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 market statistics from GCAAR, the median home price in June 2024 was $710,525 in DC. At that price, a buyer would need approximately $57,000 in cash (down payment plus closing costs) to purchase a home using a 5% down mortgage, and for many, saving that much money can take years, forcing them to continue renting.
This article intends to raise awareness of various programs that provide financial assistance to first-time homebuyers in Washington, DC. Unfortunately, many clients blindly proceed through the home-buying process, leaving significant savings on the table. 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 pretty expensive, totaling roughly 3% of the sale price. The single most significant cost comes from the Transfer Tax. Transfer Tax is a sales tax for purchasing a home. Every state/county is different around the country. In DC, the tax is 1.1% for sale prices under $400k and 1.45% for prices over, paid by each buyer and the seller. That’s right, 2.2% – 2.9% of the sale price fills the DC coffers!
The Transfer Tax Reduction reduces the fee to .725% for First-Time Home Buyers meeting certain income thresholds. Using the median home price as an example, a buyer qualifying for this program would save $5,150!
Click here For more detailed information on income limits and qualification requirements.
Transfer Tax Abatement
This program is fantastic for those who qualify and often goes unnoticed! If you are purchasing a home priced less than $552,000 and meet the household income requirements ($82,200 for a single person and $93,900 for two people), you will receive these three different benefits:
- Removal of Buyer Transfer Tax (.725% of the sale price)
- Seller's Tax credited towards buyer’s closing costs (1.1% – 1.45% of the sale price!)
- Live Property-Tax Free for five years!
Using a home priced at $520,000, this program's total savings would be approximately $28k!
For a deeper dive into the household income limits, click here to view the application from the D.C. Office of Tax and Revenue.
DC Open Doors
Unlike the first few programs, which specialize in closing costs, this government-sponsored program offers Down Payment Assistance for all home buyers with a qualifying annual income of less than $199,200. (Income is based on borrower's income ONLY, not household income!) While there is no maximum sale price, the loan amount cannot exceed $766,550.
If you find a seller willing to pay your closing costs, you can use DC Opens Doors to purchase a home with NO MONEY OUT OF POCKET!
For more information about DC Open 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 assistance loans up to $202,000 and closing cost grants of $4,000.
Getting your funds from this program is no walk in the park, but it can be worth it! HPAP may be the most complicated of all the programs, so I recommend reviewing their fact sheet and income limit table to see if you qualify. Be aware that the money allocated to this program may be exhausted quickly!
As you can see, Washington, D.C., has excellent programs to save home buyers real money! If you want to discuss these in more detail, book an appointment with our team. You can also call or text us at 202.899.2603.
Take your first step into homeownership by speaking with one of our trusted advisors!