Get Smart With City Chic: Guide to DC’s First Time Home Buyer Programs

PoP Sponsor November 10, 2022 at 12:15pm

Get Smart With City Chic is a bi-weekly column giving you the real talk rundown on what’s happening with the D.C. real estate market. Sponsored and written by Lindsay Dreyer, the broker/owner of City Chic Real Estate.

Can you really buy a house with zero down?

Buying your first home can be exciting and scary. The most overwhelming part is figuring out how to finance your purchase and making sense of all your options.

The great news? D.C. has some awesome first time homebuyer programs available. Before we dive into specifics, let’s define a few terms.

Down Payment: Upfront money to purchase a home.
Closing Costs: Additional fees due at closing, above and beyond your down-payment, such as fees for an attorney, a title search, title insurance, taxes, lender costs and some upfront housing expenses such as homeowners insurance. Usually 3-4% of sales price.
Transfer/Recordation Tax: Tax charged at closing by the city/county/state.
Private Mortgage Insurance (PMI): What you usually pay when you put less than a 20% down payment. PMI insures the mortgage for the lender in the event that the borrower defaults.

Okay, get to it… show me the money! Here’s the lowdown on D.C.’s first time homebuyer programs.

PS — income and price limits change annually, so these numbers are for 2022.

Overview: 30 year fixed, FHA or conventional loan where they give you 3-3.5% down-payment assistance. The down payment assistance is an interest free loan that is repaid when you sell, move out, or refinance.
Income Limit: $154,800
How to Apply: Through a participating lender

Overview: Up to $202,000 in down-payment assistance. Closing cost assistance is provided separately and cannot exceed $4,000. Amount of assistance and repayment terms depend on your income.
Income Limit: Review the assistance table to determine your eligibility.
How to Apply: Contact one of the Community Based Organizations (CBOs) listed under “Housing Counseling” category.

Overview: Down-payment assistance for D.C. government employees and first responders of $10,000 to $20,000. The down-payment assistance is an interest free loan that is repaid when you sell, move out, or refinance.
Income Limit: No limit, but must be a D.C. government employee
How to Apply: Contact one of the Community Based Organizations (CBOs) listed under “Housing Counseling” category

Overview: Offers mortgages at a reduced interest rate, plus an option for 3% down-payment assistance. The down payment assistance is an interest free loan that is repaid when you sell, move out, or refinance.
Income Limit: Maximum household income may not exceed 120 percent Area Median Income (AMI)
How to Apply: Through a participating lender

Overview: This is a dollar-for-dollar credit toward your federal income tax liability. The annual credit is equal to 20% of the annual mortgage interest you pay. The MCC is effective for the life of the mortgage, as long as you live in the home.
Income Limit: $154,800 for a 1-2 person household
How to Apply: Through a mortgage lender who participates

Reduction in Recordation Tax: The buyer does not pay for the recordation tax, which is 0.725% to 1.45% of the sales price. Also, instead of the seller paying the their transfer tax (1.1%-1.45%), the transfer tax is credited to the buyer.
5 Year Property Tax Relief: The buyer doesn’t pay for property taxes for five years. This does not begin until the following October after closing.
Income Limits: There are income restrictions based on household income. One person household is $75,600. Two person household is $86,400, and it goes up from there. Sales price maximum of $548,000.
How to Apply: You must apply at closing to be eligible, so working with a title company in D.C. who is familiar with this program is important.

There you have it… all the ways you can get money and save money with D.C.’s first time homebuyer programs! Have questions? Totally confused? We are here to help connect you with resources to explore your options.

City Chic Real Estate is a woman owned, independent real estate company, specializing in helping first time buyers and sellers in the DMV. Book a no pressure, intro call with our team at citychicre.com/popville.