No One Told You About This Home Buying Trick!

In Episode 11 of the Mortgage 101 Podcast, hosts Anthony and Manley dive into the "Big Beautiful Bill" (BBB), signed into law on July 4, 2025, reshaping the 2025 housing market. The bill eliminates federal taxes on tips and overtime up to $25,000 for incomes under $160,000, raises the SALT cap to $20,000, reinstates full mortgage interest deductions, and offers tax credits for ADUs and single-family construction. These changes boost buyer affordability, especially for service industry workers, and address the inventory crisis. A rapid-fire buzzword segment covers overtime pay, tip income, SALT cap, ADUs, and interest deductions, with actionable advice to leverage the bill. The episode also updates the rate prediction tracker, noting volatility at 6.75%.

Listen to the full episode: https://youtu.be/pQzfFGu9CYo?feature=shared

[00:00] Welcome to Mortgage 101: Episode 11

Anthony: Welcome to Episode 11 of the Mortgage 101 Podcast! I’m Anthony, with Manley, breaking down the Big Beautiful Bill that’s unlocking more homebuying power.

Manley: Signed on July 4, 2025, this bill changes everything—tax rules, income qualifications, and inventory. Smash that like button and subscribe for more insights!

Anthony: Today, we’re diving into how the BBB boosts affordability, with a rapid-fire buzzword segment and our rate prediction tracker update.

[01:23] The Big Beautiful Bill: A Game Changer

What is the Big Beautiful Bill and why does it matter?

Manley: Signed into law on July 4, 2025, the Big Beautiful Bill (BBB) overhauls the 2017 Tax Cuts and Jobs Act, enhancing homebuying power for millions.

Anthony: It’s not just hype—it eliminates federal taxes on tips and overtime, raises the SALT cap, reinstates mortgage interest deductions, and incentivizes construction to tackle the inventory crisis.

Manley: Lenders and underwriters are already adjusting pre-approvals, with buyers qualifying for $50,000–$200,000 more in purchase power.

[02:17] Key Provisions of the Big Beautiful Bill

How does the BBB boost home affordability?

Anthony: No federal tax on tips or overtime up to $25,000 for incomes under $160,000—huge for service workers like bartenders and nurses.

Manley: The SALT cap rises from $10,000 to $20,000, saving high-cost area residents (e.g., New York, California) hundreds monthly on property taxes.

Anthony: Full mortgage interest deductions are back, reducing monthly costs, especially in early loan years, while ADU and construction tax credits spur inventory growth.

[05:12] Impact on Buyers and the Market

Can you afford more house with the BBB?

Manley: Absolutely—buyers like bartenders are seeing up to $180,000 more in purchase power due to tax-free tips and lower debt-to-income ratios.

Anthony: In high-cost areas, the SALT cap increase and interest deductions act like a silent partner, making pricier homes affordable and sustainable.

Manley: ADU credits let homeowners add rentable units, offsetting costs, while construction incentives address the inventory crisis we’ve warned about.

[09:43] Rate Prediction Tracker Update

Where are mortgage rates headed in 2025?

Anthony: Our forecast holds at 5.8–6.5%, averaging 6.15%, but rates hit 6.75% this week due to volatility from tariffs, inflation, and strong jobs data.

Manley: The BBB’s $3 trillion deficit addition could fuel inflation, pushing rates up long-term, despite short-term dips. The Fed’s cautious, avoiding the 1980s boomerang effect.

Anthony: Don’t wait for the perfect rate—lock when favorable to avoid missing the wave in this volatile market.

[15:46] Rapid-Fire Buzzword Segment

What are the key terms tied to the Big Beautiful Bill?

Ryan: Time for rapid-fire buzzwords—one to two sentences, let’s go!

Overtime Pay (Manley)

Manley: Overtime pay up to $12,500 is now tax-free for incomes under $160,000, boosting qualifying income for hourly workers without tax penalties.

Tip Income (Anthony)

Anthony: Tips up to $25,000 are tax-free, empowering service industry workers to show more income, increasing purchase power by tens of thousands.

SALT Cap (Manley)

Manley: The SALT cap, now $20,000, lets you deduct more state and local taxes, keeping more money in high-cost area buyers’ pockets.

ADUs - Additional Dwelling Units (Anthony)

Anthony: ADUs, like basement units or she-sheds, qualify for tax credits when you add rentable space, offsetting mortgage costs with rental income.

Interest Deduction (Manley)

Manley: Mortgage interest deductions reduce taxable income, leveling the playing field for W2 earners to save like self-employed high earners.

[27:38] Don’t Be Dumb: Report Your Income

Why should you report tips and overtime now?

Anthony: Don’t hide tips thinking you’ll avoid taxes—underwriters need reported income to qualify you, and the BBB makes tips tax-free up to $25,000.

Manley: Re-educate yourself: reporting tips and overtime now boosts your buying power without tax penalties, unlike before—don’t miss this opportunity.

Anthony: Show all income to maximize your loan approval, as unreported cash won’t help you buy your dream home.

[33:08] Closing Thoughts: Act Now

How can buyers leverage the Big Beautiful Bill?

Manley: If you were pre-approved before July 4, 2025, re-evaluate now—the BBB likely increased your buying power significantly.

Anthony: Don’t wait for your CPA or perfect rates—get a Big Beautiful Bill Audit (BBBA) with your lender to see new options and act fast.

Manley: This bill levels the playing field, putting money back in American pockets—DM us your questions and share this episode to spread the word!

FAQ

What is the Big Beautiful Bill?

Signed on July 4, 2025, the BBB eliminates taxes on tips and overtime up to $25,000, raises the SALT cap to $20,000, reinstates mortgage interest deductions, and offers ADU and construction tax credits.

How does the BBB help homebuyers?

It boosts affordability by increasing qualifying income for service workers, reducing tax liabilities in high-cost areas, and incentivizing home construction to ease inventory shortages.

Should I report my tips now?

Yes, reporting tips up to $25,000, now tax-free under the BBB, increases your mortgage qualifying income without tax penalties, unlike in the past.

Will the BBB affect mortgage rates?

The bill’s $3 trillion deficit could fuel inflation, potentially pushing rates up long-term, but short-term dips are possible—lock rates strategically.