DC mortgages: recordation tax, homestead deduction and HPAP

#Recordation and transfer taxes in DC

When a deed is recorded in the District, two taxes apply at the same rate: the recordation tax, which is the buyer’s, and the transfer tax, which is the seller’s. On residential sales below $400,000 each is 1.1% of the price (2.2% combined); at $400,000 or more each rises to 1.45%. The higher rate applies to the whole price, not just the part above the threshold.

For many DC buyers the recordation tax is the largest single closing cost. The closing cost estimator shows them alongside the CFPB’s typical 2%–5% of other costs.

#The reduced recordation rate for first-time DC homebuyers

DC residents buying their first District home can record the deed at 0.725% instead of the full buyer rate, if household income is within the limits on the Office of Tax and Revenue’s form and the price is no more than $777,000 for tax year 2026. “First-time DC homebuyer” means you have never owned a house, condo or co-op interest in the District that received the homestead deduction (with an exception for a home given up in a divorce). Co-op buyers get reduced rates too. The seller’s transfer tax doesn’t change.

The median home falls under the ceiling, so a qualifying buyer would pay about $5,317 in recordation tax instead of $10,634 — a saving of about $5,317.

#The homestead deduction and assessment cap

If the home is your principal residence, the homestead deduction removes $91,950 from its assessed value for tax year 2026, which the Office of Tax and Revenue says saves $781.58 a year. Apply online through MyTax.DC.gov: applications filed from October 1 to March 31 get the full year’s benefit; later filings get half. Homesteaded owners are also protected by the assessment cap, which limits the taxable assessment increase to 10% a year even when values jump. Seniors and people with disabilities who qualify can have their tax cut in half.

Census data put the median DC tax bill at $4,594 a year, an effective rate of 0.63%.

#HPAP and DCHFA: DC’s buyer programs

HPAP repayment depends on income: for lower-income households the loan is deferred until you sell, refinance to take out equity or move out, while moderate-income households start principal-only payments after a deferral period. Funds for the current fiscal year opened October 1, 2026; once you receive a notice to proceed you have a limited window to sign a contract and close. DCHFA also offers a Mortgage Credit Certificate — see mortgage credit certificates.

#What the median DC home costs

DC households have the highest median income in the country ($109,707), and that income, at Freddie Mac’s 30% guideline, supports about $365,000 with 10% down — $368,400 below the median home value. Median owner costs for homes with a mortgage, $3,181/mo, are the highest among the states and DC. Try other numbers in the mortgage payment calculator.

#A city of renters and older homes

Most DC households rent: only 40.9% of occupied homes are owner-occupied, the lowest share in the country (US: 65.3%). The housing is old, too — the median home was built in 1960, the 2nd-oldest stock among the states and DC — which makes rowhouse inspections, condo reserve studies and co-op board approvals part of the process. Renters weighing a purchase against the median rent of $1,931/mo can use the rent vs buy calculator. For neighborhood prices and the local market, see the Washington, DC market guide.