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DC First Time Home Buyer Program Offers Up to $202K

A DC first time home buyer who qualifies for DC’s Home Purchase Assistance Program could receive as much as $202,000 for down payment assistance and gap financing beginning October 1, 2022.

This is incredible news for DC first time home buyers, as it represents an increase of more than 2.5 times the current maximum amount, which is $80,000. Money from HPAP is issued as a low interest loan that can be deferred for up to the first 5 years.

A DC first time home buyer who’s trying to purchase in today’s market is having to overcome a median sales price of about $562,766, according to Urban Turf, which is up year over year despite a supposed slowdown due to rising interest rates.

HPAP funds can be used for down payment assistance and/or gap financing, plus qualified HPAP applicants can receive up to $4,000 in additional closing cost subsidies.

The 202 figure is in fact a nod to DC’s area code, according to the Washington Post. DC first time home buyer assistance from HPAP is provided on a sliding scale depending on income level and the size of the household (assuming other eligibility requirements are satisfied) with HPAP loans ranging from $70,000 all the way to $202,000.

What are the eligibility requirements for HPAP?

To qualify for the District’s Home Purchase Assistance Program, you must satisfy the following criteria:

  • Head of the household AND a first time home buyer
  • Low-to-moderate income resident, based on the Department’s standards
  • Cannot have had ownership interest in any residential real estate within the 3 years prior to application
  • Purchased home must be the borrower’s primary residence AND located in DC
  • Good credit rating

You can view a copy of the Home Purchase Assistance eligibility table below:

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More DC First Time Home Buyer Programs

While DC’s HPAP program is making headlines this week, it’s not the only program available to DC first time home buyers. In fact, DC offers several types of home buying programs to help make homeownership more affordable.

DC Tax Abatement

The DC Tax Abatement program was designed by the District of Columbia to help lower income residents purchase property.

Home buyers who qualify for DC Tax Abatement are exempt from paying DC Recordation Tax at settlement. They also receive an allowable credit from their seller(s) that’s equal to the DC Transfer Tax.

What’s more, DC Tax Abatement recipients are exempt from paying their property taxes for the first 5 years they live in the home, beginning the next full tax year. What a great deal for first time home buyers in DC!

Qualifying properties must not exceed a certain purchase price threshold, while incomes of DC Tax Abatement applicants must not exceed a certain household limit. Contact us if you need assistance with DC Tax Abatement. We’re more than happy to help you file your qualified application as part of the settlement process.

DC First Time Home Buyer Reduced Tax Rate

District of Columbia lawmakers designed the Reduced Recordation Tax Rate benefit to ease the tax burden for DC first-time homebuyers who qualify.

Under the reduction benefit, the recordation tax paid at settlement for houses and condos is reduced to 0.725%. (Transfer taxes paid by the seller remain unchanged at 1.1% or 1.45% depending on the sales price.)

To receive the DC first-time homebuyer recordation tax reduction benefit, your title company will file an application with the Office of Tax and Revenue at closing. They will require you to provide the proper documentation showing you satisfy the property and household income requirements and that you meet the criteria of a DC first-time homebuyer.

DC Employer Assisted Housing Program (EAHP)

People who work for the District of Columbia and are also first time home buyers may be eligible for down payment and closing cost assistance through the city’s Employer Assisted Housing Program. (Note that a first time home buyer is defined as someone who has not had a principal residence in DC for the previous three years.)

To qualify, government employees must be in Good Standing meaning no adverse action by their District government employer in the past three years.

Typically, DC requires you to be employed there for one year to receive the home buying benefit. However, police officers, corrections officers, firefighters, emergency medical technicians, paramedics and teachers in a public or public charter school are exempt from this waiting period.

Those who qualify can receive up to $20,000 in a no-interest loan that requires no payments until either the property is sold or transferred, it’s no longer occupied as principal residence, or the mortgage loan is refinanced with cash out. In addition to that, beneficiaries can also receive up to $5,000 in a matching grant. And for first responders, the benefits are even greater.

Other DC Home Buyer Programs / Benefits

DC Open Doors

The DC Open Doors Program provides home purchase loans plus down payment and closing cost assistance for DC home buyers who qualify.

The program is not exclusive to first time home buyers, but there are eligibility requirements around credit scores and income thresholds.

Those who qualify can receive a Down Payment Assistance Loan that does not have to be paid back until any one of the following: 30 years from the date of loan closing have passed, a sale or any transfer (by gift or otherwise) of the property to another person, business, or entity takes place; or the property ceases to be your principal residence; or if refinancing your first trust mortgage.

DC Open Doors is facilitated by the DC Finance Housing Agency, which describes itself as a uniquely created and organized financial intermediary and administrator of affordable housing programs and resources for the District of Columbia.

DC Homestead Deduction

Your property’s assessed value for tax purposes could be reduced by as much as $74,850 with the Homestead Deduction. Second, you are entitled to an assessment cap such that your property may not be taxed on more than a 10% increase in the property’s assessed value each year.

Additional property tax savings is available to qualifying homeowners who are senior citizens and homeowners with disabilities.

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