New DC Program Offers Down Payment Assistance To Higher Income Buyers

• July 17th 2013

by Shilpi Paul

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A new program from the DC Housing Finance Agency (HFA) seeks to help potential homeowners who have good salaries and the intention to live in DC, but not enough savings for a significant down payment on a home. By targeting higher income earners, it’s a departure from existing home buyer programs that are typically designed for low or middle income households.

DC Open Doors is a essentially mortgage program that can provide down payment assistance for those with an income of up to $123,395. First-time homeowners and existing homeowners are both eligible.

Through participating lenders, HFA will offer a loan of either 3.5 or 3 percent of the home price (for either an FHA-backed loan or a standard loan through Fannie Mae).

To encourage homeowners to stick around, the city is making the deal even sweeter: every year, 20 percent of the loan is forgiven. If the homeowner stays in their home for 5 years, the loan will never have to be repaid and essentially converts into equity. The program is aimed at young professionals with good jobs who haven’t yet amassed any savings.

With the new program, HFA made a strategic decision to widen the pool of eligible home buyers from previous programs like DC Bond, HFA’s Director of Single Family Programs Carisa Stanley told UrbanTurf. The household income cap is significantly higher than in previous programs, and the participant can buy a home in any ward in the District. (For most of the loan products offered, a minimum credit score of 640 is required and the borrower must have a maximum debt-to-income ratio of 45%.)

“At $107,000, the Area Median Income (AMI) in DC has risen over the last few years, and the average purchase price for a home now exceeds $450,000,” said Stanley. “We wanted to tie our program directly to what is happening in the city.”

This article originally published at https://dc.urbanturf.com/articles/blog/new_program_offers_down_payment_assistance_to_those_making_up_to_123000/7321.