Buying your first house should be an exciting milestone in your life.
As the capital of the nation, buying in Washington, DC means locating yourself right in the heart of things. In a place where so much history has been made. But the drawback is that can come with a pretty hefty price tag.
The District of Columbia has the second-highest median home values in the whole country, at $626,911. But don’t assume a DC home lease is your only option. Homeownership may be more accessible than you think.
Happily, DC is also home to several first-time buyer programs, set up to help people get on the first rung of the property ladder. Would you like to know more about them, and find out whether you qualify?
Join us as we explore everything you need to know as a first time home buyer in DC.
Options for a First Time Home Buyer in DC
The District of Columbia Housing Finance Agency aims to help people to get buy their first Washington DC home. It uses a number of programs to do this. Some are accessible to first-time buyers, but not exclusively for them.
DC Open Doors Program
The DC Open Doors program assists buyers in DC in three ways:
- Home purchase loans
- Down payment support
- Closing cost assistance
Interestingly, this scheme is not just for first-time buyers. Repeat homebuyers can also benefit, as long as they do not own another home.
Down payment assistance comes in the form of a Down Payment Assistance Loan (DPAL). If there is a disparity between your first trust mortgage loan and the purchase price of your home, the DPAL can cover this. There are no monthly payments to make and it will be repaid upon sale of the property, refinancing, or after 30 years.
Some of the eligibility requirements include:
- Credit score of 640 or higher
- Maximum income of $151,200
- Maximum debt-to-income ratio of 50%
This scheme is open to both residents and non-residents of DC. This makes it ideal if you’re looking to relocate to the capital.
Home Purchase Assistance Program (HPAP)
This program is available only to a first time home buyer in DC. It aims to provide gap financing to eligible homebuyers who are in very low and moderate income levels.
You can gain assistance if your annual income is up to 110% of the area median income. The HPAP provides two forms of assistance:
- Down payment assistance – maximum $80,000
- Closing cost assistance – maximum $4,000
Additionally, homebuyers need to have a good credit rating and the home must be their primary residence. It only applies to homes within the District of Columbia.
You will have to repay the HPAP loan if you sell your home, it’s no longer your primary residence, or you refinance your mortgage. For moderate-income households, the repayments are deferred for 5 years, and then repaid over 40 years. For low-income households, no repayments are due unless you sell or refinance.
Do you work for the DC District Government? If you do, the DC4ME program could be just the assistance you need to purchase your first home.
To be precise, the eligibility criteria is as follows:
- Must be a first-time homebuyer
- At least one borrower must work full time for the District Government
- Maximum household income must not exceed 120% of the area median income – currently, $151,200
- Sale price of home not to exceed $530,000
- Minimum credit score of 640
- Maximum debt to income ratio of 50%
- One borrower must take a Homebuyer Education Class
DC4ME helps homebuyers by providing them with first trust mortgages at reduced interest rates. Three percent downpayment assistance with a 0% deferred subordinate loan is also available.
The DC4ME program can also be combined with HPAP and the District of Columbia Employer Assisted Housing Program (EAHP).
Other Programs Available to DC Residents
The programs mentioned above are all specific to DC residential real estate. However, they are not the only programs that can help you to buy a home in DC.
If you have a credit score between 580 and 640 and a down payment of at least 3.5%, you could be eligible an FHA loan. In fact, even with a credit score as low as 500, you may be eligible if you have a 10% down payment.
These loans do come with one caveat. If your down payment is lower than 20%, you will need to take out FHA mortgage insurance.
If you are a member of the US military, either active duty or veteran, you can qualify for a 100% VA loan. You don’t need a downpayment but you will have to pay a funding fee. However, this can be rolled into your monthly repayments.
This program is also open to qualified spouses.
There are further programs offered by the federal government and some lenders to help people to buy their first home. These include:
- Good Neighbor Next Door – for public service employees
- Energy-efficient Mortgage (EEM)
- Fannie May/Freddie Mac programs, such as HomePath Ready Buyer
The only snag with these programs may be the lack of available homes in Washington DC. However, it can be worth searching to find out if there were any qualifying homes added recently.
Just like when you sign a residential or commercial lease agreement, make sure you do your homework. If you’re eligible, some programs can be combined. This can be a great way to achieve your dream of owning your own DC home!
Find Your Perfect DC Home
Now you’re fully aware of the options available to a first time home buyer in DC, it’s time to start searching for your home!
DC has a lot of history and a varied housing stock. To navigate it successfully and find the right home for you, it’s good to have a helping hand.
At Nomadic Real Estate, we’re here to give you all the help you need. We’re experts in the DC property market, covering everything from property management to sales and purchases. We can help you find your ideal DC home.
Contact us today to discuss your residential real estate needs.