on Monday, October 28th, 2013 at 9:10pm.
The DC Housing Finance Agency (HFA) has a new program called DC Open Doors to help with down payment costs. Generally, such programs are targeted to low income residents, but DC Open Doors assists potential homeowners with incomes up to $123,395.
With an Area Median Income of $107K and an average home price over $450K, HFA realized that they needed a program to encourage homeownership and help people over the hurdle of a down payment. The $123,395 income limit only applies to the borrower, not the entire household.
DC Open Doors is a mortgage program offered through participating lenders, including Wells Fargo Bank and First Home Mortgage, among others. HFA offers residents a down payment assistance loan (DPAL) for 3% (with an HFA Preferred loan) or 3.5% (with an FHA Plus loan) of the home price. Generally, borrowers need a credit score of 640 or better and a debt-to-income ratio of 45% or less to qualify. There is no limit on the price of the home, but the mortgage loan is limited to $417K.
After submitting the loan application, applicants are required to take eight hours of free homebuyer education classes in person or online. The classes cover topics like budgeting, understanding credit, shopping for a home, and protecting your investment.
If you stay in the new home for five years, the HFA loan will be completely forgiven with no repayment. However, if you stay in the home for less than five years, 20% of the loan is forgiven each year. No monthly payments are required on the DPAL; payment is only required if you sell, refinance, or move.
The DC Open Doors program is not just for first-time buyers. Repeat buyers can also take advantage of the program. However, it is not available for investors.
The program aims to entice young professionals, who may not have savings, to invest in DC real estate as a longterm home. DC Open Doors makes homeownership more affordable in all parts of the city.