Good Deal or Not? “Income limits apply” edition

1414 Belmont Street Northwest

This unit is located at 1414 Belmont Street, NW:


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The listing says:

“Affordable Living in Heart of DC 2 br/2 ba condo in U St. Income limits apply- $60,088 for an individual, $68, 672 for a two-person household, and $77, 256 for 3. Wood floors, large west-facing windows, community patio. Close to Metro, shops, restaurants, Busboys & Poets, Meridian Hill Park, and more. Great opportunity to own!”

You can see more photos here.

This 2 bed/2 bath is going for $297,500 ($208 monthly fee.)

91 Comment

  • want to make sure I’m clear, you can’t make over 60k as a single person…but need to qualify for a 300k mortgage? As a person in this income bracket, who owns a condo, I don’t see how anyone would qualify….?

    • Ditto. So confused by these limits. How are these numbers calculated?

      • yea, weird….I know that income requirements are typically set by the neighborhoods avg. income and you have to fall below a certain percentage. But if it is in fact 60k for a single person, I can tell you who will qualify. A youngish person who comes from wealth. A 26 yr old who’s parents are willing to cover the difference that will make the bank happy.

        • While that clearly wasn’t the original purpose, is it a terrible thing to get young blood buying in the neighborhood? Why not have those starting their careers put down roots in the community? I’m sure college educated non-profit employees would like some affordable housing too.

          • Um, pretty sure everyone would love some affordable housing. But why are they special? Why do they deserve it more? If you work at a non-profit, and choose to forgo money in order to do something you believe in, why should that entitle you to cheaper housing than the rest of us?

      • The mortgage is 60 year fixed

      • Well,

        30 yr mortgages are ~3.5%

        Assume you put 10% down you get a 270K mortgage at 3.5%, that’s ~$945 a month. Add in $100 a month for property tax, another $100 for utilities and $208 for the condo fee, your total cost of ownership is ~$1,350 for a 2 bedroom condo.

        The base assumption banks and lenders make is that you can qualify for a loan that consumes 30% of your gross income. Less if you have other debt, a little more depending on your credit.

        Assuming you can spend 30% of your pretax on your roof, that’s $1,700 a month you would spend, which is pretty doable assuming you don’t have a $1,000 dollar a month bar bill, don’t drive a BMW or don’t have six figures in school debt.

        • I have a 270k 30 year mortgage at 3.5% and it’s more like $1,200 a month.

        • Not sure how you’re getting a 30-yr mortgage for $270K at 90% LTV and 3.5% interest. It’s much more than that even without the PMI you will have to pay with only 10% down.

          You’re looking at about $1325 for your mortgage, plus condo fee and insurance. It’s exempt from property taxes because it’s low-income however, according to DC records. So there’s that.

        • Yeah, thats because your property tax is part of the payment and escrowed in. I said the total (including property tax) was ~$1045 so we are $150 bucks a month off and I don’t know what your property tax is.

          Point being, someone making the income required can quite easily afford the ~1350 a month it would cost to own.

          If you were to list a 2bd/2ba apt for rent at 14th and Florida it would rent out for $2,800-3,500 a month, so this is quite a steal. You could easily rent out the second bedroom and bath and charge $1,000 a month for it and live there damn near expense free.

          • There are typically strict leasing restrictions on these units, so I doubt you could rent out the second bedroom under the term of the deed covenants.

          • Def. not correct. A $270,000 30 year mortgage at 3.5 percent is $1,212 a month for only principle and interest on the loan. Doesn’t include escrow for property taxes or mortgage insurance. Just run it through a mortgage calculator. Mortgage insurance will be at least $100 more per month.

          • 1050/month only if you put 20% down. While doable for some – I’d imagine a majority of buyers at this income bracket won’t have 60k cash to put down.

            3% down would result in around $1600/month inclusive of condo fee and PMI (as someone said it’s exempt from property tax). That’s more then 50% of take home pay…

        • binpetworth

          Thank you. Especially your last paragraph.

          I bought a condo at roughly the same price a few years back on a then $54K salary (I had saved for a decade to put 20% down do avoided PMI). It’s completely do-able. Some of us know a bit about budgeting and don’t toss 30% of our income down the drain hitting all the latest concept restaurants and pubs.

