D.C. First-Time Home Buyer | 2022 Programs and Grants

What to know about buying a house in Washington D.C.

Being a Washington D.C. first–time home buyer can seem like a daunting prospect; most homes in the District are eye–wateringly expensive.

But there’s good news, too. You might be in line for all sorts of help, from special mortgages to home buyer education courses.

Indeed, some D.C. home buyers receive down payment assistance, which could help you cover any shortfall in your savings. So you could be moving into your first home sooner than you dreamed possible.

Verify your home buying eligibility in D.C. Start here (Feb 11th, 2022)

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D.C. home buyer overview

The median selling price in the District was $740,000 in November 2021, according to Realtor.com. That’s much higher than the median price nationwide.

But first–time buyers may be in line for help, which can put homeownership within reach even at those high prices.

And there was a glimmer of good news. Home listing prices in D.C. rose by only 4.2% during the 12 months ending in November 2021. And that was only a fraction of the nationwide average.

D.C. Home Buyer Overview
Average Home Sale Price in D.C.	$740,000
Minimum Down Payment in D.C. (3%)	$22,200
20% Down Payment in D.C.	$148,000
Average Credit Score in D.C.1	713
Maximum D.C. Home Buyer Loan2	Up to $84,000 through D.C. Government’s Home Purchase Assistance (HPAP) program

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

Verify your home buying eligibility in D.C. Start here (Feb 11th, 2022)

First–time home buyer loans in D.C.

If you’re a first–time buyer in Washington D.C. with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI). The same goes for buyers anywhere in the nation.

Of course, few first–time buyers have saved a 20% down payment. But the good news is, you don’t need one.

D.C. home buyers can often get into a new home with as little as 3% or even 0% down using one of these low–down–payment mortgage programs:

• Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
• FHA loan – Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
• VA loan – Only for veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
• USDA loan – For those on low–to–moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
• D.C. OpenDoors mortgage – “Competitive interest rates and lower mortgage insurance costs.” Plus the possibility of mortgage credit certificates giving mortgage interest deductions on federal taxes

Depending on the loan program you choose, you could potentially get into a home with very little cash out of pocket.

These programs even let you use gifted money or down payment assistance to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage, your loan officer can help you find the right match based on your finances and home buying goals.

Find the best first-time home buyer loan for you (Feb 11th, 2022)

D.C. first–time home buyer programs

The D.C. Housing Finance Agency (DCHFA) has a range of home buyer programs, including its D.C. Open Doors offering. This promises “competitive interest rates and lower mortgage insurance costs on first trust [main] mortgages.” If you qualify, you can combine this with a down payment assistance program, which we’ll cover in the next section.

To qualify for a D.C. Open Doors loan, the main eligibility criteria require you to:

• Choose a lender from a list of those participating in the program
• Have a credit score of 620 or higher
• Not earn more than $151,200 annually (that’s the borrower’s income, not the household’s)
• Take out a mortgage loan of $510,400 or less

Those are early–2022 figures and you should check the website to see that they still apply when you read this.

To learn more, reserve your place at one of DCHFA’s twice–monthly “informational sessions,” which are conducted online. There’s a calendar on this webpage. Or you could just get in touch with one of those participating lenders.

You may also be in line for a mortgage credit certificate (MCC). According to the DCHFA’s website, an MCC “provides qualified borrowers the ability to claim a Federal Tax Credit of 20 percent of the mortgage interest paid during each calendar year.”

D.C. first–time home buyer grants

The DCHFA’s down payment assistance program can be used in conjunction with one of its mortgages. It provides an interest–free loan up to the full amount you need for your down payment.

This is a deferred down payment loan, meaning you don’t make monthly payments.

Instead, you repay the amount you borrowed (with no interest) in full in the following circumstances: “30 years from the date of loan closing; sale or any transfer (by gift or otherwise) of the property to another person, business, or entity; property ceases to be your principal residence, or refinancing your first trust [main] mortgage.”

In addition to the DCHFA’s offering, the D.C. Department of Housing and Community Development (DHCD) has a Home Purchase Assistance Program (HPAP).

DHCD says, “Eligible applicants can receive a maximum of $80,000 in gap financing assistance and an additional $4,000 in closing cost assistance.” The “gap” there is the difference between your savings and down payment requirements.

The DHCD’s deal is very similar to the one the DCHFA is offering. It’s an interest–free, deferred loan with no monthly payments that you repay when “the property is sold, refinanced to take out equity, or is no longer [the borrower’s] primary residence.”

If you’re a first responder or employee of the D.C. government (not the federal government), you should check out the District’s special down payment assistance deals.

Verify your home buying eligibility in D.C. Start here (Feb 11th, 2022)

Where to find home buying help in D.C.

Both the organizations we’ve listed above should provide advice freely to any first–time home buyer in Washington D.C.

The U.S. Department of Housing and Urban Development (HUD) also provides a list of city–specific programs across the District. These are as follows:

What are today’s mortgage rates in D.C.?

Mortgage rates vary by borrower. Your own interest rate depends on factors like your credit score, loan program, down payment, and more.

Compare mortgage loan quotes from at least three different lenders to make sure you’re getting the lowest rate and upfront fees possible.

Borrowers who do this often save thousands of dollars on their home loans.

And don’t forget to ask your lender about down payment and closing cost assistance. These programs could seriously lower the barrier to buying your first house.

Show me today’s rates (Feb 11th, 2022)

¹ Source: Experian.com 2021 study of 2020 data

²Based on a review of the state’s available DPA grants at the time this was written