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D.C. to provide up to $200K to first-time home buyers in hot market

The money will be issued in the form of a low-interest loan that allows households to defer repayment for up to five years.

Washington Mayor Muriel E. Bowser holds a news conference on affordable housing at the Spring Flats housing complex in 2021. (Matt McClain/The Washington Post)

An earlier version of this story incorrectly stated the homeowners assistance program helped owners cover home repairs. It covers mortgage payments, HOA fees, property taxes and utilities. This version has been updated.

D.C. will more than double the amount of assistance first-time home buyers can receive from the government this year in a bid to help Washingtonians — particularly Black Washingtonians — be competitive in the District’s explosive housing market.

Starting Oct. 1, first-time home buyers may qualify for as much as $202,000 in assistance from the city, D.C. Mayor Muriel E. Bowser (D) announced Monday. The money, part of the District’s Home Purchase Assistance Program (HPAP), will be issued in the form of a low-interest loan that allows households to defer repayment for up to five years.

Previously, HPAP enabled qualified home buyers to receive a loan for up to $80,000 in gap financing and down-payment assistance and up to $4,000 in additional closing cost subsidies. Eligibility is determined based on income.

D.C. Deputy Mayor John Falcicchio said the increase is meant to help residents “keep up with a hot housing market” at a time when interest rates are going up and inflation has made other costs of living in the city even more costly.

“We knew we had to do something to make the program more viable for potential home buyers,” he said last week. “We wanted our residents to be the most prepared as they go into this hot housing market.”

D.C. development has soared under Bowser. So have housing costs.

The amount D.C. officials settled on — a nod to the District’s area code — would allow individuals making up to $109,600 and families of four making as much as $156,550 to qualify for graduated assistance based on income level. Loans will range from $70,000 to $202,000.

The number, said Tsega Bekele, chief of staff for the D.C. Department of Housing and Community Development, is “gimmicky, but this is real money that will help people.”

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, by making a dramatic change to the program. “If you see $202,000 is available to me for down-payment assistance, you might think, ‘Wow, I, too, could buy a home, I think.’ ”

The median home price in D.C. was $646,000 in July, according to Bright MLS.

The program expansion comes as the mayor is expected to win a third term in office amid a soaring housing market and widespread anxiety over housing affordability in the District. In recent months, her office has sought to expand initiatives meant to help Washingtonians purchase or remain in their home.

Participants in the first-time home buyer program have said that despite the financial assistance, they still have struggled to stay competitive in the District’s white-hot housing market due to some of the program’s requirements, including having an approved home inspection, which can be a disadvantage to buyers going up against others who can get faster financing or are willing to waive all contingencies.

But more changes may be on the horizon.

Bowser earlier this year announced a new “strike force” aimed at boosting Black homeownership and closing the racial equity gap in the District. The group is expected to issue recommendations by October that will guide how D.C. spends a $10 million allotment Bowser has earmarked for Black homeowners in her fiscal 2023 budget.

This increase to HPAP, Bekele said, is in line with the strike force’s mandate to make homeownership more accessible to Black families. A spokesman for DCHCD said later the mayor recommended expanding the program as part of her budget proposal in March.

Roughly 350 people have received assistance through the program since Bowser took office in 2015, officials said.

Mayor Bowser announces $10 million effort to support Black homeowners

During her first term in office, Bowser doubled the amount of down-payment assistance that potential home buyers could receive from the Home Purchase Assistance Program and created a program specifically meant to provide financial aid to city workers, teachers and first responders — applicants to that program can receive an additional $20,000.

Although the nation’s real estate market may be cooling thanks to rising interest rates, Falcicchio said the District’s housing market shows no signs of significant slowdowns.

Officials said they’re hoping to equip residents to purchase homes even as real estate prices continue to hit all-time highs.

“If you look back historically where there have been dips in the housing market nationally, we haven’t felt that as much as other regions,” Falcicchio said. Raising the cap on how much assistance prospective home buyers can receive “puts those who participate in the program on equal footing in a market where people are looking for that first home that’s maybe a condo or a home that isn’t at the higher end of what homes can go for in the District.”

Bowser also announced an expansion to the District’s homeowner assistance fund, which offers financial relief to homeowners who need help paying their mortgage and HOA fees, among other things, from Wards 7 and 8 to residents throughout the city. The District has $50 million to dole out — part of its pandemic relief efforts. Asked about a deadline for applications, the deputy mayor said he encourages people to apply before Sept. 30, but officials said they have not set a deadline yet.