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Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Washington D.C., the average 30-year fixed mortgage rate is 5.56% — up from 2021's historic lows. This raises the average monthly mortgage payment to $2,516 (assuming a 20% down payment at the median home value).
But buying a home in Washington D.C. is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Washington D.C. with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
🔑 Key takeaway:
Your down payment can be less than 20% of the purchase price — $110,047 for the typical home in Washington D.C. — but you'll have to purchase mortgage insurance and pay more interest over the life of your loan.
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Washington D.C. want you to contribute 20% of the purchase price as a down payment. That would be $110,047 for a $550,237 home — the typical home value in Washington D.C..
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on home values from Zillow (August 2022) and a 5.56% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
» READ MORE: Everything you need to know about low-income home loans
Washington D.C. down payment assistance programs
There are a few down payment assistance (DPA) programs designed with Washington, D.C. residents in mind. If you qualify, these programs can provide you with a grant or second mortgage to pay for a down payment or cover closing costs.
Here are a few regional resources that you may qualify for:
DCHFA Home Purchase Assistance Program
The D.C. Housing Finance Authority’s (DCHFA) Home Purchase Assistance Program offers an interest-free loan of up to $80,000 to low-income buyers. Some borrowers may be eligible for an additional $4,000 to pay for closing costs. This loan must be repaid once the home is resold or refinanced.
Moderate-income homebuyers can qualify for this program, but they're required to start paying it off after five years.
DCHFA DC Open Doors Program
The DCHFA’s DC Open Doors Program offers a deferred 0% interest loan that can completely cover the minimum down payment of a home. The program is open to first-time and repeat homebuyers.
To qualify, the borrower must have a credit score of at least 640 and earn less than $151,200 annually.
U.S. Department of Housing and Urban Development
Additional programs for D.C. homebuyers can be found through HUD.
Step 2: Find a great real estate agent in Washington D.C.
🔑 Key takeaway:
Interview multiple agents to find one who knows your target neighborhoods, has experience in your price range, and communicates well.
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Washington D.C..
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Step 3: Get preapproved for a mortgage
🔑 Key takeaway:
Once you're preapproved for a mortgage, it's imperative that your financial situation doesn't change. If your credit drops, it can derail the process and keep you from closing on your house.
Here are some easy ways to ensure your credit doesn't change after you receive your preapproval letter:
- Avoid opening new credit accounts
- Don't close any accounts that have been open for a long time
- Make all of your credit card payments on time
» LEARN MORE: What factors do mortgage lenders consider?
A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Washington D.C. will require preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Washington D.C. home.
Step 4: Choose the right location
🔑 Key takeaway:
Search for neighborhoods where:
- Home prices are within your price range
- Home values are on the rise
- The local amenities support your lifestyle
Currently, the typical home value in Washington D.C. is $550,237, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Washington:
Home value appreciation in Washington
Step 5: Start house hunting in Washington D.C.
🔑 Key takeaway:
Prices in Washington, D.C. are starting to level out, while market inventory is slowly coming up. While you may have an easier time finding something in your budget, you may still have to be flexible with your must-haves list. Talk to your realtor to get their take on your desired neighborhood or amenities and whether or not your budget is feasible for that area. If you keep an open mind and take a look at all the listings they recommend, you'll find your new home without breaking the bank.
Searching for homes in Washington D.C. is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Washington D.C. can have a big impact on your number of options. For example, in Washington D.C., September has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, December gives you the fewest choices in Washington D.C.. Historically, there are 55.6% fewer homes for sale than during Washington D.C.'s peak season.
Housing inventory in Washington D.C. by season
New listings per month
Based on data from Realtor.com (October 2022)
Step 6: Make an offer
🔑 Key takeaway:
While homes are sitting on the market for quite a while, if you find the perfect home you shouldn't wait around to make an offer. Nice homes in desirable neighborhoods will still go quickly, so you'll want to make sure you have your ducks in a row. Talk with your real estate agent about all your options for contingencies and concessions when considering your offer. They'll make sure your offer is competitive, but also a great deal for you.
