While property prices in Washington D.C. will likely remain high, they’re not out of reach, especially as a first-time buyer eligible for one (or more) of the programs below.
The DC city government has long recognized that properties in the metro area command high prices. But they’re not out of reach. To encourage first-time homebuyers, these four housing programs were launched to make it easier to afford your own.
DC Open Doors
This program is one of the few that offers mortgage loans and down payment assistance to both first-time and repeat buyers. There’s also no area restriction, so any property within the DC metro is eligible.
To qualify for mortgage loans, buyers must have:
- A credit score of at least 640
- A borrower (not household) income of not more than $140,640
- A debt-to-income ratio of 50% at most (45% when paired with an FHA loan)
Qualifying for a DC Open Doors loan gets homebuyers no-points rates (meaning less upfront costs), a first trust loan cap of $484,350, and no ceiling for property sales price.
Employer Assisted Housing Program (EAHP)
A program made with government employees in mind, DC’s EAHP bundles a deferred zero-interest loan with a funds grant to support buyers during the down payment and closing of their first single-family home or condominium.
Compared to DC Open Doors, there is no income cap for buyers, but the maximum price for a property cannot exceed $636,150. District government employees who have served for at least a year get a maximum loan amount of $20,000 paired with a funds grant of up to $5,000.
First responders (police officers, paramedics, and firefighters among others) get the same maximum loan amount, plus down payment assistance of up to $10,000 with a more generous funds grant of up to $15,000.
Home Purchase Assistance Program (HPAP)
HPAP is another local program limited to first-time homebuyers, but eligibility also requires having no property ownership interest in residential properties in the last three years.
To qualify for assistance, borrower household income must not exceed the current cap of 110% of DC’s area median income (AMI). Approved borrowers can receive amounts of up to $80,000 for down payments and $4,000 for closing costs. These can be availed on deferred zero-interest loans for a period depending on their income level.
Negotiated Employee Assistance Home Purchase Program (NEAHP)
Similar to the HPAP, the NEAHP sticks to the first-time buyer and three-year ownership interest restriction rules. Another criterion: Only District government employees who have certain collective bargaining agreements like the District of Columbia Nurses Association can apply.
Under this program, an applicant potentially receives any amount from $3,000 to $26,000, depending on number of years served. The approved amount is structured as a grant and does not need to be repaid after 10 years if the employee fulfills the terms of agreement. NEAHP grants are typically paired with other housing loans.
FHA Loan
Unlike the last four programs, an FHA loan receives federal backing through the Federal Housing Authority. The conditions and requirements for Washington D.C. are similar to elsewhere in the country.
Some major criteria are:
- A FICO or credit score of 500 to qualify for a 10% down payment
- A FICO or credit score of 580 to qualify for a 3.5% down payment,
- Two years of continuous employment
- A debt-to-income ratio of 43% (50% in special cases)
- A primary residence designation for the property in question.
For more program details, interested homebuyers can visit the following websites:
- DC Housing Finance Agency (DCHFA)
- Department of Housing and Community Development (DHCD)
- Department of Housing and Urban Development (HUD)
Thinking of buying your first home in Washington DC? Let Heller Coley Reed of Long & Foster Real Estate make the experience a smooth one. Give her a call at 240.800.5155 or send her an email at hellercoleyreed(at)gmail(dotted)com.