The purpose of these programs is to help homebuyers afford to buy a home. Homebuyers needing help may have several options, such as grant funds (free money), low or no-interest loans (payback), and deferment or reduced fees associated with buying a home. These various options can reduce a homebuyer's purchase costs, making the home more affordable and lower the monthly mortgage amount. Most homebuyer’s assistance programs are for low-to-moderate income, first-time homebuyers. Below are a few points to remember:
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How HUD-Certified Housing Counselors Can Help |
1. HUD-certified housing counselors can help you apply for homebuyer’s assistance programs - The largest investment most people will make is buying a home, which can be costly and complicated. The homebuyer’s dream of homeownership can become a nightmare if misinformed or misled. To help homebuyers make informed decisions, the U.S. Department of Housing and Urban Development (HUD) trains and certifies housing counselors to provide guidance. HUD-certified housing counselors offer free training, resources, and advocate for the homebuyer’s best interest.
Traditionally, the realtor and lender are the homebuyer’s initial contacts in the homebuying process. HUD recommends first contacting a HUD-certified housing counselor for homebuyer's education and resources. Homebuyers can also learn about down-payment and closing costs assistance programs and how to avoid predatory lending practices. HUD-certified housing counselors have no vested interest in the homebuyer’s real estate transactions and neither earns commission nor income from the sale, purchase, or rent of real estate. They are employed by HUD-Approved Housing Counseling Agencies, which are also Community-Based Organizations (CBOs).
The D.C. Department of Housing and Community Development (DHCD) allocates grants to CBOs to provide free housing counseling services and application intake for homeownership assistance and other housing programs for D.C. residents who are low-to-moderate income.
2. Essential information that low-to-moderate income homebuyers should know:
Where to find HUD-certified housing counselors – Here is a link to Community-Based Organizations (CBOs) that have HUD-certified housing counselors to assist homebuyers with applying for the D.C. government homeownership assistance programs.
The benefits of down-payment help and closing costs assistance – Lenders typically require borrowers (homebuyers) to have 3% - 5% of the loan amount for down-payment. Also, borrowers must pay closing costs. Low-to-moderate income borrowers with insufficient funds to meet the lender's requirements may qualify for down-payment and closing costs assistance from government, for-profit, and non-profit organizations.
Benefits that D.C. residents and D.C. government employees receive –The D.C. government gives residents and employees priority ranking in its homeownership programs. There are also homeownership assistance programs only for D.C. government employees.
DC Department of Housing and Community Development (DHCD) - This agency administers most of the D.C. government's homeownership programs, such as the: Home Purchase Assistance Program (HPAP), Employers Assisted Housing Program (EAHP), Negotiated Employee Affordable Home Purchase Program (NEAHP), Inclusionary Zoning (IZ) Program, Affordable Dwelling Units (ADU), Accessory Dwelling Units (ADU) and Tenant Opportunity to Purchase Program (TOPA). For more information, see the Resource Section, Step 7.
Housing programs that assist with reasonable modifications and roof repairs for persons with disabilities - DHCD has grants for roof repair or replacement. D.C. Department of Aging and Community Living (DACL) has grants for accessibility modification. For information, see the Resource Section, Step 6.
Buydown the interest rate with Discount Points - Borrowers (homebuyers) can reduce their mortgage interest rate with discount points, aka mortgage points. A discount point costs the borrower 1% of the loan amount. For example, a mortgage lender offers borrowers the opportunity to buy down their interest rate by .50% per discount point. If the mortgage loan is $100,000 and the interest rate is 6%, the borrower can pay $1,000 for a point to reduce the interest rate from 6% to 5.5%. A lower interest rate generally reduces the monthly mortgage amount. HPAP loans can be used to buy discount points to buy down the mortgage interest rate.
Layering homebuyer’s assistance programs to lower the monthly mortgage payment – In addition to homeownership assistance programs listed above, other programs may be sponsored by the government, lenders, non-profit organizations, and developers. Homebuyers who qualify for more than one homeownership assistance program can layer or combine the programs to reduce their monthly mortgage even more. Contact a HUD-certified housing counselor at a Community-Based Organization (CBO) to learn about available and upcoming homeownership assistance programs.