First Time Home Buyers In Washington DC May Qualify For The Home Purchase Assistance Program (HPAP)
If you’re a first time homebuyer that wants to buy a home in Washington DC but you’re having trouble coming up with a down payment or you’re worried about paying for closing costs the Home Purchase Assistance Program can help you buy a home.
What Is The Home Purchase Assistance Program?
The costs of a down payment and closing costs can make buying a home in Washington DC difficult for low to moderate income people. The Home Purchase Assistance Program was created by DC Finance Housing Agency to bridge the gap and help low to moderate income people purchase a home in Washington DC. Loans can be up to $202,000 for a down payment and up to $4000 for closing costs.
People who qualify for HPAP can get a no-interest loan to help with the down payment and closing costs when they buy a home in DC and they don’t have to start making payments on the loan for six years if they have moderate income. The loan is paid back over the course of 40 years so the payments are typically very manageable. Very low income households may not have to make monthly payments at all.
If you ever sell the property the loans must be repaid. The repayment terms of the loan state that:
“The entire loan amount becomes immediately due and payable if the borrower transfers the property, the property is refinanced (unless the refinance meets certain conditions), or the property ceases to be the borrower’s primary residence.”
With low monthly payments that don’t start for six years or no monthly payments at all depending on your situation that makes it much easier for low or moderate income to buy a new home in Washington DC.
Who Is Eligible For The Home Purchase Assistance Program?
The HPAP was created specifically to help low and moderate income people with the costs of buying a home in DC. So there is an income requirement that applicants must meet in order to be eligible for HPAP.
To be approved for a loan from HPAP applicants must earn 110% of the Area Median Income or less based on the amount of people in the household. Anyone that earns more than the Area Median Income cannot qualify for a loan through HPAP. You can learn more about the current income limit amounts here. Other eligibility requirements for HPAP state that applicants:
- Be a first time homebuyer and head of their household.
- Be a DC resident that is a low to moderate income earner.
- Have had no ownership in any residential real estate property in the last 3 years.
- Show financial readiness and credit worthiness.
- Intend to use the property as their primary residence.
HPAP funds can be used towards the purchase of a single family home, condo, or townhouse as long as it is your primary residence. HPAP can’t be used to buy investment property or second homes. If you are a low to moderate income earner and you want to buy a home but your credit isn’t great there are some things that you can do to fix your credit. Read our guide to getting ready to buy a home to get started. You can also contact us if you have any questions about HPAP and how to apply.
Getting Ready For Home Ownership
If you didn’t know about HPAP you’re not alone. Many DC residents don’t realize that there is down payment assistance and help with closing costs available for them. If you have put off buying a home or assumed that you couldn’t afford to buy a home because you weren’t able to save up a large down payment you should start thinking about buying a home in DC.
Rental prices in the DC area have increased more than 15% and the average one bedroom apartment in Washington DC now rents for $2,400 a month. A two bedroom apartment rents on average for $3,200 a month. Renters that are paying those kinds of rents can pay similar amounts for a mortgage and own a home instead of renting. With no-interest loans from the Home Purchase Assistance Program renters can borrow up to $80,000 for a down payment which will put them in a great position to buy a new home in DC rather than rent.
If you’re considering buying a home in the next year with help from HPAP the first thing that you should do is pull your credit report and make sure it’s accurate. Then figure out how much house you can afford, and how much house you need. You can use this guide to help you figure out the first steps in getting your finances ready so that you can buy a new home.
You should also talk to one of our agents who can help you find the right neighborhood for you and your family and guide you through the process of buying your first home. Make 2023 the year you leave renting behind and start investing in your future by investing in home ownership.