DC Open Doors

DC Open Doors [Program Review]
Financial Assistance for Homebuyers in the District of Columbia


 

 

DC Open Doors is your key to homeownership in the District.

We all know that one of the best ways to invest in your future is through homeownership.

To help individuals in Washington, DC achieve their dreams of homeownership, the District of Columbia Housing Finance Agency (DCHFA) implemented the DC Open Doors Program. This program provides a home loan at a competitive rate, as well as down payment assistance in the form of a zero-interest, non-amortizing loan.

Although this program is not just for DC first time home buyers, it is an ideal first time home buyer program.

History

The District of Columbia Housing Finance Agency (the “Agency” or “DCHFA”) was established in 1979 to stimulate and expand homeownership and rental housing opportunities in Washington, D.C.

The Agency accomplishes the mission of increased homeownership opportunities by offering funds for affordable first trust mortgage loans and down payment assistance, both of which lower the overall cost of a home purchase.

The Agency embraces its responsibility with conviction and pledges its best efforts to serve as the City’s champion for homeowners and to act as the City’s principal catalyst for neighborhood investment.

The Agency’s first trust mortgage and its down payment assistance loans are offered to eligible borrowers on a first-come, first-served basis with a Participating Lender.

DC Open Doors Explained

In order to be eligible for the DC Open Doors program, all applicants must meet minimum eligibility and program requirements.

Buyer Eligibility

  • Open to both first-time and repeat homebuyers
  • Open to all neighborhoods and wards
  • Open to both residents and non-residents of DC

Program Requirements

  • Minimum credit score of 640
  • Maximum income of $151,200
  • Income is based on BORROWER’s income ONLY (not household)
  • Maximum debt-to-income (DTI) ratio of 50% (max DTI for FHA loan is 45%)
  • $510,400 maximum 1st trust loan
  • No maximum sales price limit

Eligible Properties

  • single family detached or semi-detached
  • townhomes
  • modular homes
  • condos
  • 1-4 Units

Note: Coops are not eligible for the DC Open Doors Program.

Purchasing a home with a DC Open Doors mortgage product should not add any additional time to your home purchase process. In fact, DCHFA monitors its lenders very carefully to ensure loans are processed as quickly as efficiently as possible.

As you know, purchasing a home is a big step. You will need a team of knowledgeable individuals to help you through the process of selecting your home, determining which mortgage loan best suits you, obtaining a mortgage loan, etc. We will happy to help you get the process started!

Maximum Borrower Income$151,200
Maximum Sales PriceN/A
Maximum Loan Amount$510,400

Down Payment Assistance Loan (DPAL)

What is a DPAL? The DPAL is a secondary financing source for homebuyers. It is a second mortgage loan used in conjunction with the first mortgage to provide necessary funds for the down payment and/or closing cost.

DC Open Doors offers Down Payment Assistance Loans (DPAL) to help potential home buyers bridge the financial gap between the purchase price of a home and their first trust mortgage loan. DC Open Doors only offers down payment assistance loans for qualifying borrowers who use their mortgage products.

The DC Open Doors DPAL is available to all homebuyers that qualify under the DC Open Doors Program through a Participating Lender. Eligible borrowers may borrow up to 3% of the purchase price for conventional Loans or 3.50% of the purchase price for FHA Loans.

This zero payment loan is not due until one of the following:

  • Thirty (30) years from the date of loan closing
  • Sale or any transfer (by gift or otherwise) of the property to another person, business, or entity
  • Property ceases to be your principal residence
  • Refinancing your first trust mortgage

Your required minimum down payment will depend on your home purchase price and your mortgage loan product. Some mortgage loan products require a minimum of a 3.00% down payment, while others require 3.50% and some even require 5.00%.

DC Open Doors participating lenders will help you determine how much of a down payment you will need.

Do I Have To Be a First Time Homebuyer?

Nope! Although DC Open Doors is the ideal first time home buyer program, it is open to both first-time and repeat homebuyers.

Credit Score Required

The minimum credit score for all DC Open Doors loan types is 640. The score used is the middle score of all borrowers. (If a borrower only has two scores, the lower score must be used.)

What is the middle score?

Your “middle‘ score” is a term used by lenders and mortgage loan officers to describe the FICO score used in determining which of your three FICO scores will be used in the mortgage application process.

If your scores are 710, 745, and 750, the lender will use 745 as your FICO. If your scores are 640, 685, and 694, the lender will use 685 as your FICO.

When you apply with a spouse or co-borrower, the lender will use the lower of the two applicants’ middle FICO credit scores.

Each credit bureau will show a different FICO score for you, since each will have slightly different information about you. You will need to show at least one account which has been reporting a payment history for at least six months in order for the c credit bureau to have enough data to calculate a score.

Your FICO credit score takes into account all the information found in your credit report. Some parts of your credit history are more important than others and will carry more weight on your overall score.

