DC’s Home Purchase Rehabilitation Program

• October 25, 2010
• 5 Comments

by Joe Marhamati

The Department of Housing and Community Development (DHCD) has introduced a new pilot program that will allow first-time home buyers to purchase homes that are in need of limited repairs using FHA’s 203(k) loan program in conjunction with DC’s Home Purchase Assistance Program (HPAP) program. Eligible home repairs include everything from structural work and plumbing and electrical work to painting, weatherization, basement finishing and other cosmetic finishes.

HPAP provides interest-free loans and closing cost assistance to low to moderate-income applicants in DC. The loan amount is based on a combination of factors, including income, household size, and the amount of assets that each applicant must commit toward a property’s purchase. Eligible applicants can receive a maximum of $40,000 in down payment assistance and an additional $4,000 in closing cost assistance. The HPAP zero-percent interest loan is deferred for the first five years and amortized over 40 years. The 203(k) loan is essentially a home improvement loan, but applicants must meet a list of requirements before taking advantage of it.

The new pilot program, which began on October 1st, gives first-time buyers in DC the option to purchase properties that require a little repair in order to fix health and safety concerns or building code violations. It provides loans via the Federal Housing Administration’s (FHA) 203(k) Streamlined Rehabilitation Program as a first trust lending product, in conjunction with an HPAP or other DC purchase assistance second trust loan. The 203(k) Rehabilitation Program provides a loan amount between $5,000 and $35,000 for repairs and DC’s HPAP program acts as a second trust loan for down payments and closing cost assistance. The Greater Washington Urban League is administering the new program in conjunction with HPAP. The applicant must apply for HPAP with a Community Based Organization and attend general HPAP training. The applicant must also attend a separate mandatory 203(k) streamline class.

Interested homebuyers should contact a housing manager at DHCD at 202-442-7200 for more information to get started.

This article originally published at http://dc.urbanturf.com/articles/blog/dcs_home_purchase_rehabilitation_program/2601

5 Comments

1. Mike said at 12:22 pm on Monday October 25, 2010:

   I am assuming to be eligible for these loans, it also requires eligibility as a first time DC homebuyer, including the income level thresholds set up by the first time homebuyer credit?  Can anyone confirm that?

1. Joe Marhamati said at 1:36 pm on Monday October 25, 2010:

   That’s right Mike, in order to quality for these loans you must qualify for HPAP, which includes being a first-time buyer and falling under the income limits.

1. Q-Street said at 2:00 pm on Monday October 25, 2010:

   That is correct. You must be a first time home buyer. The income level limit is set by the Home Purchase Assistance Program.

   I can’t tell from the DHCD information on the pilot whether they are using the income limit for full eligibility or the higher income limit that is eligible for closing costs assistance only.

   So for an individual or a family of 4 it would be either:
   Individual - 60,200
   Family of 4 - 91,350

   Or under the higher limit:
   Individual - 79,700
   Family of 4 - 120,950

   Seems like an interesting pilot, although I suspect the 203k loans will trend towards the smaller side given the income limits and the affordability of an additional loan (interest free or not) on top of a mortgage in a fairly expensive housing market.

   I think it’s an A+ idea for helping low/moderate income people first time home buyers make minor repairs to their new home. Probably not very meaninful in the sense that it’s going to lead to an increase of big 35k loans for real fixer-uppers.

1. Kim Henderson said at 3:38 pm on Monday October 25, 2010:

   To learn more about HPAP, visit http://www.gwul.org or http://www.dhcd.dc.gov.  The Urban League administers HPAP on behalf of DHCD. The League is holding a Realtor Forum on November 3 at 10:30am at 2901 14th Street NW where we will discuss this new pilot.

1. CBMendez said at 2:04 pm on Tuesday October 26, 2010:

   I keep coming back to this question. Given the state of our economy and the exsisting housing stock, why limit these programs to low/mod income and first time buyers. Why not open them up to investors who rehab these homes as “affordable” based on the same income/ownership guidelines. Why limit the funds to inexperienced rehabbers? My first remodel was (as expected) over time and over budget. Happens a lot. Those with experience can and do turn more of these properties and faster. They are the ones who will visit the home centers and appliance stores, repeatedly. They are the ones who will hire the good landscapers and roofers, as trusted sub-contractors. They are the ones who have cash reserves, even when the banks are not lending.

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