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First-Timer Primer: DC’s Home Buyer Assistance Programs

by Lark Turner

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This article was originally published on UrbanTurf in 2013, but we re-publish from time to time to remind readers of the homebuyer programs available in DC.

Whether you’re buying a home for the first time or looking to move, several programs in the DC area are available to assist buyers. Homebuyer assistance programs can be a bit complex, though, so this edition of First-Timer Primer aims to provide some clarity. This article looks at programs in DC proper, but we hope to do similar pieces on programs in Maryland and Virginia as well.

  • DC Open Doors: If you qualify for this program (and many do), it could be a simple way to get part of a deposit loan forgiven if you plan to be in the city awhile. DC Open Doors is designed to provide down payment assistance to homeowners who may exceed the income levels of other assistance programs (individuals earning up to $123,395 a year are eligible). To qualify, applicants likely need to have a credit score of 640 or higher and a maximum debt-to-income ratio of 45 percent. The program will offer a loan of either 3.5 or 3 percent of the home price to be used as a down payment (for either an FHA-backed loan or a standard loan through Fannie Mae). For every year you stay in the home, 20 percent of that loan is forgiven.
  • Individual Development Account (IDA) program: An IDA is designed to help those with a lower-income buy a home. The program sets participants up with a savings account, held in escrow, that’s matched to help build up the investment and encourage saving. At Capital Area Asset Builders in DC, participants in the IDA program receive dollar-for-dollar matches while attending classes and receiving training on finances and budgeting — before they make the big purchase.
  • Home Purchase Assistance Program (HPAP): HPAP gives first-time buyers interest-free loans and help with closing costs to those who qualify. The amount awarded is based on income, the size of your household, and the amount of your down payment. HPAP offers a maximum of $40,000 in assistance and an additional $4,000 in closing. The list of eligibility criteria is long, though.
  • Employer Assisted Housing Program (EAHP): This program is for first-time homebuyers who work for the city. DC will match down payments by up to $1,500 and a deferred loan of up to $10,000. If you qualify, you’ll receive more incentives, like income and property tax credits for the first five years. For this program, a home purchase cannot exceed $417,000.
  • Lower-Income Home Ownership Tax Abatement: Eligible buyers could enjoy up to five years without property tax. Sound good? You need to meet the income requirements and live in the home, which must be worth less than $356,000.

Read more on the District’s housing strategy that aims to give middle income buyers a shot at owning a home in DC.

See other articles related to: first-timer primer, dclofts

This article originally published at http://dc.urbanturf.com/articles/blog/first-timer_primer_a_rundown_of_dcs_home_buyer_assistance_programs/7974

12 Comments

  1. DC2380 said at 5:31 pm on Thursday January 9, 2014:

    Man, I wish I would have known about these programs before I made my purchase. Sucks sometimes when you are single with a part time job, but make too much to ever qualify for any assistance. Esp. when the part time job is mainly to pay student loans

  1. Zesty said at 11:37 am on Friday January 10, 2014:

    Good info…Open Doors is really good if you make less than the cutoff.

  1. Andi said at 1:52 pm on Friday January 10, 2014:

    To be clear, with the Open Doors program, the subordinate down payment loan is forgiven at a rate of 20% per year, not the home loan.

  1. Lark Turner said at 2:05 pm on Friday January 10, 2014:

    Hi Andi,
    Thanks for the feedback. I’ve updated the language there for clarity.
    —Lark Turner

  1. NavyYard said at 1:27 pm on Friday March 21, 2014:

    What about similar programs in Virginia and Maryland?

  1. Lark Turner said at 2:12 pm on Friday March 21, 2014:
  1. Loan Officer said at 8:38 am on Tuesday August 12, 2014:

    For First-Timer Primer: DC’s Home Buyer Assistance Programs, can we use this program on rehab homes?
    Thank you,

  1. Francisco said at 5:09 pm on Thursday November 13, 2014:

    Little caveat about the Opens Doors programs as I just recently went through the home buying process and elected not to use Opens Doors. The interest rate is (significantly) higher than a conventional loan and you are going to end up paying PMI for the life of the loan.

  1. http://www.GetDCSold.com said at 8:05 pm on Sunday November 16, 2014:

    @Loanofficer-I think you can use it on rehab homes. It just has to be your first home purchase.

  1. Mari said at 6:34 pm on Sunday April 26, 2015:

    Does anyone know of any homebuyer programs for people with not so great credit. Like a program that will counsel you to improve credit and then help with the purchase of a home?

  1. First-time homebuyer said at 1:13 pm on Thursday June 18, 2015:

    The HPAP program for first-time homebuyers is great in theory but the timeline it requires is nearly impossible to accommodate in a seller’s market like DC. The program does not have a good reputation with real estate agents, as they are wary of the 45-60 days needed to close. As I discovered, it is difficult to find a seller willing to work with you on that long a timeline. It will require a lot of patience on your part, as you will likely need to make offers on several homes before you find a seller who accepts. I am using the program to buy a coop unit and am at 60 days and counting with no settlement date yet set. The delay is mostly due to the bank’s negligence; however, the extra 10-12 days that HPAP adds cannot be avoided or shortened, and my earnest money deposit is sitting exposed to litigation. It has been a entirely stressful and painful two months. I hope that the HPAP process is revamped because otherwise the program will not be able to best serve the low-to-moderate income population it was meant to help most.

  1. First-time homebuyer said at 1:39 pm on Thursday June 18, 2015:

    Adding one more thing. The HPAP program further requires a very strict inspection process. I had a total of four (yes, four!!) inspections conducted on a two-bedroom coop in great shape with hardwood floors and remodeled kitchen and bath. I paid for the first inspection, was required to fix a few things as per HPAP requirements, then had to pay for the re-inspection. Once I passed re-inspection, HPAP sent their own inspector on their own dime. In this particular case, more problems were found, more money spent to fix these problems (requiring yet more negotiation with the sellers), and then another re-inspection took place.

    I recognize these inspections are for a good purpose; no low-income first-time homebuyer should get into a sticky situation in which they are living in unsafe conditions and can’t pay to fix them. Additionally, it makes sense that the program wants to do what it must to protect its investment in you and your new home.

    However, I paid a significant amount of money on inspections and a lot more “fixing” things I didn’t want to change. For example, to protect my non-existent children from falling out of windows that don’t have screens, we drilled screws into the windows to prevent them from opening more than 6 inches. When and if I ever move in, I’ll need to fix the damage.

    HPAP undermines your ability to make smart decisions and to negotiate with the sellers for a credit at closing. All the back and forth doesn’t do much for goodwill between buyer and seller—-especially when you’re weeks overdue for closing.

    Again, the benefits of the program are incredible. But you should be aware of the drawbacks to the process and make an educated decision on whether or not to apply for HPAP funding.

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