By TED SMITH
D.C. is a city that prizes home ownership. In addition to contributing to the financial wellbeing of the city and the tax situation of the individual homeowner, home ownership creates stable neighborhoods and increases a sense of community.
Toward that end, three programs in place or on the horizon are encouraging people to buy homes in the city:
The HPAP program (Housing Purchase Assistance Program) has been in place for a number of years. It is designed to assist low- and moderate-income buyers with a down payment or second mortgage loan of up to $40,000 for their first home in D.C. (defined as not having owned a home in three years). HPAP can function as a gap loan for first trust loans (i.e. mortgages) above $417,000, or can be part of a down payment. HPAP is a loan, with zero payments and zero accrued interest for the first five years, but is then repaid as a principal-only loan over the next 40 years. The loan must be repaid in full if the property is sold.
There are many restrictions on HPAP loans. To see them, please check the program page on the DC.gov site. Be sure to check out the list of approved lenders.
The DC Open Doors program is a relatively new program this summer designed to assist moderate-income individuals in making a down payment on a home, whether first time or not. The program is designed to assist individuals who make enough salary to qualify for a mortgage (up to $123,395) but do not have a down payment saved. DC Open Doors will contribute 3 percent for a conventional mortgage that adheres to Freddie Mac guidelines, or 3.5 percent for an FHA-backed mortgage. Unlike HPAP, Open Doors is available only for down payment assistance. Further, the loan does not need to be repaid if you stay in your home for five years or more.
For more information on restrictions and qualifications, please check out the program description on the DC Housing Finance agency web site at dchfa.org.
Finally, there is a move on the horizon to lower or eliminate the transfer and recordation taxes that are paid by both sellers and buyers of homes and condos. Currently, both parties pay a 1 percent tax for properties with a sold price of up to $400,000 and a 1.45 percent tax for properties over $400,000. The DC Tax Revision Commission is considering a number of proposals, one of which is to either remove this tax altogether, or to reduce it to a 0.433 percent transfer record tax like Virginia’s.
If you want more information about this, please check out the options #55 through #60 being considered by the Commission: http://media.wix.com/ugd/ddda66_22484a55cead0d301d92b011b9deeb27.pdf
To voice your opinion, please write the Commission at: D.C. Tax Revision Commission
1101 4th St., S.W., Suite W770, Washington, D.C. 20002.
D.C. Reach him at TedSmithSellsDC@stagesrealtors.com and follow him on www.Facebook.com/MidCityDCLife , www.Youtube.com/TedSmithSellsDC or @TedSmithSellsDC. You can also join him at monthly free seminars for first-time homebuyers or weekly tours of open houses specifically geared toward first-time buyers and in a different neighborhood each week. Sign up at www.meetup.com/DCMidCity1stTimeHomeBuyers/.