By the time Courtney received a notice last November that she was eligible for D.C.’s down payment assistance program for first time homebuyers, she’d spent close to five months applying.

The 37-year-old has lived in D.C. off and on since 2009, and last summer decided to get serious about buying an apartment here. The founder of a local nonprofit, Courtney has lived in every quadrant of the city, and says she hopes to stay here permanently. (Courtney asked DCist/WAMU to use only her first name, to avoid professional repercussions.) But because she’s self-employed and was receiving a graduate student stipend at the time, she struggled to find a primary mortgage lender. 

She thought HPAP, the District’s Home Purchase Assistance Program, could help bridge the gap between what lenders were offering and what sellers in D.C. were demanding.

“I was thrilled,” Courtney says. The program deemed her eligible for its maximum loan – an interest-free $202,000, with payments deferred for five years – and she began to look for the place she and her dog would call home. In April, she put in an offer on a one-bedroom condo in Mt. Pleasant, but the seller rejected her offer, skittish about working with an HPAP recipient. The search dragged on for months, hampered by low inventory and high prices.

Finally, in June, she found it: a dog-friendly condo in Adams Morgan with a unit accessible for Courtney, who has a heart condition and can’t live in a walkup. She put in an offer, her agent needling the seller into working with an HPAP applicant. He relented. And on Monday, June 26, the seller accepted Courtney’s offer. 

But just hours later, shortly before noon, she received an email from the Department of Housing and Community Development to all eligible HPAP applicants that made her stomach drop: HPAP has committed all of its funding for the current fiscal year, and will no longer be able to finance sales whose contracts have not yet been ratified and submitted to the program administrator. 

So almost exactly one year after she first began seeking assistance through the program, Courtney lost out on the only home she came close to purchasing. 

“I’m frustrated. I’m also just more angry for everyone [in this position],” she says. “The letter was just ridiculous. It was like, ‘Homeownership is the best thing you can do for generational wealth. Good luck buying a house, just not with us!’” (The actual text of the email, which Courtney shared with DCist/WAMU, isn’t far off: “Owning a home is the best way to build generational wealth and we encourage you to continue your housing search,” it says.)

The nature of how HPAP is administered makes it difficult to track how many buyers are in Courtney’s position. Once an applicant receives their notice of eligibility, they are free to begin their housing search with an understanding of how much HPAP funding they would receive should they choose to buy a home. But buyers don’t actually secure their HPAP funding until they and the seller ratify the sales contract – a stage in the sales process that Courtney had not yet reached, since she’d only just had her offer accepted – and the HPAP administrator works with the buyer’s primary mortgage lender to hammer out financing details. 

A spokesperson for DHCD says that there are about 700 people who received notices of eligibility this fiscal year for funds from the program, but could not provide disaggregated data about how many of those people have pending offers on homes. HPAP received $67 million in funding this year. 

Information tracking HPAP expenditures in real time is not made available to the public – so those who receive notices of eligibility often don’t actually know whether they will ultimately receive funding – and program watchers tell DCist/WAMU they were blindsided by DHCD’s sudden announcement that the program had run out of funding. 

“DHCD has been working to find additional funding to meet the demand to the best of our ability to continue the HPAP program for as long as possible to support as many District residents as possible,” the spokesperson, Tim Wilson, says, adding that eligible participants who submitted a ratified sales contract to purchase a home and who received a closing date confirmed by their HPAP administrator before June 23 are still eligible to receive funds for closing.

While it’s not atypical for HPAP funding to run out before the end of the year, real estate players worry that the program running dry at this time could dampen what is typically a prime season for house sales. One real estate agent who asked to remain anonymous to prevent professional repercussions calls HPAP “the game in town” for first-time and lower-income homebuyers. 

“When the lower end can’t move, then the middle can’t move, then the high end can’t move [in] the market. Because if you’re selling that so you can buy something else, you need that money,” says the agent, who has worked in the D.C. market since the 1990s. 

While sellers and their agents have often snubbed offers involving HPAP recipients – the bureaucracy involved in cobbling together a financing offer can drag a closing out to 45 days or more – rising interest rates and home prices have made the program more appealing in recent months, experts say. 

Only low- to moderate-income first-time homebuyers in D.C. are eligible for the program, and for the lower-income recipients, payments are deferred until the property is sold. Applicants must first attend a day-long training on home buying and program rules at one of a half-dozen community-based organizations; those qualified to receive program funds ultimately receive their notice of eligibility and can begin the housing search with a better understanding of how much they can afford to pay for a home.

The agent who spoke with DCist/WAMU is working with several women who were in the middle of applying for HPAP funds when they received the news from DHCD, although the agent is encouraging clients to continue applying anyway. (Barring major changes to a recipient’s income, notices of eligibility are valid one year from the date they’re issued.) Another client of the agent’s, who received HPAP financing, is expected to close on their home this week – “lord hear my prayer,” the agent says.

Potentially exacerbating the strain on HPAP’s funding is a recent change in the maximum available award for recipients. Mayor Muriel Bowser announced last fall that D.C. would more than double the amount of assistance that residents could be eligible to receive, from $80,000 to $202,000. While the programmatic change was ostensibly designed to make recipients more attractive in an increasingly competitive market, housing experts worried privately that the decision could reduce the number of people who ultimately received funding. 

In the meantime, Courtney says she now has to start from square one when HPAP receives funding in the new fiscal year that begins October 1. She says she asks, jokingly, whether the HPAP deal falling through is a sign she’s not supposed to stay in D.C.

“My life is here, my work is here, my community is here,” she says. “I’m just distrustful that the program will actually come through. So I don’t know if I want to go through that anymore. It’s been a roller coaster.”