A Review of the Best Programs for First-Time Homebuyers in VA/DC/MD

Buying a home for the first time can be both an exhilarating and scary experience. While there are many challenges to making the one’s first home purchase, the highest hurdle for many is saving enough for the down payment.

From the early 2000s until the crash of the housing and financial markets in 2008, lenders had relaxed their requirements to the point that many homebuyers didn’t need much of a down payment, if at all. While those times of easy credit are over, people can, once again, put down less than 20% when buying a home. Interest rates remain historically low making this an excellent time to buy a home.

Most of our clients at Glassman Wealth Services have already purchased homes or have already paid off their mortgages, however, many of their children or grandchildren are making this purchase for the first time. What most people don’t realize is that the DC metro area has many programs designed to give a leg up to first-time homebuyers.

Virginia just announced their First Time Home Savings Plan (FHSP) that provides tax incentives to help more first-time buyers make the move. These incentives are also available to parents and grandparents who plan to help their loved one save for a down payment.

Listen to Barry Glassman’s tips for first-time homebuyers on WTOP

Virginia, Maryland and the District of Columbia can help first-time homebuyers save literally thousands of dollars. I’ve listed several of these programs in our area with links to their websites for more information.

In Virginia:

First Time Home Savings Plan (FHSP)

  • Save up to $50,000 in an account
  • Earnings on those funds – interest and capital gains – are free from VA state taxes forever
  • Accounts can grow up to $150,000
  • Must be a first-time home buyer
  • No income limit for eligibility
  • A parent, grandparent, friend, etc., can put money into the account and give it to a first-time home purchaser
  • Can use money to pay for another person’s closing costs as long as they are a first-time homebuyer
  • Can claim FHSP status as part of tax return to be exempt from VA state tax as they accumulate funds over time in the account to be used for first-time home purchase

In D.C.:

DC Open Doors

  • Provides down payment assistance to homeowners who may exceed the income levels of other assistance programs.
  • Individuals earning up to $123,395/year are eligible
  • Need to have a credit score of 640 or higher and a maximum debt-to-income ratio of 45%
  • Program offer loans up to 3.5% of the home price to be used as a down payment
  • 20% of loan is forgiven for each year the homeowner stays in the home

Home Purchase Assistance Program (HPAP):

  • Eligible first-time home buyers or those who have not owned any residential real estate within 3 years of the application.
  • They can receive interest-free loans (up to $40,000) and help with closing costs (up to $4,000)
  • There’s a long eligibility list some of which includes: head of household and first-time home buyer; low-to-moderate income resident; cannot have owned real estate within the past 3 years; must be used to purchase the borrower’s primary residence which must be in the District, etc.

Employer Assisted Housing Program (EAHP):

  • For first-time homebuyers who work in D.C.
  • Match down payment up to $1,500
  • Loan deferral up to $10,000
  • Income property tax credits for first 5 years
  • Max price for house – $417,000

In Maryland:

Maryland HomeCredit Program

  • Provides eligible homebuyers with a tax credit equal to 25% of the value of their mortgage interest payments up to $2,000 each year for the life of the loan
  • Must meet income limits requirement (broken down by county)
  • Cannot have owned a home in the past 3 years unless they are purchasing a home in a “targeted” area
  • Maximum eligible home price is $417,000

Down Payment Assistance and Partner Match

  • Similar to DC Open Doors Program
  • Eligibility includes income limits of up to $128,760 for a household of up to 2 people
  • Participant must live in the home
  • Used to help pay for things like a down payment, closing costs, prepaid/escrow expenses and home inspection
  • May be available in form of zero-interest deferred loans, forgivable loans or outright cash grants

 

Barry Glassman, CFP®

His vision for starting GWS was to deliver investment strategies and wealth management services typically available at the highest levels of wealth. Today, clients benefit from these sophisticated financial services targeted to meet their unique needs.
Barry Glassman, CFP®
PLEASE SEE IMPORTANT DISCLOSURE INFORMATION

1 Comment

  1. […] Downpayment Assistance (DPA), Fairfax County’s First-Time Homebuyers Program, Virginia’s First-Time Home Savings Plan and D.C.’s Open […]