First-Time Home Buyer in DC | 2022 Programs and Scholarships

What to know about buying a home in Washington DC

Being a first-time homebuyer in Washington DC can seem like a daunting prospect; most houses in the district are extremely expensive.

But there is also good news. You could be online for all kinds of help, from special mortgages to home buying education courses.

Indeed, some DC homebuyers 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 thought.

Check Your Home Buying Eligibility at DC Start here (February 10, 2022)


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DC Homebuyer Preview

The median sale price in the district was $740,000 in November 2021, according to Realtor.com. This is much higher than the national median price.

But first-time home buyers may be queuing up for help, which can put homeownership within reach, even at these high prices.

And there was a glimmer of good news. DC real estate listing prices rose just 4.2% in the 12 months ending November 2021. And that was just a fraction of the national average.

DC Home Buyer Overview
Average DC Home Selling Price $740,000
Minimum CD deposit (3%) $22,200
20% deposit at DC $148,000
Average DC Credit Score1 713
DC Home Buyer Loan Maximum2 Up to $84,000 through the DC government’s Home Purchase Assistance Program (HPAP)

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

If you qualify for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the United States Department of Agriculture), you may not need a down payment at all..

Check Your Home Buying Eligibility at DC Start here (February 10, 2022)

Loans for buying a first home in DC

If you’re a first-time buyer in Washington DC with a 20% down payment, you can get a conventional loan with a low interest rate. And you’ll never have to pay for private mortgage insurance (PMI). The same goes for buyers all over the country.

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

DC homebuyers can often buy a new home with as little as 3% or even 0% down payment using one of these low down payment mortgage programs:

  • Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment and 620 credit points minimum. You can usually stop paying mortgage insurance after a few years
  • FHA loan – Supported by the Federal Housing Administration. 3.5% down payment and a minimum credit score of 580. But you are responsible for mortgage loan insurance until you refinance another type of mortgage, move house, or pay off your loan.
  • VA Loan – Only for veterans and military. No deposit is required. Minimum credit score varies by lender, but often 620. No outstanding mortgage insurance after closing. These are arguably the best mortgages available, so apply if you qualify
  • USDA Loan – For low to middle income people buying in designated rural areas. No deposit required. Credit score requirements vary by lender, but often 640. Low mortgage insurance rates
  • DC OpenDoors Mortgage – “Competitive interest rates and lower mortgage loan insurance costs. Plus the possibility of mortgage credit certificates giving mortgage interest deductions from federal taxes

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

These programs even allow you to use donated cash or down payment assistance to cover the down payment and closing costs.

If you’re unsure which plan to choose for your first mortgage, your loan officer can help you find the right plan for you based on your finances and buying goals.

Find the best first-time buyer loan for you (February 10, 2022)

DC Home Ownership Programs

The DC Housing Finance Agency (DCHFA) ​​offers a range of homeownership programs, including its DC Open Doors offering. This promises “competitive interest rates and lower mortgage loan insurance costs on the 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 DC Open Doors loan, the main eligibility criteria require that you:

  • Choose a lender from a list of participants in the program
  • Have a credit score of 620 or higher
  • Do not earn more than $151,200 per year (this is the borrower’s income, not the household’s)
  • Take out a mortgage of $510,400 or less

These are early 2022 numbers and you should check the website to see that they still apply when you read this.

To find out more, book your place at one of DCHFA’s bi-monthly “information sessions,” which take place online. There is a calendar on this web page. Or you can simply get in touch with one of these participating lenders.

You may also be in line for a Mortgage Credit Certificate (MCC). According to the DCHFA website, an MCC “offers qualified borrowers the opportunity to claim a federal tax credit of 20% of mortgage interest paid in each calendar year.”

Grants for DC First Time Home Buyers

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

It is a deferred installment loan, which means that you do not make monthly payments.

Instead, you repay the amount you borrowed in full (without interest) under the following circumstances: “30 years from the loan closing date; the sale or any transfer (by gift or otherwise) of the property to another person, company or entity; the property ceases to be your principal residence or refinances your first trust [main] mortgage.”

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

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

The DHCD agreement is very similar to that offered by DCHFA. It’s a no-interest, no-monthly deferred loan that you repay when “the property is sold, refinanced to take equity, or is no longer [the borrower’s] Principal residence.”

If you are a first responder or an employee of the DC government (not the federal government), you should check out the district’s installment assistance specials.

Check Your Home Buying Eligibility at DC Start here (February 10, 2022)

Where to Find Help Buying a Home in DC

The two organizations we’ve listed above should provide advice freely to any first-time home buyer in Washington D.C.

The US Department of Housing and Urban Development (HUD) also provides a list of city-specific programs in the district. These are:

What are the current mortgage rates in DC?

Mortgage rates vary by borrower. Your own interest rate depends on factors such as your credit score, loan program, down payment, etc.

Compare mortgage 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 for help with the down payment and closing costs. These programs could seriously reduce the barrier to buying your first home.

Show me today’s rates (February 10, 2022)

1 Source: Experian.com 2021 study of 2020 data

2Based on a review of available DPA grants from the state at the time of writing this article

The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent company or affiliates.

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