smaller down payments—just 3.5% in many cases.
- Closing Costs: These typically include loan origination fees, credit reports, title searches, escrow fees, and appraisal costs. Expect them to range from 2% to 5% of the loan amount.
- Inspections and Appraisals: Depending on the property and market, home inspections can cost $300 to $500, and appraisals can cost $400 to $600.
- Earnest Money (Good Faith Deposit): Usually 1% to 3% of the purchase price, paid upfront to show you are serious about your offer.
- Insurance and Prepaid Taxes: Often prorated at closing, buyers need to pay for homeowners insurance and at least a portion of the property taxes for the year.
Let’s look at Las Vegas homes. According to Las Vegas Realtors®, the median home price was approximately $430,000 in Q1 2024:
- FHA Down Payment (3.5%): $15,050
- Estimated Closing Costs (5%): $21,500
- Total Upfront Range Needed: Between $15,000 and $40,000, depending on financing terms and seller concessions.
And that is where your tax refund can make a big difference.
Down Payment Assistance: How Far Your Refund Can Go
First-time homebuyers often think they need more money to start buying a home than they actually do. Your tax refund can do three main things when you buy:
- Down Payment Boost: Though $3,000 to $4,000 may not meet the full down payment in some places, it can be a big part of it. For FHA properties at $200,000 or less, your refund may cover the entire amount needed.
- Covering the Full Down Payment in Lower-Cost Areas: For buyers in less expensive suburbs or low-cost housing markets, your tax refund could pay for all of it.
- Adding to Gift Funds or Programs: Pair your tax refund with family gift money or a down payment assistance program to be able to afford more.
And remember to look into local help programs. Many states, like Nevada, have grants or loans you don’t have to pay back. These can help you even more, especially if you are buying for the first time or your income is below certain levels.
Using Your Refund for Closing Costs or Appraisals
Closing costs can stop many buyers who can otherwise afford a home because of costs not included in the loan. Even if you saved enough for the down payment, your refund could help you pay for:
- Home Inspections: A must-have to find issues before you finish the contract.
- Appraisals: Required by lenders to figure out the actual value of the property.
- Escrow Fees and Title Insurance: These protect both buyer and lender from unexpected claims.
- Loan Origination Fees: Charged by lenders for working on your loan request.
When you use your tax refund to pay for these required costs, you can keep money for things like furniture, repairs, or emergencies after you move in. This extra money can be the difference between a hard move and an easy move.
Steve Hawks’ Take: Turning Refunds Into Real Estate Investments
Steve Hawks is a real estate expert and a successful agent. He’s also a good planner. He has sold over 4,000 homes in the Las Vegas area. Hawks talks about how helpful timing and having cash quickly can be. Hawks explains, “If you can use your refund in Q2, when fewer people are buying than in the busiest time in summer, you can be in a good spot.”
He also says that smart investors often use refunds to help them buy vacation homes or rental properties. This is true especially in a market that is growing fast like Las Vegas, where many people want to rent homes.
Hawks says, “Using a tax refund isn’t just about just finding enough money to buy a home. It’s about growing your money faster by making smart choices.”
Should You Delay Buying Until You Get Your Refund?
Timing your home purchase around when you get your refund means thinking about if waiting is worth the chance. Waiting might mean you can afford more, but it also has some downsides:
It makes sense to wait if:
- You lack enough funds for closing costs or down payment.
- Market prices are stable or declining.
- You have flexibility in your housing timeline.
But you should act now if:
- Interest rates are on the rise.
- Homes in your price range are disappearing.
- You’ve already found a property that fits your needs.
Also, tax refunds often show up in bank accounts from late February through April. This is early enough to still see homes for sale in spring and avoid competing with summer buyers. If you plan well, timing it this way can help you.