Your FICO score is made up of the following:

  • Payment History : 35% of your total score
  • Total Amounts Owed : 30% of your total score
  • Length of Credit History : 15% of your total score
  • New Credit : 10% of your total score
  • Type of Credit in Use : 10% of your total score

DC Open Doors Income Limits

Borrower(s) must meet the income limits for the DC Open Doors Program and lenders must document all borrower income.

The Maximum Borrower Income for the DC Open Doors loan program is $151,200.

The DC Open Doors Program does not count household income of non-borrower individuals.

Co-signors are allowed.

Choosing a Property

The residence must be located in Washington, DC and be eligible for insurance under FHA or conventional guidelines as a principle residence. (Don’t worry we will you with identifying an eligible property.)

You can purchase a home in any neighborhood, area, or Ward of Washington, DC using DC Open Doors.

Keep in mind that DC Open Doors can only assist applicants on homes within the District of Columbia.

We will be happy to assist you in your home selection process once you have been pre-qualified by a lender. (Please contact us with assistance with finding a participating DC Open Doors.)

Eligible Property Types

  • Single family detached or semi-detached
  • Townhomes
  • Modular homes
  • Condominiums
  • 1-4 Units

Ineligible Property Types

  • Manufactured homes
  • Cooperative housing units 

DC Open Doors FHA vs Conventional Loans

Let’s take a look at the two types of loans that can be used with DC Open Doors- FHA and conventional loans. Directly weigh the pros and cons and your own qualifications so you take your next steps in the right direction.

Ultimately, understanding which loan is right for you is a matter of understanding your financial situation and needs.

FHA Loans

FHA loans are insured by the U.S. Federal Housing Administration and are offered by FHA-approved lenders. 

An FHA loan has less-restrictive qualifications which can make it a good choice if you’re worried about coming up with a down payment and/or have a lower credit score.

You must pay a MIP (mortgage insurance premium) for an FHA loan, regardless of the down payment amount.

FHA mortgage insurance premiums last for the life of the loan if you make a down payment of less than 10%. You can get rid of FHA mortgage insurance by refinancing to a conventional loan.

FHA mortgage premiums cost the same no matter your credit score.

Note: Most condo buildings in the District of Columbia are not FHA insured. If you are interested in purchasing a condo, you will be required to use a conventional loan.

FHA Loans – Insured by the Federal Housing Administration (FHA) and issued by an FHA-approved lender.

Updated September 9, 2020

Mortgage Loan ProductFHA w/ Down Payment AssistanceFHA w/out Down Payment
LTV (Loan To Value)96.5%96.5%
Down Payment Assistance*3.50% Subordinate LoanNone
DCHFA RequirementsMaximum borrower income of $151,200Maximum borrower income of $151,200
Minimum Credit Score640640
Maximum Debt to Income45%45%
Maximum 1st Trust Loan$510,400$510,400
Pre-purchase Homebuyer EducationNot RequiredNot Required
Additional Product RequirementsAll FHA underwriting requirements
imposed.
All FHA underwriting requirements
imposed.

*DCHFA’s down payment assistance is a 0%, non-amortizing, subordinate loan due upon sale, refinance or the borrower no longer occupying the property as a primary residence within the 1st five years.


Conventional Loans

Conventional loans are not government insured and are available through many banks, credit unions and other mortgage lenders.

You will typically need to have a higher credit score, lower debt-to-income (DTI) ratio and down payment to qualify for a conventional loan.

Contrary to popular belief, a 20% down payment is not a requirement for a conventional loan. However, if you don’t come up with a 20% down payment, you pay private mortgage insurance (PMI), which is a lender’s protection in case you default on your loan.

Conventional loans are available in fixed rates and ARMs. Common loan terms range from 10 – 30 years.

Conventional loans require borrowers to pay for mortgage insurance if their down payment is less than 20%.

Private mortgage insurance on conventional loans costs more if you have a low credit score, but it may cost less than FHA mortgage insurance if your credit score is above 720.

Conventional Loans – HFA Preferred HFA Advantage (Fannie Mae / Freddie Mac)

Updated September 9, 2020

Mortgage Loan ProductHFA Preferred

HFA Advantage w/ Down Payment Assistance
HFA Preferred

HFA Advantage w/out Down Payment
LTV (Loan To Value)97%97%
Down Payment Assistance*3.00% Subordinate LoanNone
DCHFA RequirementsMaximum borrower income of $151,200Maximum borrower income of $151,200
Minimum Credit Score640640
Maximum Debt to Income50%50%
Maximum 1st Trust Loan$765,600$765,600
Pre-purchase Homebuyer EducationRequired for 1st time homebuyersRequired for 1st time homebuyers

DC Open Doors Rates

Last Updated: 09/18/2020

  • FHA – 2.625%
  • FHA Plus w/ DPA – 2.875%
  • HFA Conventional no DPA < 80% AMI – 2.750% 
  • HFA Conventional w/ DPA < 80% AMI – 2.875% 
  • HFA Conventional no DPA > 80% AMI – 3.250% 
  • HFA Conventional w/ DPA > 80% AMI – 3.875%
  • HFA Preferred High Cost no DPA < 80% AMI – 2.875% 
  • HFA Preferred High Cost w/ DPA < 80% AMI – 3.125% 
  • HFA Preferred High Cost no DPA > 80% AMI – 3.750% 
  • HFA Preferred High Cost w/ DPA > 80% AMI – 4.750%

DC Open Doors vs HPAP

Both DC Open Doors and HPAP (Home Purchase Assistance) are programs that provide interest-free DPALs (down payment assistance loans) to qualified applicants in the District. 