        • At this income level, first-time buyers may qualify for FHA loans, which I believe would require very little down and relieve the burden of PMI. I lack personal knowledge on this front, so grain of salt, but that’s my rough understanding from friends, which may make better sense of the financial math

          • Very little down, yes, but FHA comes with PMI for a minimum of 5 years (even if you were to put 20% down).

        • Don’t forget the home mortgage interest deduction, which should shave at least 1/3 off your monthly payments.

          • No it won’t.

            Standard deduction is $5,950 for a single person. At 3.5% you are paying $9,450 in interest at 10% down, and you probably paid about 3k in DC income taxes. Your total deduction is $12,450, which only exceeds the standard deduction by $6,500. You save 15% of this excess, so you only save $975 a year, or $81.25 a month.

            You will only exceed the standard deduction by a few thousand, with DC Income tax and Mortgage interest being your two main deductions. At 60k, you are only saving 15% of that few thousand. Call it a

          • I have a 285k mortgage and the interest I deduct shaves around $250/month from my total payment (of course I don’t really see it that way because I get a tax refund at the end of the year but pay the mortgage monthly).

        • Your calculation does not include $$ for PMI because it is 90% loan-to-value. That would add another $200-$300 per month.

        • There is no way you can get a 3.75% rate with only a 10% down payment without paying PMI. Including property taxes, a $270K mortgage would be closer to $1,600 including PMI and taxes.

          • No need to speculate about the 3.5 vs 3.75, or PMI vs. no PMI. Call 3.5%, no PMI a best case scenario, work out the math (correctly), see how that plays out, and then realize it’ll cost more than that, because what you just calculated was the best case scenario.

    • Numbers are based on 80% of the median income for DC.

      Agree that they don’t make sense – how can someone making that afford such a place?

      I understand the developer gets kickbacks for having a certain number of units “affordable.” However that’s barely affordable for someone making 80k with a roommate paying part of the mortgage – let alone someone making only 60k….

    • When I bought 7 years ago I qualified for a home 415k and I was making aprox 74K. It was a big stretch/risk that I took. Best thing about it all is that my living expenses stayed the same, but my salary almost doubled in this time frame, and now I also have 200K of equity in my home, and was able to refinance and now my mortgage is $600 less than when I first bought.

    • I don’t see the issue that the others see. This is a 2 bedroom unit clearly designed to be inhabited by a 2- or 3-person household — therefore if your household income is 68k-77k then you can DEFINITELY qualify for a $300k mortgage (I did it).

      Even though this is probably unintentional, the income limits discourage individuals from living in 2 bedroom condos, and has the effect of reserving those spaces for 2 or preferably 3-person households (i.e. families).

    • you would probably do an FHA loan

    • When mortgage rates were much higher (around 6%), I easily afforded a $380K condo on my less than $50K salary. It was all about not having other debt, being able to save for the down payment, then continuing a frugal lifestyle when I moved into the condo to pay the mortgage. It was just that much easier to afford when my salary hit $60K.

  • Is UrbanTurf cool with PoP always leaching off their articles?

  • One of the bedrooms had 3 beds in it.

  • I’m curious about the calculus as well – the numbers don’t quite add up.

  • This doesn’t make a ton of sense. The only person who can afford this is someone who can cover the downpayment of 20%. If you have 60k laying around, not certain you should be getting a 2br on U St.

    Whoever gets it is going to be quite happy with it though.

  • Income requirements are not new or surprising. There was a requirement in place on each of the RENTAL apartments that I have lived in.

    • Maximums or minimums?

      • Minimums.

        Would they set Maximum limits for someone who was overqualified for the space??

        • I thought maybe oohbaybehbaybeh had posted quickly without reading the posting fully, and didn’t absorb what the deal was with this building.

          Minimum income requirements for rental housing are nothing new, but one doesn’t usually see income _limits_ (i.e., maximums) for rental housing or for condos unless — as with this case — the building or unit is specifically designated as affordable housing.

  • I think I must be too old for PoP commenters these days. Have any of you asking “how this makes sense” ever applied for a mortgage? If you make 60k a year, you likely meet the income requirement for a $300k loan.

