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Help Is Available To Lower The Costs

Information for Buyers

Even in a slow market, housing prices in the Washington area are among the highest in the country. Add in the difficult mortgage market, and it could seem as if buying a first home is as likely as winning the lottery.

But state and local governments provide some help to first-time buyers through assorted programs aimed at giving them a financial boost.

These programs generally use the federal definition of a first-time home buyer -- someone who hasn't owned a home in the past three years. Other eligibility requirements vary greatly. There may be a waiting list, screening procedures and other prerequisites that must be satisfied before you see any money.

So even if you aren't ready to buy a home, it might be a good idea to do some research and know what assistance you qualify for, what you need to do to receive it and how far in advance you need to act.

Don't count yourself out because you think you make too much money to receive assistance. These programs are not all for the poorest home buyers. Many provide help to moderate-income buyers and even to some with above-average salaries.

For example, in Montgomery County, a single person making up to $66,150 is eligible for a below-market-interest-rate loan to purchase a home worth up to $429,619. Statewide, the Virginia Housing Development Authority offers more than a dozen loans, some of which are available to repeat home buyers, each with different requirements to help a wide variety of potential owners.

While loans for the purchase of a home are available in Virginia and some other jurisdictions, the most common type of assistance provides help with the cash that buyers need to purchase a home -- the down payment and closing costs. This assistance generally comes in the form of low-interest or interest-free loans, often with payments deferred for a few years or until the original buyer sells the home or stops using it as a primary residence.

Another popular type of program aims to help law enforcement officers, teachers and other public employees who may not earn enough to afford homes near their jobs. In the District, for example, the Metropolitan Police Housing Assistance Program gives officers who have been in good standing for at least a year matching down-payment funds of up to $1,500, deferred loans of up to $10,000, and income and property tax credits for their first five years of homeownership.

D.C. buyers can also get some federal help not available elsewhere in the nation. The D.C. First-Time Homebuyer Individual Income Tax Credit program provides a federal income tax credit of up to $5,000, available in the tax year the house is purchased. There are income limits, though: The credit is smaller for buyers with income of $70,000 or more ($110,000 for couples filing jointly), but buyers are still eligible for a partial credit with income up to $90,000 ($130,000 for joint filers).

By Brooke Howell
Special to The Washington Post
Sunday, September 30, 2007; R05