D.C. will more than double the amount of government assistance available to first-time home buyers this year in an effort to help Washingtonians, particularly Black Washingtonians, compete in the District’s explosive housing market.
Beginning Oct. 1, first-time home buyers may be eligible for up to $202,000 in city assistance, according to D.C. Mayor Muriel E. Bowser (D). The funds, which are part of the District’s Home Purchase Assistance Program (HPAP), will be distributed in the form of a low-interest loan with the option of deferring repayment for up to five years.
Previously, qualified home buyers could receive a loan for up to $80,000 in gap financing and down-payment assistance, as well as up to $4,000 in additional closing cost subsidies through HPAP. Eligibility is determined based on income.
The increase, according to D.C. Deputy Mayor John Falcicchio, is intended to help residents “keep up with a hot housing market” at a time when interest rates are rising and inflation has made other costs of living in the city even more expensive.
“We knew we needed to do something to make the program more appealing to potential home buyers,” he explained last week. “We wanted our residents to be as prepared as possible as they enter this hot housing market.”
The amount agreed upon by D.C. officials — a nod to the District’s area code — would allow individuals earning up to $109,600 and families earning up to $156,550 to qualify for graduated assistance based on income level. Loans will range from $70,000 to $202,000.
According to Tsega Bekele, chief of staff for the District of Columbia Department of Housing and Community Development, the figure is “gimmicky, but this is real money that will help people.”
By making a dramatic change to the program, the District is “trying to get more people to buy in the District, live in the District, primarily with a focus on Black homeownership,” he added. “If you see that I have $202,000 available for down payment assistance, you might think, ‘Wow, I think I could buy a house, too.'”
The program expansion comes as the mayor is expected to win a third term in office, despite the District’s soaring housing market and widespread concern about housing affordability. In recent months, her office has sought to expand initiatives aimed at assisting Washingtonians in purchasing or retaining their homes.
Participants in the first-time home buyer program have stated that, despite the financial assistance, they have struggled to remain competitive in the District’s white-hot housing market due to some of the program’s requirements, such as having an approved home inspection, which can put buyers at a disadvantage when competing against others who can get faster financing or are willing to waive all contingencies.
Bowser announced earlier this year a new “strike force” aimed at increasing Black homeownership and closing the District’s racial equity gap. The group is expected to issue recommendations by October that will guide how D.C. spends a $10 million allotment in Bowser’s fiscal 2023 budget for Black homeowners.
Bekele explained that the increase in HPAP was a result of one of the strike force’s early recommendations.
According to officials, approximately 350 people have benefited from the program since Bowser took office in 2015.
During her first term in office, Bowser doubled the amount of down-payment assistance available through the Home Purchase Assistance Program and established a program specifically designed to provide financial aid to city workers, teachers, and first responders — applicants to that program can receive an additional $20,000.
Although the national housing market may be cooling as a result of rising interest rates, Falcicchio said the District’s housing market shows no signs of significant slowing.
Officials said they hope to prepare residents to buy homes even as real estate prices remain at all-time highs.
Bowser also announced an expansion of the District’s homeowner assistance fund, which provides financial assistance to homeowners in Wards 7 and 8 who need to make home repairs. The District has $50 million to distribute as part of its pandemic relief efforts, and applications will be accepted until the end of September.