DC Real Estate Lending

Author: Susan Isaacs | The Isaacs Team

Choosing a mortgage loan program is an important first step towards buying DC real estate. Discuss your goals and loan programs with several mortgage lenders to find the right fit.

Mortgage Programs And Lenders

What Types of Mortgage Loans Are Available in Washington DC?

Conventional mortgages

The majority of conventional loans are “conforming” loans that meet Freddie Mac and Fannie Mae requirements. These government-backed entities purchase mortgages from lenders to sell to investors.

Conventional mortgages offer varied term options with 15-year, 20-year and 30-year terms, each with their own set of requirements and lending guidelines. Conventional loans typically carry stricter credit requirements than government-sponsored programs such as FHA loans.

Two types of conventional loan types are:

Fixed Rate  A fixed-rate mortgage  offers a set interest rate for the full loan term. Borrowers benefit from knowing their monthly payment is predictable;

Adjustable Rate (ARM) Allows buyers a lower monthly payment for a specified term, from 3 to 10 years. The rate may be adjusted at interims outlined in the loan terms and according to the benchmark interest rate and margin set by your lender. The index + margin become the adjusted interest rate when the initial rate expires.

Non-Conforming loans  For individuals with low to moderate incomes or those who require a low or no-down payment option, non-conventional mortgage loans can make the difference between purchasing a home, or not. They are good options for borrowers who:

  • Are self-employed
  • Have low cash reserves
  • Have employment history issues
  • Have a prior bankruptcy on their credit record

Examples of non-conventional mortgage loans are:

FHA Loans  Offer more flexible credit score terms and low down payment (3.5%)

VA Loans  Offered to military service members, veterans and surviving spouses. Those eligible can purchase a home with zero money down

USDA Loans  Those buying homes in certain eligible towns and rural areas designated by the government may qualify for a USDA mortgage loan with zero-down-payment. Guaranteed by the Rural Development Guaranteed Housing Loan Program, they’re typically issued by lending partner lenders and offer lower rates than conventional mortgages. NerdWallet cites the Aug. 1, 2023 example, in which the direct-issued USDA mortgage interest rate was 4.125% while the conventional 30-year rate was approximately 6.7%.

USDA loans do not require MIP, PMI or guarantee fees as are required (per program) by VA and FHA.

Jumbo Loans  The most common non-conforming loans, especially for borrowers in high-cost locations like Washington DC whose needs exceed the limits of conforming loans. The 2024 FHFA limit is $1,149,825. Jumbo loans have higher interest rates than conforming loans, Qualifying can be more difficult, and downpayments can be higher.

Interest Only Loans

Many interest-only mortgages are also adjustable-rate jumbo loans. Borrowers make payments on just the loan’s interest, not principal.  Any equity build would be on the property value alone. Terms run up to 10 years before borrowers make amortized payments that split between interest charges and principal reduction, refinance the loan, or pay it off.

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Special loan programs in Washington DC

Home Ready

Fannie Mae’s HomeReady™ Mortgage program is offered to creditworthy, low and moderate income borrowers. HomeReady offers high loan-to-value ratio financing to help homebuyers who would otherwise qualify for a mortgage but may not have the resources for a larger down payment. HomeReady mortgages offer low rates, minimal risk-based price adjustments compared to other programs, and reduced mortgage insurance costs.

Open Doors  DC Open Doors makes homeownership in Washington, D.C. affordable by offering qualified buyers home purchase loans, down payment and closing cost assistance. The program offers deferred repayable loans for a homebuyer’s minimum down payment requirement in addition to below-market interest rates for first trust mortgages for the purchase of a home in the District of Columbia.

DC4ME  Provides D.C. government employees a first trust mortgage at a reduced interest rate, with or without the option of 3% down payment assistance with a 0% deferred subordinate loan (2nd mortgage).

Borrowers must be current, full-time District government employees, and employees of DC government-based instrumentalities, independent agencies, DC public charter schools, and organizations that fall under the oversight of the DC Council.

HPAP  Home Purchase Assistance Program (HPAP) is offered to qualifying first-time DC homebuyers. The program provides down payment and closing cost assistance in the form of a deferred interest free loan.

Income limits are determined by area median income (AMI) for the DC metro area. Maximum first trust loan amount cannot exceed the conforming loan limit (currently $1,089,300). Funds availability subject to change without notice.

Washington DC Lenders

There are many specialized mortgage loan programs and the offerings change over time. The best way to find a mortgage loan program that fits your specific needs is to consult a mortgage lending expert. Here are the mortgage professionals in the DC Metro Area who have provided our clients with great service and products in 2018. It is advisable to get more than one mortgage loan pre-approval. Lending institutions offer different programs. You’ll want to match a program to your needs and the home type you purchase.

Gregg Busch
First Savings

  • Very Fast closes
  • Co-Ops (up to 95%)
  • New construction
  • Complex Loans

NMLS ID 221278
703-919-5230 Mobile
703-827-4620
[email protected]
8444 Westpark Drive 4th Floor McLean, VA 22102

Alex Jaffe | Branch Sales Manager
First Home Mortgage

  • First Time Buyers
  • New Construction

8401 Connecticut Ave Ste 1100 Chevy Chase MD 20815
Office: 240-479-7658 | Cell: 301-928-8030
[email protected]

Brian Farasy | Branch Manager
SWBC

  • First Time Buyers
  • Jumbo Loans
  • Certified Pre-Approvals
  • 3 Week Close

NMLS ID# 728159
SWBC Mortgage Corporation
11150 Sunset Hills Road Ste.308 Reston VA 20190
Phone: (443) 574-2400 Mobile: (240) 277-4422
www.swbcmortgage.com/Brian-Farasy

Michelle M Davis | Sr Loan Officer
Prosperity Mortgage

  • New Construction
  • First Time Buyers

NMLSR ID 192538
Phone 301-807-2005
[email protected]

Kari Sansom Elwood | Mortgage Banker

Sandy Spring Bank
  • Construction/Renovation loans
  • Bridge Loans
  • Physicians loans
  • Jumbo loans

NMLS #415708
647 New York Avenue, NW DC 20001
Office 301.617.4242
Mobile 301.767.6354
[email protected]

Tip

There are many different types of lenders and loan products. Be sure to ask about programs and loans that will benefit your particular needs. We recommend obtaining pre-approvals from three different lenders.

GET IN TOUCH

THE ISAACS TEAM

Compass
1313 14th St
NW DC 20005

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