    • Totally agreed. I don’t understand how people are freaking out about someone making $60k being able to afford a $300k condo. If home ownership is a priority, this should be very, very achievable for someone in this price range. That’s plenty of money and this could be a great deal for the right buyer.

    • This. People are acting like $60K is low-income. When I bought my first house I was making less than $60K and qualified for $300K, though I did have a 20% down payment. Honestly, I was pretty surprised to see $60K as the maximum income limit since it seems like a single person making that isn’t doing too bad.

      • Exactly. the purpose of these units are not for what we think of as traditional “poor” they are for working middle class people to be able to live where they work and not have to move out to the far out burbs of VA and MD. A teachers, firemen, police officers etc.

      • Yes, I was looking at this the other way. Since when is $60,000 low income, but Bloomingdale’s explanation is helpful. Now if we can find affordable housing for real poor people, like those who make minimum wage. Not sure what a full-time minimum wage person makes annually, but I don’t think it’s that.

        • The federal minimum wage is $7.25/hour. DC’s minimum wage is $8.25. Someone making DC’s minimum wage, working 40 hours/week and 52 weeks/year makes $17,160.

  • Suppose you qualify when you buy this, but then get a new job/raise/promotion? Do you have to sell?

    • binpetworth

      No, usually the income limits are only applicable for the time of purchase.

      • Correct. Which my guess is the person/people who purchased this home might now make more money and can take the equity banked in this home to apply to a new home that can appreciate at full market rates.

    • No but I’m assuming you will have to resale it to someone who qualifies under a similar program – making any potential upside a little more difficult to capture.

  • I’m reading a lot this stuff and I think everyone is actually making good comments but there seems to be a disconnect.

    1. Yes you CAN get a $300k mortgage on $60K income with present rates. I have done it.

    2. ~$320K is going to be about the most you are going to get at current rates. A friend of mine making about this just got qualified this week.

    3. SHOULD you buy a $300K condo if you make $60K a year? That’s subjective.

    5. You will never make any return on your massive investment in this property, ever.

    6. Educated buyers will not be willing to leverage themselves out the wazoo and tie up ALL of their credit to make nothing. All downside no upside.

    7. In light of 5 and 6, this is a terrible buy.

    8. If you are the kind of person that “doesn’t buy to invest,” rent. I’m not being snarky. It’s an investment with a lot of downside risk so just rent.

    • I suppose I was shocked by the 60k—>300k mortgage, bc I bought in this neighborhood a few years ago for 160k, making 45k and had a decentish down payment. I always looked at your income X 3.5 = the max amount of mortgage you should/could get.

      • FWIW, I was pre-approved for about 5.5 times my annual income (with 20% down)

        • Misread your statement. You were referring to mortgage value not purchase price. That said, I was still approved for a mortgage that would be about 4.5 times my annual income.

    • I’m genuinely curious, why would renting be a better option for someone who is not buying to invest? (i.e. buying to live there for a long time.)

      Your mortgage will be stable while rents around you go up and up, and after 30 years you have no payments at all. If you rent you’re on the hook for whatever you pay now +2-20% increases every year for the rest of your life.

    • I disagree with the premise that you will walk away with no return on your investment. The property is reassessed and set to the market value at the time of resell. So if a typical 2br in this building is selling for 50k more than it was 5 years ago, the cost of a below market value unit like this one would increased (with limits but increases) and income levels would adjust too.

      Even if the value of the unit does not increase, you are able to walk away with 100% of the principal you paid into the property that you were not giving to a landlord annually in rent.

      Sure, you can take 300k and buy a small bungalow in NE with the usual market benefits/risks, but this is another option for those not wanting to be that far away from an urban hub or take such risks investing in an emerging investment neighborhood.

      • If it’s anything else like other affordable units elsewhere in the district you can only resell it for someone qualifying under similar terms.

        I’d imagine this would hurt the resell value as you are limiting your pool of potential buyers.

        • That is true in a typical market home where you are trying to get the most money for your property, this has a cap a very large cap on the amount of money you can make from appreciation. Therefore, you are not looking for the best offer, just someone who also qualifies for the program….and believe me there are plenty of people who would take this deal in the city. There are waiting lists for units like this in new construction across the city.

