If going through the home buying process in Washington DC wasn’t stressful enough, being a low-income buyer can present a range of additional roadblocks.
Not only do you need to ensure that you find a property within your budget range, but you also need to make considerations for the down payment, closing costs, mortgage payments, and any repairs or renovations that you might need to make upon moving in.
The good news for you as a low-income buyer is that there are now a good number of housing grants and loans available at both a local and federal level. There are also some notable programs offered by private lenders too.
To help you along the way we are going to list some of the best housing grants and loans available for low-income buyers in Washington DC.
Best Washington DC Loans & Grants for Low-Income Home Buyers
Home Purchase Assistance Program (HPAP)
When it comes to low-income buyer assistance in Washington DC, your first port of call should be the Department of Housing and Community Development (DHCD).
The Home Purchase Assistance (HPAP) program offers those based in the Washington DC area interest-free loans, as well as assistance with closing costs. If eligible, you can receive an interest-free loan of up to $80,000, and an additional $4,000 to help pay for closing costs.
If you are classed as a low or very low-income buyer, you are not required to repay the loan until you sell the property, or you decide to take out equity by refinancing your home.
To qualify, you need to be a first-time buyer, have a low-to-moderate income, and the property you buy must be your primary residence.
DC Open Doors
The DC Open Doors program is offered by the DC Housing Finance Agency. The concept behind the program is to provide home buyers with down payment assistance and mortgages.
To qualify, you can't currently be a homeowner, the property needs to be within Washington DC, and your income can't exceed $140,640. You will also need to ensure that you have a minimum credit score of 640. The down payment assistance on offer can be as much as 3% of the property value.
Mortgage Credit Certificate
An additional program offered by the DC Housing Finance Agency is that of the Mortgage Credit Certificate. The program allows you to use up to 20% of any mortgage interest you have paid as a credit against income tax.
For example, if you owed $10,000 in income taxes, and had already paid $20,000 in mortgage interest, you could offset 20% of this against your tax liability. This would mean that $4,000 could be credited against your tax, leaving you to pay $6,000. You can qualify for the Mortgage Credit Certificate if your total household income is $164,080 or less.
For more information about low-income home loans, be sure to read our guide.
Best Federal Mortgage Options for Low-Income Buyers
On top of exploring what’s on offer for low-income buyers at a local level, it’s also worth considering a federal grant or loan.
FHA Home Loan Program
One of the most notable federal programs for low-income buyers is the FHA Home Loan Program. The program offers low-income buyers a housing loan if you are able to cover a down payment of at least 3.5%.
To qualify, you will need to have a FICO credit score of 580 or more. If you don’t quite meet this minimum requirement but you have a score of between 500 and 579, then you’ll qualify for a loan with a down payment of at least 10%.
As an added bonus, the FHA Home Loan Program allows you to roll closing costs into the loan agreement. This means that you won’t need to find the money to pay the costs upfront.
HUD Good Neighbor Next Door Program
If you currently work in a government role such as teaching, law enforcement, firefighting, or medical services, then you might qualify for the HUD Good Neighbor Next Door Program. Offered by the Department of Housing and Urban Development (HUD), the program allows you to purchase a home at a significant discount of 50% from the listed price.
You’ll only qualify if you meet the specified employment criteria, you’re buying a single family home, and you remain in the house for a minimum of three years.
For more information on FHA programs, read our Complete Guide To FHA Loans.
Best Private Lender Programs in Washington DC for Low-Income Home Buyers
While most low-income buyers in Washington DC turn to programs offered at a local or federal level, it is also worth considering what’s offered by private lenders. One of the most notable programs for low-income buyers is the HomeOne program offered by Freddie Mac.
Freddie Mac allow you to obtain financing on a property with a down payment of 3%. To qualify, you will need to undergo a Freddie Mac risk assessment. The good news is that decisions are not based on geographical location or income, meaning that you stand a good chance of approval. However, you will need to be a first-time buyer to qualify.
Check-out our guide on the 7 Easiest Mortgage Lenders for First-Time Home Buyers.
Home Buyer Rebate
When it comes to evaluating the best low-income buyer programs for your individual needs, we highly advise you to connect with an experienced real estate agent from within the Washington DC area. They'll have excellent knowledge of the end-to-end buying process, meaning that they'll be able to provide you with guidance on which programs you'll be eligible for.
Going with a top-rated real estate agent will also give you the opportunity to make further savings along the home buying journey. This might consist of a better-negotiated sale price, or timing the Washington DC housing market to perfection.
You also have the chance of obtaining a $1,000 rebate if you use a Clever Partner Agent to buy your Washington, D.C. house, and the value of the purchase is $150,000 or more. This can be used to help towards closing costs.
For more information on how to get a home buyer rebate, be sure to read our guide.