Home Purchase Assistance Program (HPAP): Everything You Need to Know
If you're thinking of buying a home but are struggling to come up with the down payment, the Home Purchase Assistance Program (HPAP) might be just what you need. In this article, we'll take a closer look at HPAP, including what it is, who's eligible, how it works, and much more.
Table of Contents
- What is HPAP?
- Who's Eligible for HPAP?
- How Does HPAP Work?
- HPAP Application Process
- HPAP Funds and Loan Terms
- HPAP Property Requirements
- HPAP Homebuyer Education
- HPAP Subordination Policy
- HPAP Resale and Recapture Policy
- HPAP vs Other Homebuyer Assistance Programs
- Pros and Cons of HPAP
- Tips for Using HPAP
- Frequently Asked Questions
What is HPAP?
The Home Purchase Assistance Program (HPAP) is a program offered by the District of Columbia Department of Housing and Community Development (DHCD) to help low- and moderate-income residents buy their first home. HPAP provides assistance in the form of down payment and closing cost assistance, as well as rehabilitation loans.
Who's Eligible for HPAP?
To be eligible for HPAP, you must be a first-time homebuyer, meaning you have not owned a home in the past three years. You must also meet income and credit score requirements. Income limits vary depending on the size of your household and where you're looking to buy. As of 2023, the maximum income limit for a household of one is $90,960, while the maximum for a household of four is $173,880. Your credit score must be at least 640.
How Does HPAP Work?
HPAP provides assistance in the form of a loan that must be repaid. The loan can be used for down payment and closing costs, as well as rehabilitation costs if needed. The loan is "forgivable" if you live in the home as your primary residence for at least five years. This means that if you live in the home for five years, you will not have to repay the loan. However, if you sell the home before the five-year mark, you will have to repay a prorated amount of the loan.
HPAP Application Process
To apply for HPAP, you must attend a homebuyer orientation and complete a pre-purchase counseling session. You will also need to provide documentation of your income and credit score, as well as other financial information. The application process can take several weeks to complete.
HPAP Funds and Loan Terms
The amount of assistance you can receive through HPAP varies depending on your income and the location of the home you're looking to buy. As of 2023, the maximum loan amount is $202,000.
For households that are eligible based on moderate income: Loan payments are deferred for the initial five years. From the sixth year onwards, they will begin making monthly payments towards the principal amount only, spread over a 40-year period.
For households that are eligible based on low income and very low income: Loans will not require any monthly payments.
When the loan becomes due and payable: Irrespective of household income, the entire loan amount will become immediately due and payable if the borrower transfers the property, refinances the property (unless certain conditions are met), or if the property is no longer the borrower's primary residence.
HPAP Property Requirements
The home you purchase with HPAP assistance must meet certain property requirements. The home must be located in the District of Columbia and must be your primary residence. The home must also meet certain safety and habitability standards.
HPAP Homebuyer Education
HPAP requires all participants to complete a homebuyer education course. The course covers topics such as budgeting, credit management, and the homebuying process. The course can be taken online or in person.
HPAP Subordination Policy
If you use HPAP funds to purchase a home, the loan will be subordinate to your first mortgage. This means that if you default on your mortgage, the lender of the first mortgage will have priority over the HPAP loan.
HPAP Resale and Recapture Policy
If you sell the home before the end of the five-year occupancy period, you will be required to repay a prorated portion of the HPAP loan. The amount you will need to repay is based on the length of time you lived in the home. If you sell the home after the five-year occupancy period, you will not be required to repay the loan.
HPAP vs Other Homebuyer Assistance Programs
There are several other homebuyer assistance programs available in the District of Columbia, such as the DC Open Doors program and the Employer Assisted Housing Program. Each program has its own eligibility requirements and benefits. It's important to research each program to determine which one is the best fit for your needs.
Pros and Cons of HPAP
- Provides down payment and closing cost assistance
- Zero percent interest rate
- Homebuyer education course required
- Must be a first-time homebuyer
- Income and credit score requirements
- Loan is subordinate to the first mortgage
Tips for Using HPAP
- Attend a homebuyer orientation and complete a pre-purchase counseling session early in the process.
- Research the property requirements to ensure the home you want to purchase is eligible for HPAP.
- Determine your income and credit score early in the process to ensure you meet the eligibility requirements.
- Complete the homebuyer education course as soon as possible to gain valuable knowledge about the homebuying process.
Frequently Asked Questions
Can I use HPAP funds to purchase a multi-family property?
- No, HPAP funds can only be used to purchase a single-family property.
Can I use HPAP funds to refinance an existing mortgage?
- No, HPAP funds cannot be used to refinance an existing mortgage.
How long does the HPAP application process take?
- The application process can take several weeks to complete.
Can I use HPAP with other homebuyer assistance programs?
- Yes, in some cases, HPAP can be used with other homebuyer assistance programs. It's important to research each program to determine eligibility and benefits.
The Home Purchase Assistance Program (HPAP) is a valuable resource for low- and moderate-income residents of the District of Columbia who are looking to buy their first home. By providing down payment and closing cost assistance, as well as rehabilitation loans, HPAP can help make homeownership a reality for those who might not otherwise be able to afford it. If you're considering buying a home in the District of Columbia, be sure to research HPAP and other homebuyer assistance programs to determine which one is right for you.
If you would like to learn more about how we can help you with your home purchase and sale, give my team a call at: 301-651-4900 or fill out the form below
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