      • Plus, even if you break even, the equity you put into the house is really like a profit (because it would have otherwise been thrown away as rent). Live there for 5 years, build equity, hopefully increase your salary, and then you can get a more expensive place with a larger down payment.

        • You guys are missing the point.

          With this $300,000 unit you have

          1. Downside — the market could crash, your pipes could burst, the heater could break, etc.

          2. no upside — your return is dictated to you and it is small.

          With a market-rate $300,000 unit you have

          1. Downside — the market could crash, your pipes could burst, the heater could break, etc.

          2. Upside — your house could (and USUALLY does) appreciate nicely.

          *Note, the wealth you accumulate by paying off your mortgage is not a return on investment. It is savings. You get that with BOTH types of property. Return On Investment is the amount of money that you get IN ADDITION when you sell an APPRECIATED home.

          I am saying this because I care. If you are the kind of buyer in this price range buy something in Trinidad instead. Hell buy anything market rate for $300K, you won’t be living in a slum I promise. You will thank me in five years.

          As for why you should not buy just to buy but rather to make money that is simple: Buying a home is by definition a highly leveraged investment. You could lose your shirt regardless of if you are an urban pioneer or a rural grandmother. So you better play for keeps, everyone else in the transaction is. It’s serious business and we as a nation do a woeful job of educating people about it.

    • Assuming that you can still rent out this property, this could still be a viable investment from all the rental income you can pull in. I wouldn’t personally pass up years of potential returns in equity, but it could perhaps make sense for someone else.

      • As someone mentioned earlier – income restricted property’s usually have fairly stringent requirements and require the owner to occupy.

        Might be able to get away with renting out the second bedroom but it could be against policy.

        • Ok, that’s what the rules say. But if DC is anything like NYC, it won’t be enforced AT ALL. And do you honestly believe DC would have the resources to investigate it? I don’t.

          Anyone have actual experience with this stuff? Anyone subletting an “affordable” home in DC?

          I did this in NYC with an amazing 1BR apartment in Chelsea that was located in a 12 building affordable co-op. The owner was paying $700/month for her mortgage, utilities and fees (we paid her $1800). We had to lie and say we were her cousins. Eventually, the neighbors left us alone and stopped asking questions.

    • Re points #5 and #8: typically these types of affordable properties are geared toward people who are looking to put down roots in a community and buy an affordable home in a decent neighborhood, not necessarily people who are looking at their home as an investment. An earlier commenter brought up younger workers as a potential buyer demographic, but this type of unit and price point could also appeal to older buyers who are solidly middle-class and whose $60,000 salaries are near the maximum of their earning potential. (I’m sure there are thousands of clerical or administrative civil service jobs that fit into this category, for example, or various types of paraprofessional positions in education or healthcare.) Ditto a single parent who’s making a solid civil service or nonprofit income in the high $60s/low $70s and has one or two kids. As for reasons why it might be more attractive to buy instead of rent, even if you aren’t looking for an investment, there are a number: the autonomy to do what you want with your interior space (paint, buy the appliances/fixtures you want, etc.) and protection from being displaced by fast-escalating rents, to name two big reasons.

  • A question from someone who doesn’t know much about these things. Why is it 60,088 for a single person but 68,672 for a couple? Why not 60,000 for one person or 120,000 for two? I’m sure I’m missing something. I get that couples split housing expenses but still, it seems odd that my boyfriend and I (we both have salaries in the 40s) could qualify for an apartment each but not one together.

    • Making 85,000 you can afford a full market rate 2br apartment in DC. You could possibly qualify for close to 500k in a mortgage.

      The requirement allows for joint filers of a dual income couple who maybe each make 35k a year or a stay at home parent with a single family income of 60k.

    • I get what you’re saying, but a couple making $120K in no way would need or qualify for affordable housing. The $60K max for a single person is a bit confusing, but maybe as Bloomingdale suggested it’s geared more toward single parents or single income families.

  • This thread has reached its logical conclusion, but people need to be aware that “breaking even” isn’t simply selling it for what you bought it for.

    Real estate tyros constantly forget that it costs money to sell your place. Between the transfer taxes, realtors fees, settlement fees etc, selling your condo or house will cost you damn near 10%, meaning you only “break even” if you are selling your condo for 10% more than you paid for it.

