What you need to know when buying a home in Washington DC
First-time home buyers in Washington DC, on average, face high home prices that are well above the national average.
But there's good news: You may be able to get all kinds of help, from special mortgage loans to homebuyer education courses and even down payment assistance. Make sure you explore all your options to find out how to make buying a home in DC more affordable.
Start here to find out if you qualify to buy a home in DC
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DC Home Buyer Overview
Home purchase prices are actually falling in Washington, DC: The average sales price in May 2024 was $697,450, which is a 3.3% increase from the previous year, according to Redfin.
But don't let rising home prices put you off buying a home. First-time homebuyers in Washington DC may be eligible for assistance that can make rising home prices within reach.
Start here to find out if you qualify to buy a home in DC
DC Home Buyer Statistics
DC Average Home Sale Price1$697,450DC Minimum Down Payment (3%)$20,924DC 20% Down Payment$139,490DC Average Credit Score2717DC Best Loan for Home Buyers3Up to $84,000 through the DC Government Home Buying Assistance (HPAP) Program
Down payment amounts are based on the average recent available home sales price in that state. The “minimum” down payment assumes a 3% down payment on a conventional mortgage with a minimum credit score of 620.
If you qualify for a VA loan (guaranteed by the Department of Veterans Affairs) or a USDA loan (guaranteed by the United States Department of Agriculture), you may not need a down payment at all.
First Time Home Buyer Loans in DC
First-time homebuyers in Washington DC can get a conventional loan with a low interest rate if they make a 20% down payment, and they don't have to pay private mortgage insurance (PMI).
Of course, very few first-time homebuyers have saved up a 20% down payment. But the good news is that you don't need that much. Not at all. Borrowers can often purchase a new home with just 3% or even 0% down by taking advantage of one of these low down payment mortgage programs:
Find the best first-time homebuyer loan for you. Start here: Conventional 97: Offered by Freddie Mac or Fannie Mae. 3% down payment, credit score 620 or higher. You can usually stop paying private mortgage insurance (PMI) after a few years. FHA Loan: Insured by the Federal Housing Administration. 3.5% down payment, credit score 580 or higher. But you'll have to pay mortgage insurance premiums (MIP) until you refinance to another type of mortgage, move, or pay off the loan. VA Loan: Only available to veterans and active military. No down payment required. Minimum credit score varies by lender, but is usually 620. Mortgage insurance doesn't continue after settlement. These are arguably the best mortgages available, so apply if you qualify. USDA Loan: For low- to moderate-income buyers in designated rural areas. No down payment required. Credit score requirements vary by lender, but are often 640.Low Mortgage Insurance Premiums DC OpenDoors: “Competitive interest rates and low mortgage insurance premiums.” Plus, mortgage credit certificates allow you to qualify for a federal mortgage interest deduction.
Keep in mind that government loan programs (including FHA, VA, and USDA mortgages) require you to purchase a primary residence, meaning you can't use these loans for a vacation home or investment property.
Additionally, most programs allow you to use gift funds or down payment assistance (DPA) to cover down payment and closing costs. Depending on your mortgage, you may be able to purchase your new home with minimal cash down.
If you're not sure which program to choose for your first mortgage, a lender or real estate agent can help you find the right program based on your financial situation and homebuying goals.
DC First Time Home Buyer Program
The DC Housing Finance Agency (DCHFA) has a variety of homebuyer assistance programs aimed primarily at helping low- and moderate-income households purchase single-family homes sooner than they might have originally thought.
Start here to find out if you qualify to buy a home in DC
DC Open Door (DCOD)
DC Open Doors promises “competitive interest rates and low mortgage insurance premiums on initial trust.” [main] If you qualify, you can combine it with the down payment assistance programs described in the next section.
To qualify for a DC Open Doors loan, you must meet the following key eligibility criteria:
Choose a lender from a list of lenders participating in the program Have a credit score of 640 or higher Meet the median income limit of $154,800 per year (note: this is the borrower's income, not household income) Get a mortgage of $647,200 or less
These are the figures for early 2023, so you'll need to check the website to see if they still apply when you're reading this article.
If you would like to learn more, please attend one of DCHFA's twice-monthly “information sessions” conducted online, or you can contact one of the participating financial institutions.
DC4ME
For first-time homebuyers, DC4ME loans can offer low-interest 30-year mortgages that also come with optional financial assistance to put up to 3% of the loan amount towards a down payment.
You must complete a homebuyer education class and have a credit score of at least 640. Additionally, there are limitations on loan amount, household income, and purchase price. To learn more about the requirements, check out the link to the DC4ME loan website in the resources section below.
DC First Time Home Buyer Grants
DCFHA helps first-time homebuyers become homeowners with generous down payment and closing cost assistance programs. To qualify for these assistance programs, you must have a DCFHA mortgage.
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DC Open Door DPA
The DC Open Doors program offers a zero-interest loan up to the full amount needed for a down payment. This is a deferred down payment loan with no monthly payments.
Instead, you must repay the entire loan amount borrowed (without interest) in the following circumstances: “30 years from the closing date of the loan; if you sell or transfer (by gift or otherwise) the property to another person, company, or entity; if the property ceases to be your primary residence; or if you refinance the original trust.” [main] mortgage.”
Home Purchase Assistance Program (HPAP)
In addition to DCHFA offerings, the DC Department of Housing and Community Development (DHCD) offers a homebuying assistance program.
Eligible applicants can receive up to $202,000 in gap financing assistance and an additional $4,000 in closing cost assistance, where the “gap” is the difference between the amount of savings and the down payment requirement.
The amount of loan you qualify for is based on your income and the number of people in your household.
DHCD's deal is very similar to the one offered by DCHFA. It's a no-interest deferred loan with no monthly payments required, but “if the property is sold, refinanced to extract equity, or is no longer available, the loan can be repaid.” [the borrower’s] Primary residence.”
Employer Assisted Housing Program (EAHP)
If you are a first responder or work for the DC government (not the federal government), please see the resources section below for a link to a special down payment assistance agreement for government employees.
DCHFA Mortgage Credit Certificate
You may also be eligible for a Mortgage Credit Certificate (MCC), which, according to the DCHFA website, “entitles eligible borrowers to claim a federal tax deduction of 20 percent of the mortgage interest paid each calendar year.”
Where to get home buying help in DC
The organizations listed above should offer free advice to first-time home buyers in Washington DC.
The U.S. Department of Housing and Urban Development (HUD) also provides a list of city-specific programs across the District. These include:
Start here to find out if you qualify to buy a home in DC
What are current mortgage rates in Washington DC?
Mortgage interest rates vary from borrower to borrower. Your interest rate will be determined by factors such as your credit score, the loan program, and your down payment.
When you're ready to start the home-buying process, try a mortgage calculator to see how your down payment and interest rate will affect your mortgage payments. Then, get individual interest rate quotes from at least three to five mortgage lenders.
Don't just look at rates advertised online, apply for pre-approval and compare the rates and fees you're offered, because that's the only way you'll know you're getting the best possible terms on your new mortgage.
Time to move? Find the mortgage that's right for you
1Source: Redfin Washington DC Housing Market Report
2Source: Experian.com research based on 2021 and 2020 data
3Based on a review of state DPA grants available at the time this article was written