The "First Home Savings Opportunity Act of 2025" proposes to amend the Internal Revenue Code of 1986 by establishing **Down Payment Savings Accounts**. These new tax-advantaged accounts are designed to help individuals save for the **qualified down payment expenses** of their first principal residence, offering a tax deduction for contributions and tax-free distributions for eligible home purchase costs. Individuals can contribute cash to these accounts, with an annual deduction limit of **$10,000 for individuals** or **$20,000 for joint filers**, subject to a phase-out based on modified adjusted gross income. To qualify, the account beneficiary must be at least 18 years old and a **first-time homebuyer**, meaning they have not owned a principal residence in the last three years. The account must be a trust managed by a qualified trustee, exclusively for this purpose, and cannot invest in life insurance. Distributions from these accounts are **excluded from gross income** if used for qualified down payment expenses; otherwise, they are included in gross income and generally incur an **additional 20 percent tax**, with exceptions for death or disability. The bill also outlines rules for rollover contributions, reporting requirements for trustees, and inflation adjustments for contribution limits, with the provisions taking effect for taxable years beginning after December 31, 2025.