    • Very true.

      Also people NEED to understand that the equity you build simply by paying off your mortgage is not PROFIT. It is savings.

      PROFIT is what you get when you sell an appreciated asset.

      At any point in time, this home and a similarly priced market rate home will yield the same SAVINGS from paying off the mortgage. The market rate home will yield you additional PROFIT. Therefore there is a huge opportunity cost to buying this place. This cost gets larger the larger you stay.

      All of this affordable housing stuff is a MESS. It does not help build wealth like all of the NGO leaches who suck down salaries claim. An educated buyer would never into such an arrangement.

  • I wonder if this is a building where a certain number of units are market rate, with a small portion set aside as “affordable.”

    If so, this building might be having the same problem as the building at 2910 Georgia Avenue is currently having:

    See:
    http://www.washingtoncitypaper.com/blogs/housingcomplex/2012/12/14/georgia-avenue-developer-sues-city-over-inclusionary-zoning/

    … and, from http://www.washingtoncitypaper.com/blogs/housingcomplex/2012/06/06/why-inclusionary-zoning-isnt-working-yet/ :

    “The problem is, you can’t get a mortgage — or not very easily, at least. Most low- to moderate-income buyers want to get a Federal Housing Administration-backed loan. But the banks that FHA works with don’t want to issue loans on properties that can’t be resold at market rates in the event they go into foreclosure. As currently structured, the District’s IZ [inclusionary zoning] program keeps those affordability restrictions in place, so FHA is a non-starter.”

  • I don’t know whether this is a good deal or not. But it does illustrate why the angst that accompanies announcements about “affordable” housing coming to a particular neighborhood is so unwarranted. People assume “affordable” means “low income” when in fact, the threshold is too high for many white collar professionals to meet.

    • For what it’s worth, though, “affordable” seems to include all kinds of different scenarios — from set-asides in otherwise market-rate buildings, to all-”affordable” buildings, to city-run (?) housing projects with waiting lists.

  • At least the interior of that building looks infinitely better than the exterior.

  • Dont these units have serious resell/rental restrictions? I thought it wsa 20-30 years for it to stay affordable. So the buyer cant just turn around and sell it for a massive market rate profit. Its kind of pointless to buy if you have no chance to get any equity. The city is currently being sued by another developer because of the stupid and overly restrictive guidelines on affordability. No bank wants to make a loan to someone who cannot get any appreciation out of the property.

    • It might be pointless to you, but as a single parent who currently pays $1600/mo in rent for a smaller apartment several Metro stop north of this on a $57K/yr salary, something like this appeals to me. I’d be closer to work and my kid’s school and pay less money for more space. Will I get equity? No, but I also won’t have to worry about rising rents every year either.

      I’m not interested right now, as don’t have enough money for a downpayment and several posters upthread have talked about the difficulty with getting loans on a place like this, but still. I understand the appeal.

  • You can get a roommate for the 2nd bedroom probably for 1,200 per month. Still a bad deal? And yes, I checked and you can rent the 2nd room as long as you also live there

    • Or if you’re in a serious relationship but unmarried, just invite your partner to move in with you and split the mortgage.

  • Wow – I actually did very well in (crazy, treacherous, somewhat accidental and many years with many room-mates) real estate, but I have no idea what most people are talking about here.

  • I used to work right there in a shelter for homeless families with a health clinic on the first floor.

  • I’m sorry, but reading through this makes it clear to me that the push for all of this “affordable” housing in DC is misappropriated funds. The money will end up going to (1) yuppies early in their career who start off making little money but will be making close to six figures in a matter of 5-7 years, (2) folks who will take on roommates and charge market rates for the rent of their second bedrooms thereby essentially living for free, or (3) folks who will (albeit illegally) sublet the apartments at market rate and keep the difference.

    I know that we have good intentions here, but the system ignores economics and human nature. Even if subletting is illegal or looked down upon, the invisible hand of economics will make it a certainty. It will happen, and it will happen for folks who have subsequently progressed in their careers and are pulling in close to $100,000 or more per year.

    Again, good intentions, but wrong approach. We’re better off letting people apply for “down payment grants” and targeting folks who are in the affordable category and will likely stay there (e.g., teachers, firemen, police, etc.)

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