Once you find a Washington D.C. house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Washington D.C., homes stay on the market for 39 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Washington D.C. homes sell fastest in April, where the average property is only on the market for 32 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in January, you have a bit more time to search. Homes typically stay on the market 19 days longer than Washington D.C.'s annual average.
Average time homes spend on market in Washington D.C.
Based on data from Realtor.com (October 2022)
» LEARN MORE: What should an offer include?
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
🔑 Key takeaway:
- Inspections: A licensed professional checks the house for any unseen, unexpected, or potential issues.
- Appraisals: An appraiser hired by your lender examines the house to determine how much it's worth.
Home inspections in Washington D.C.
Having your Washington D.C. home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Washington D.C.-specific inspections
Sellers in Washington, D.C. are required to disclose known property issues to interested buyers, but some problems may go unnoticed. Buyers are strongly encouraged to take extra precautions by having a few specialized tests completed in addition to a general home inspection.
Although these inspections aren't required, they can reveal potential health and safety hazards that might devalue a home. Before closing on a D.C. home, think about conducting the following tests:
- Radon testing: Exposure to high levels of radon can cause long-term health complications, so consider doing a test if the seller hasn't performed a test within the past year. You can order a free radon test kit from the D.C. Department of Energy and Environment here.
- Pest inspection: Not all lenders require buyers to have a pest inspection completed before closing, but it's a smart move regardless. Termites and other household pests can pose health and safety hazards that could be easily mitigated with early detection.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
» LEARN: 3 options for buyers after a low appraisal
Step 8: Close on your new home!
🔑 Key takeaway:
Before you close on your new home, you and your agent will do a final walkthrough of the property to ensure that it's still in the expected condition.
To finish closing on your D.C. home, you'll need to complete the necessary paperwork and settle your closing costs.
On the closing date, you'll meet at the title company to review and sign several documents. It's highly recommended to study the paperwork ahead of time to make sure you fully understand what you're signing.
A few common real estate forms will include:
- The mortgage note
- The deed
- The disclosure statements
After finishing the paperwork, you'll have to pay the closing costs. For homebuyers, closing costs can usually be divided into four categories:
- Lender fees: Fees paid to your lender for originating and underwriting your loan.
- Title and escrow charges: Charges paid to the title company for their research, documentation, title transfer, and other services.
- Prepaid costs: Ongoing costs of homeownership, like property taxes and homeownership. Some lenders require borrowers to pay these fees up front when buying a house.
- Other closing fees: Miscellaneous fees that vary for each buyer. These expenses may cover pest inspections, flood insurance, real estate attorney fees, and other services.
Buyers in Washington D.C. typically pay 3–5% of the purchase price in closing costs. For a $550,200.00 home — the typical home value in Washington D.C. — that's between $16,506 and $27,510!
Frequently asked questions
In Washington D.C. it's required for a real estate attorney to be part of every home sale. While your agent can make recommendations, remember you get to make the final decision. Interview lawyers before hiring them to make sure they have the experience you need.
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Washington D.C. neighborhoods
- Partner with the right real estate agent in Washington D.C.
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes! The Washington State Housing Finance Commission offers its House Key Opportunity Program to first-time buyers. Eligible participants can get competitive interest rates if they have an FHA, VA, or USDA loan. Buyers with conventional loans may be eligible for a rate discount if they earn less than 80% of their area's median income.
To qualify, you need to be within the household income and purchase price limits set for your county. If you're accepted, you'll have to complete a homebuyer education course.
Why trust us?
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We’ve earned buyers’ trust with a rating of 4.9 out of 5 starts on Trustpilot and over 1,800 customer reviews.
Our team of industry-leading researchers are committed to making homeownership more accessible by educating buyers through guides like this one. We've spent thousands of hours analyzing publicly available data, surveying consumers, and interviewing industry experts. Our research has been featured in The New York Times, Business Insider, Inman, Housing Wire, and many more.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.