First Time Home Buyer Washington D.C. Down Payment Assistance Programs

Washington D.C. First Time Home Buyer Programs 

Purchasing your first home in Washington D.C. can be overwhelming given the competitive market, but there are several programs available to help with upfront expenses like down payments and closing costs. Let’s explore these options to make your homebuying journey more manageable.

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How does DCHFA work? 

The DC Housing Finance Agency (DCHFA) is a government agency focused on making housing more affordable in the District of Columbia. DCHFA collaborates with developers, housing providers, and lenders to create affordable housing options. They provide financial assistance for building new homes, renovating existing properties, and offer programs to help residents achieve homeownership. 

DCHFA DC Open Doors Program 

The DC Open Doors Program offers home purchase loans and provides down payment and closing cost assistance to qualified buyers in Washington, D.C. The program aims to bridge the gap between the home’s purchase price and the amount you are approved to borrow. You could receive up to 3% or 3.5% of the home’s sale price or appraised value, to cover your down payment or closing costs. This program features a deferred loan with below-market interest rates, meaning repayment is not required for 30 years or until you sell, move, or refinance your home. 

DC Open Doors Program Eligibility and Requirements 

To be eligible for the DC Open Doors Program, you must meet specific criteria. Your annual income must be below $199,200, and you need a credit score of at least 640. Additionally, you cannot own other property at the time of settlement, although you do not have to be a first time homebuyer. You must also work with a DCHFA-approved lender and have a debt-to-income ratio of less than 50%. 

DC Open Doors Benefits 

The DC Open Doors Program offers several benefits to homebuyers. It provides financial assistance for both down payments and closing costs, which could significantly ease the burden of purchasing a home. Additionally, the program gives you access to below-market interest rates, helping you secure a more affordable mortgage. 

One of the main advantages of the program is its accessibility. Unlike many other homebuyer assistance programs, this program is open to all buyers, not just first time homebuyers. This allows a broader range of individuals and families to benefit from the program’s support. 

How To Apply for The DCHFA DC Open Doors Program 

To apply for the DCHFA DC Open Doors Program, you’ll need to work with an approved lender. Here’s a general overview of the application process: 

• Eligibility Verification: Your lender will assess your eligibility based on factors such as income, credit score, and purchase price. 
• Gather Required Documents: Prepare the necessary financial documents, like tax returns, pay stubs, bank statements and proof of employment.  
• Mortgage Application: Submit your completed mortgage application to your lender, along with any additional supporting documentation. 
• Pre-Approval: Once your lender has reviewed your documents and determined your eligibility, you’ll receive a pre-approval for a loan, giving you an estimate of how much you can borrow. 

How To Find A DC Open Doors Mortgage Lender 

To find a participating DC Open Doors mortgage lender, visit the DCHFA website for a list of approved lenders. Direct Mortgage Loans is a participating lender and can assist you through the process. Contact one of our expert Loan Officers to get started. 

What is the DCHFA Home Purchase Assistance Program? 

The Home Purchase Assistance Program (HPAP) is part of the DC Open Doors initiative, specifically designed for first-time homebuyers. It offers down payment and closing cost assistance as a deferred, interest-free loan. We will delve deeper into the details of this program in the following section. 

Washington D.C. Down Payment Assistance

There are several down payment assistance programs to help those purchasing a home in Washington D.C. Let’s explore some of these programs.

DC HPAP

The DC Home Purchase Assistance Program (DC HPAP) is a government-backed initiative designed to assist low-to-moderate income individuals purchase a home.

What is the DC Home Purchase Assistance Program (DC HPAP)?

The DC Home Purchase Assistance Program (DC HPAP) provides first time homebuyers with up to $202,000 in down payment assistance through a deferred, zero-interest loan. The amount you could receive depends on your income and household size. In addition to the down payment assistance, eligible households may receive up to $4,000, or 4% of the purchase price, for closing costs.

How does DC HPAP work?

The DC HPAP offer’s a deferred zero-interest loan to low- to moderate-income residents. For those with moderate incomes, the loan is deferred for the first five years, with monthly principal payments beginning in the sixth year and continuing over a 40-year period. For very low-income borrowers, the loan requires no monthly payment, until you sell, move, or refinance your home.

