You did it! You found the house! It’s a 3 bed, 2.5 bath with gorgeous master bedroom, open concept kitchen, shiplap walls, and Spanish tiles in the entryway. It’s like JoJo from Fixer Upper designed it herself. And it was only $100,000! Okay, let’s get real, folks. Buying in Washington, DC often takes a sizable chunk of your change. Even after you’ve scrimped and saved it can be hard to pour every penny you have into the down payment, the closing costs, and the moving fees. In fact, no reputable agent or lender would advise that you do that; that’s where the term “house poor” comes from.

Fortunately, you’re not alone; there are programs out there from the federal government, the DC government, and from private lenders that help cover some or all of these fees. (No, movers won’t be covered – but if you’re moving in from out of state or from abroad, there’s a good chance your employer will help if asked!) Let’s get familiar with these costs:

What’s a Down Payment?

This is the amount of money you “put down” to spend at the start of the purchase that is part of your home loan. It’s typically 3-25% of the total loan; so, on a $400,000 condo, your down payment could be anywhere from $12,000 - $100,000. That’s quite a spread; put that on your bread and butter it! Most people in DC will put down 10-20% but as a buyer, it’s good to know you can put down less.

Lenders prefer you put down more because they think it means you’re less likely to default on your mortgage (that’s industry term for not paying your mortgage and it’s a really bad idea, I wouldn’t suggest it). Your credit score, history, total debt, and annual income all impact the loan amount you can qualify for. See my post last week on how a lender pre-approves your loan.

Down Payment Assistance

DC Open Doors (DCOD)

Down Payment Assistance Programs by Private Lenders

Home Purchase Assistance Program (HPAP)

Also, some versions of these programs require that you take a class or two on home ownership and financing; while that’s time out of your schedule they’re often helpful and free. You can also schedule a meeting with me to discuss what the home buying process will look like! While I’m no teacher, I do wear glasses and have a jacket with patches on the elbows.

Earnest Money Deposit (EMD)

*A ratified offer is when both the buyers and sellers agree to the terms of the offer; it means the seller has chosen to your offer to volunteer as tribute move forward in the process to purchase.

Let’s Not Forget Closing Costs

Buyers have paid at the start of the process with their EMD, secured a loan to pay a mortgage, and are now ready to get the keys to a new home. But, wait! We’re not quite done. All of the other experts in the business haven’t been paid, yet. Your title attorney and lender, having done the lion’s share to ensure your home is really yours and that your finances are in order, are going to get paid here. The DC Government also wants a piece of the action and will ask for a recordation tax. (Yep, so you have to pay to record your purchase. The seller has to pay both the recordation and the transfer tax.)

You’ll also have to pay mortgage insurance, title insurance, and I’m surprised they don’t ask you to insure your lunch for the next day. All this insurance protects you (and them) in case you can’t pay the mortgage or someone says your house is theirs.

Saving Money Through the DC Recordation Tax

Saving Money with Title Attorneys and Lenders

Saving Money on Title Insurance

The list of costs is long when buying a home, there’s no doubt about that. But a savvy agent makes a savvy buyer. Talk with your agent to discuss these options; they may not know every answer but a great agent is always challenging themselves to learn. Don’t have an agent yet? Talk to me – you know I’ve already got your back. Because we all have to get by with a little help from our friends.