However, there are a few differences.

The HPAP Program is based on additional factors that are not required of DC Open Doors. This includes; household size and the amount of assets that each applicant must commit toward a property’s purchase. 

Additionally, eligible HPAP applicants receive up to $80,000 in gap financing assistance and an additional $4,000 in closing cost assistance. (The closing cost assistance is distinct from, and in addition to, gap financing assistance.)

The HPAP gap assistance is based on both income and household size.

Example 1;
A household size of 1 with an income up to $44,100 could receive up to $80,000 in gap assistance and $4,000 in closings costs. In contrast, DC Open Doors would provide a total of 3% or 3.5% (depending on the loan) of the property sales price.

Example 2;
A household size of 1 with an income up to $97,000 could receive up to $16,000 in gap assistance and $4,000 in closings costs. In contrast, DC Open Doors would provide a total of 3% or 3.5% (depending on the loan) of the property sales price.

The table below features a few other differences of DC Open Doors vs HPAP.

DC Open DoorsHPAP
Maximum Household Incomen/a*$97,000**
Maximum Borrower’s Income$151,200$97,000
Maximum Sales Pricen/a$510,400
Maximum Loan Limit$510,400$510,400
Co-signors allowedyes
*The DC Open Doors Program does not count household income of non-borrower individuals.
**Household of 1. (2=$110,900; 3=$124,750; 4=$138,600; 5-8=$147,250)

DC Open Doors FAQs

dc open doors
Will I qualify for a DC Open Doors loan if I am not a first-time homebuyer?

Yes, DC Open Doors has a variety of mortgage loan products to serve both first-time and repeat homebuyers. 

How much of a down payment will I need to purchase a home?

Your required minimum down payment will depend upon your home purchase price and your mortgage loan product. DC Open Doors offers down payment assistance loans for qualifying borrowers.

Can I purchase a home anywhere in DC?

You can purchase a home in any neighborhood, area, or Ward of Washington, DC. However, DC Open Doors can only assist applicants on homes within the District of Columbia.

How do I find a home that will qualify?

We will be happy to assist you in your home selection process. Our first step together will be to have you pre-qualified by a participating lender for the DC Open Doors mortgage loan.

DC Open Doors Terms & Definitions

DC Open Doors

Here are a few terms you should know.

ACT – the District of Columbia Housing Finance Agency Act, Chapter 27, Title 42 of the District of Columbia Code, as amended.
ACQUISITION COST – the sales price plus borrower-paid closing costs, discount points, repairs and rehabilitation expenses and prepaid expenses.
CO-SIGNER/CO-SIGNOR – a non-occupant who is co-signing the Note for a particular loan.
COMMITMENT – letter provided to lender upon DCHFA’s review and approval of pre-closing documents.
DCHFA – the District of Columbia Housing Finance Agency.
DTI – Debt-to-Income Ratio.
DPAL – Down payment assistance loan.
FHA – the Federal Housing Administration.
FHLMC – the Federal Home Loan Mortgage Corporation (“Freddie Mac”). FNMA – Federal National Mortgage Association (“Fannie Mae”).
LTV – Loan-to-Value Ratio.
MAXIMUM BORROWER INCOME – maximum permitted income as established by DCHFA for all borrowers signing the Note. Household income is not considered.
LOCK-IN EXPIRATION DATE – Seventy Days past the date the loan is reserved (locked).
MI COMPANY – Also known as PMI, a private mortgage insurance company providing mortgage insurance on conventional loans.
MCC – Mortgage Credit Certificate issued by DCHFA according to the rules and regulations set forth by the Internal Revenue Service – must also refer to MCC specific guidelines for eligibility requirements.
MORTGAGOR – the borrower(s) in a mortgage transaction.
NON-BORROWING CO-OCCUPANT – Any person aged 18 years or older who will occupy the property and will not be secondarily liable on the mortgage.
PARTICIPATING LENDER or LENDER – A lender that has been approved by DCHFA and the Master Servicer to originate, process, underwrite, close and fund mortgage loans under the DCHFA approved programs.

DC Open Doors Questionnaire

Ready to get started? We will be happy to walk you through the process.

Seriously, we are not stalkers.
Borrower does not need to be a first-time homebuyer (cannot own any other property at time of settlement).
Borrower income may not exceed $151,200 (not based upon household income).
e.g., Parking, Basement, Master Bath

We’re here to help!

Ready to get started NOW? Whether you’re a DC first time home buyer or an experienced buyer, we’re here to answer any questions you may have.

Contact us today to discuss your eligibility and how the DC Open Doors program could work for you.
(202) 818-8718 [call or text]
5 Items You Need To Qualify For a Home Loan