What to know about buying a house in Washington D.C.
Washington D.C. first-time home buyers face steep housing prices on average — well above the national median. But there’s good news, too. You might be in line for all sorts of help, from special mortgages to home buyer education courses and even down payment assistance. Explore all your options to find out how you can buy a house in D.C. more affordably.
In this article (Skip to...)
- D.C. home buyer overview
- Home loan options
- D.C. home buyer programs
- First-time buyer grants
- D.C. mortgage rates
D.C. home buyer overview
Home purchase prices are actually down in Washington D.C. The median sale price was $650,000 in May 2022, according to the District of Columbia Association of Realtors. That’s a 5.3% decrease year over year, although it’s still higher than the median price nationwide — which was $428,000 in June 2022.
But don’t let these high home prices discourage you from becoming a homeowner. First-time buyers in Washington D.C. may be in line for help, which can put homeownership within reach even at those high prices.
D.C. home buyer stats
|Average Home Sale Price in D.C.1||$650,000|
|Minimum Down Payment in D.C. (3%)||$19,500|
|20% Down Payment in D.C.||$130,000|
|Average Credit Score in D.C.2||717|
|Maximum D.C. Home Buyer Loan3||Up to $84,000 through D.C. Government's Home Purchase Assistance (HPAP) program|
Down payment amounts are based on the state's most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.
If you're eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.
First-time home buyer loans in D.C.
If you’re a first-time buyer in Washington D.C. with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI). The same goes for buyers anywhere in the nation.
Of course, few first–time buyers have saved a 20% down payment. But the good news is, you don’t need that much. Not by a long shot.
D.C. home buyers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:
- Conventional 97: From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying private mortgage insurance (PMI) after a few years
- FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan
- VA loan: Only for veterans and active-duty service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
- USDA loan: For those on low–to–moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
- D.C. OpenDoors mortgage: “Competitive interest rates and lower mortgage insurance costs.” Plus, the possibility of mortgage credit certificates giving mortgage interest deductions on federal taxes
Depending on the loan program you choose, you could potentially get into a home with very little cash out of pocket.
If you’re not sure which program to choose for your first mortgage, your loan officer can help you find the right match based on your finances and home buying goals.
D.C. first-time home buyer programs
The D.C. Housing Finance Agency (DCHFA) has a range of home buyer programs, including its DC Open Doors offering. This promises “competitive interest rates and lower mortgage insurance costs on first trust [main] mortgages.” If you qualify, you can combine this with a down payment assistance program, which we’ll cover in the next section.
To qualify for a DC Open Doors loan, the main eligibility criteria require you to:
- Choose a lender from a list of those participating in the program
- Have a credit score of 640 or higher
- Meet median income limits of no more than $154,800 annually (note: that’s borrower income, not household income)
- Take out a mortgage loan of $647,200 or less
Those are mid-2022 figures, and you should check the website to see that they still apply when you read this.
To learn more, reserve your place at one of DCHFA’s twice-monthly “informational sessions,” which are conducted online. There’s a calendar on this webpage. Or you could just get in touch with one of those participating lenders.
You may also be in line for a mortgage credit certificate (MCC). According to the DCHFA’s website, an MCC “provides qualified borrowers the ability to claim a Federal Tax Credit of 20 percent of the mortgage interest paid during each calendar year.”
D.C. first-time home buyer grants
DCFHA can help first-time buyers become homeowners with its generous down payment and closing cost assistance programs. You’ll need to use a DCFHA mortgage to be eligible for these assistance programs.
DC Open Doors DPA
The DC Open Doors program provides an interest-free loan up to the full amount you need for your down payment.
This is a deferred down payment loan, meaning you don’t make monthly repayments.
Instead, you repay the loan amount you borrowed (with no interest) in full in the following circumstances: “30 years from the date of loan closing; sale or any transfer (by gift or otherwise) of the property to another person, business, or entity; property ceases to be your principal residence, or refinancing your first trust [main] mortgage.”
DHCD Home Purchase Assistance Program
In addition to the DCHFA’s offering, the D.C. Department of Housing and Community Development (DHCD) has a Home Purchase Assistance Program (HPAP).
DHCD says, “Eligible applicants can receive a maximum of $80,000 in gap financing assistance and an additional $4,000 in closing cost assistance.” The “gap” there is the difference between your savings and down payment requirements.
The loan amount you qualify for will be based on your income and household size.
The DHCD’s deal is very similar to the one the DCHFA is offering. It’s an interest-free, deferred loan with no monthly repayments unless “the property is sold, refinanced to take out equity, or is no longer [the borrower’s] primary residence.”
Employer-Assisted Housing Program
If you’re a first responder or work for the D.C. government (not the federal government), you should check out the District’s special down payment assistance deals for government employees.
Where to find home buying help in D.C.
The organizations we’ve listed above should provide advice freely to any first-time home buyer in Washington D.C.
The U.S. Department of Housing and Urban Development (HUD) also provides a list of city-specific programs across the District. These are as follows:
- DC Department of Housing and Community Development: Provides first-time homeownership opportunities to low-to-moderate income residents
- District of Columbia Housing Finance Agency: Homebuyer programs, including down payment and closing cost assistance
- Habitat for Humanity: Through volunteer labor, builds houses for families in need
What are today’s mortgage rates in D.C.?
Mortgage rates vary by borrower. Your own interest rate depends on factors like your credit score, loan program, down payment, and more.
Compare mortgage loan quotes from at least three different lenders to make sure you’re getting the lowest rate and upfront fees possible. Borrowers who do this often save thousands of dollars on their home loans.
And don’t forget to ask your lender or real estate agent about down payment and closing cost assistance. These programs could seriously lower the barrier to buying your first house.
1Source: District of Columbia Association of REALTORS Local Market Insight Report
2Source: Experian.com study of 2021 and 2020 data
3Based on a review of the state's available DPA grants at the time this was written