First Home Financing Act of 1981

First Home Financing Act of 1981 - Amends the Internal Revenue Code to allow individual taxpayers an income tax deduction for cash contributions to a savings account established for the exclusive purpose of purchasing the taxpayers' or taxpayers' child's first principal residence. Limits the aggregate amount deductible by a taxpayer to 15 percent of his adjusted gross income. Limits the dollar amount of such deduction to $2,000 per year, with a maximum lifetime deduction of $15,000.

Exempts such individual housing account from income taxation. Excludes distributions from such account from the taxpayer's gross income as long as such distributions are used for the purchase of a first principal residence.

Prescribes penalties for the use of housing account distributions which are used for purposes other than the purchase of a first principal residence.

Directs the trustee of an individual housing account to make reports regarding such account to the Secretary of the Treasury as required.

Extends the income tax deduction for contributions to an individual housing account to taxpayers who do not itemize deductions.