DC HPAP Eligibility and requirements

To qualify for the DC HPAP program, you must be a first time homebuyer and the head of the household. Your household income must fall within the levels set by the Department of Housing and Community Development (DHCD). The home you buy must be your primary residence and located within the District of Columbia.

DC HPAP Benefits

The DC HPAP program offers several benefits for eligible homebuyers in Washington, D.C. The pogram provides interest-free deferred payments, allowing buyers to receive a loan for the down payment without accruing interest during the deferral period. The program includes flexible repayment terms, with no monthly payments for very low-income households and manageable payments for moderate-income buyers. Additionally, HPAP helps with closing costs, covering expenses like appraisal fees and title insurance.

How To Apply for DC HPAP

To apply for the DC HPAP program, you should begin by reaching out to a DHCD-funded community-based organization (CBO). These organizations are equipped to guide and support you throughout the application process. After you complete your application, the CBO will forward it to the appropriate administrator to request a Notice of Eligibility (NOE).

Once you receive your NOE, you’ll need to undertake pre-purchase homeownership training. This training covers important aspects of the homebuying process, including budgeting, credit management, and understanding closing costs.

How to find a DC HPAP Mortgage Lender

To find a participating DC HPAP mortgage lender, visit the DCHFA website for a list of approved lenders. Direct Mortgage Loans is a participating lender and can assist you through the process. Contact one of our expert Loan Officers to get started.

FHA 100% Financing

The FHA 100% Financing program allows homebuyers to obtain full financing for their home purchase without making a down payment. This is achieved by combining a first and a second mortgage, both of which are compatible with FHA loans. The second mortgage could cover up to 3.5% of the lesser of the sales price or appraised value and comes with a 10-year term.

FHA 100% Financing Eligibility and Requirements

To qualify for this program, you must have a minimum credit score of 620. Also, you must complete a Homebuyer Education course designed to guide you through the home buying process. Eligible properties include single-family homes, duplexes, manufactured homes, PUDs, townhouses, and condos.

DCHFA Mortgage Credit Certificate

The DCHFA’s Mortgage Credit Certificate (MCC), allows qualified borrowers to claim a Federal Tax Credit of 20% of the mortgage interest paid during each calendar year. To determine your eligibility, it’s best to consult with a tax advisor who can offer personalized guidance based on your specific financial situation.

Other Washington D.C. First Time Home Buyer Loan Options

FHA Loan

FHA loans are a popular choice for first time homebuyers in D.C. due to their flexible lending requirements. Borrowers can put down as little as 3.5% with a credit score of at least 580 or 10% if their score is between 500 and 579. However, mortgage insurance is required regardless of the down payment amount.

VA Loan

VA loans are a great option for eligible service members, veterans, and surviving spouses in Washington D.C. These loans, backed by the Department of Veterans Affairs, offer beneficial terms, including no down payment requirements, making them a valuable choice for those who have served.

Conventional Loan

Conventional loans offer a broad range of options for Washington D.C. homebuyers seeking alternatives to government-backed programs. These loans provide a variety of down payment options and mortgage insurance choices, giving borrowers more flexibility in their homebuying journey.

Washington D.C First Time Home Buyer FAQ’s 

Who qualifies as a first time home buyer in DC? 

To qualify as a first time homebuyer in Washington D.C., you must not have owned a residential property within the three years prior to your application. This includes not having been a co-owner, joint tenant, or having any other ownership interest in a home during that period. 

How do I qualify for a first time home buyer in Washington? 

To be considered a first time homebuyer, you must not have owned a home in the past three years. Additionally, you may need to meet other specific criteria depending on the program you are applying for. 

Is HPAP only for DC residents? 

The Home Purchase Assistance Program (HPAP) is primarily for residents of Washington, D.C. However, non-DC residents are also eligible to apply. DC resident applications are given priority, and non-resident applications are processed only after all DC resident applications have been reviewed. 

What is the minimum down payment in DC? 

The minimum down payment in D.C. varies depending on the type of loan you qualify for. For instance, certain government-backed loans, such as USDA, VA, and FHA 100% Financing loans, do not require a down payment for eligible borrowers. To determine the exact minimum down payment for your situation, speak with a Loan Officer.