Strategic Planning: Steps to Take With Your Refund
How you handle your refund before buying can affect if you get a loan, how good your money situation looks, and how ready you are to make offers. Here are some smart steps to take with your refund:
- Keep Your Refund Separate Quickly – Open a separate bank account just for home costs. This helps avoid buying things you don’t need and shows lenders the money is real money available now.
- Inform Your Lender – Lenders often ask about large deposits. Telling them ahead of time that your tax refund is coming is open and clear. It can even make your debt-to-income ratio look better.
- Get Pre-Approved First – Pre-approvals show sellers you are serious. Your refund can mean you can borrow more or that the loan company checks things less closely.
- Work With an Agent Who Knows the Market – Someone like Steve Hawks knows how prices change in the area. They can help you get the seller to pay some costs or lower the price.
- Look for Grants and Matching Programs – Groups and lenders might add money to your down payment if it comes from a refund or a specific account.
Las Vegas Market Watch: Why Timing Your Purchase Matters
The Las Vegas real estate market gets busy fast, especially in the summer. Usually, there are much fewer homes for sale in this area by early summer. And this is when most people are trying to buy.
Steve Hawks says that buyers who act in April or May—right after they get their tax refunds—are in a better place:
- Sellers are more ready to sell before the summer rush.
- Interest rates often remain steady until later in the year.
- And you avoid getting into price wars with people who only look to buy in summer.
Using your tax refund when the market is right and you have cash can give you an edge.
First-Time Buyer Programs That Complement Your Refund
Nevada’s program across the state called Home Is Possible™ gives buyers help with grants and good rates, especially when you add them to tax refunds. People who qualify can get thousands of dollars in grants they don’t have to pay back. This makes the refund help even more.
Other options may include:
- FHLBank WISH Program: Matches eligible down payments for qualifying buyers at a 4-to-1 ratio.
- Employer-Sponsored Buyer Programs: Some companies provide homeownership bonuses or HR-matched deposits.
Putting these together with your tax refund uses all the money well. It helps you build long-term wealth because you timed it right.
Refund vs. Other Uses: Why Real Estate Might Be the Best ROI
It might feel good to use your refund for things you enjoy right away, like travel, new gadgets for your home, or paying off small debts. But think about what you gain over time with real estate.
According to the National Association of Realtors®, 26% of first-time buyers used their tax refund toward a down payment or closing costs. These buyers are not just spending money—they’re investing it in:
- Equity Growth: Homes usually go up in value over time.
- Cost Stability: Fixed-rate mortgages keep monthly payments consistent.
- Tax Benefits: Homeowners can deduct mortgage interest and property tax.
Over time, putting your refund into a home gives you money benefits and a feeling of security that other choices usually don’t.
Tips to Get the Most From Your Refund
Here are a few simple steps to get the most out of your refund:
- Act quickly: The sooner you use your refund, the less likely you’ll spend it without thinking.
- Talk to a tax expert: Make sure your money is clearly listed so mortgage lenders accept it.
- Avoid credit changes: Don’t open new cards, auto loans, or make big purchases until after closing.
- Match offers to when you get your refund: Think about adding words to your offer that delay closing until after you receive your refund.
Real-Life Example: Buyer Success With a Refund
One of Steve Hawks’ clients, a couple buying in Henderson, used their $3,500 tax refund and $2,000 in money they had saved to buy a 3-bedroom townhome with an FHA loan. What happened?
- Refund covered the entire down payment.
- Seller agreed to cover most of the closing costs.
- They moved from renting into homeownership in under 60 days.
This shows how real people use smaller refunds to make big money changes when they get the right help.
A Smart Refund Strategy for Las Vegas Buyers
Don’t think of your tax refund as just extra cash. See it as money that can change your life. You can use it by itself or use it with grants and good timing. Either way, your refund can get you much closer to getting your dream home. Using a tax refund to buy a house is a smart choice that helps you build money.
Use what you know about the market, get help from experts, and time it right to get the best results. Talk to people like Steve Hawks. They can help turn that refund into your main help for your down payment.