First-Time Home Buyer Programs in D.C.

First-Time Home Buyer Programs in D.C.

As home prices rise, it becomes increasingly more difficult for First Time Home Buyers to purchase a new home.  Higher prices lead to more money needed for a down payment!  According to a report from MarketStats by Bright MLS, the median condo price in January 2019 was $431,500 in the district.  At that price, a buyer would need approximately $27,500 in cash (down payment plus closing costs) to purchase a home using a 3% down mortgage.  For many, saving that much cash can take years which forces them to continue renting. 

The intent of this article is to bring awareness to various programs that provide financial assistance to first-time home buyers in Washington, DC.  Unfortunately, many clients blindly move through the home buying process.  In some cases, that means they could be leaving significant savings on the table.  Or worse yet, they may squash their thoughts of buying a home altogether.

Below is a list of all Home Buyer Programs available in Washington, DC.   

First-Time Home Buyer Transfer Tax Reduction

It’s no secret that closing costs for a home in DC are quite expensive, totaling roughly 3% of the sale price.  The single largest cost comes from the Transfer Tax.  Transfer Tax is basically a sales tax for purchasing the home.  Every state/county is different around the country.  In DC, the tax is 1.1% for sale prices under $400k and 1.45% over paid by each the buyer and the seller.  That’s right, 2.2% – 2.9% of the sale price goes to the DC tax man!

The Transfer Tax Reduction simply reduces the fee to .725% for First-Time Home Buyers meeting certain income thresholds.  If we use the median condo price as an example, a buyer qualifying for this program would save $3,128! 

For more detailed information on income limits and qualification requirements, click here to view the full application.  

Transfer Tax Abatement 

This program is amazing for those who qualify and often goes unnoticed!  If you are purchasing a home priced less than $479,066 and meet the household income requirements ($65,220 for a single person and $74,520 for two people), you would receive these three different benefits:

  • Removal of Buyer Transfer Tax (.725% of sale price)
  • Sellers Tax credited towards buyer’s closing costs (1.1% – 1.45% of the sale price!)
  • Live Property-Tax Free for five years

Using the same house priced at $431k, the total savings of this program would be approximately $25k! 

For a deeper dive into the household income limits, click here to view the application from D.C. Office of Tax and Revenue.

DC Opens Doors

Unlike the first few programs which specialize on closing costs, this government sponsored program offers Down Payment Assistance for all home buyers with annual income less than $140,640. If you find a seller who is willing to pay your closing costs, you can use DC Opens Doors to purchase a home with ZERO DOWN! 

This program hasn’t quite taken off like many thought it would.  Mostly because you can use lender credits on regular conventional loans to offer similar benefits at lower mortgage rates.  If you are interested in DC Opens Doors, click here to learn more.

Home Purchase Assistance Program (HPAP)

If you mention this product to most Realtors in DC, you might see them cringe.  Why is that?  Well, most lenders do not fully understand how to manage the process which has caused settlement delays and a bad reputation for the program!  HPAP offers tremendous value with down payment loans up to $80k and closing cost grants of $4k. 

Getting your funds from this program is no walk in the park, but it can totally be worth it!  HPAP may be the most complicated of all programs, so I recommend reviewing their fact sheet and income limit table to see if you qualify. 

As you can see, Washington, D.C. has great programs to save home buyers real money!  If you would like to discuss these in more detail, be sure to book an appointment with our team.  You can also call or text us at 202.899.2603. 

Take your first step into home ownership by speaking with one of our trusted advisors! 


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