Virginia First-Time Homebuyer Programs

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Updated on Monday, April 1, 2019

Buying your first home can be tough. You not only need money to pay for the house itself, but also closing costs, taxes and attorney fees. Plus, you’ll need upfront cash for a down payment. But if Virginia is where you plan to lay your head, you have plenty of resources to help make buying a home more affordable.

The Virginia Housing Development Authority (VHDA) offers programs for first-time homebuyers (and in some cases repeat owners) that can finance your down payment, lower your taxes or give you access to affordable, 30-year, fixed-rate mortgages.

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Many of the VHDA’s loans can be combined with their Down Payment Assistance Grant or Mortgage Credit Certificate to help you save more money.

Here’s a look at programs in Virginia that can make buying a home a reality for you.

Virginia first-time homebuyer programs

The VHDA works with public-private partners to help first-time homebuyers get mortgages and to fund revitalization projects in apartment communities and neighborhoods. The organization also offers free homebuyer education classes, housing counseling and housing-related help for seniors and people with disabilities.

Eligibility for Virginia assistance

The requirements for the VHDA’s loans vary depending on your situation and the type of funding you’re requesting, but there are specific requirements the programs share in common. Many, but not all, have a first-time buyer requirement, meaning you can’t have owned a home in the past three years. To qualify for a VHDA program, you must also:

Down Payment Assistance Grant

What is it?

  • Grant for up to 2.5% of the purchase price that can be used toward a down payment.
  • The grant does not need to be repaid.
  • Reduces monthly housing payment.
  • Can be combined with a Mortgage Credit Certificate.

Requirements

  • Must be a first-time homebuyer unless buying in a targeted area.
  • Down payment of 1% required
  • Can only be used with VHDA loans.
  • The eligible VHDA mortgage must be locked in before reserving grant funds.
  • Must have a ratified sales contract before reserving grant funds.

How to apply

If you’re interested in the Down Payment Assistance Program, you’ll need to first find a participating lender. A lender can check that you qualify for the program and handle your application.

Closing Cost Assistance Grant

What is it?

  • Grant for up to 2% of the purchase price that can be used toward closing costs.
  • No repayment required.
  • Can be combined with a Mortgage Credit Certificate and other non-VHDA assistance.
  • May be enough to cover all closing costs.

Requirements

  • Must be a first-time homebuyer or buying a home in a targeted area.
  • Must be used with a VHDA Rural Housing Service or Veterans Affairs loan.
  • Funds can’t be used toward a down payment.
  • The eligible VHDA mortgage must be locked in before reserving grant funds.
  • Must have a ratified sales contract before reserving grant funds.

How to apply

To apply for the Closing Cost Assistance Grant, first find a find a participating lender. Your lender will check to see that you qualify for the program and help apply.

Mortgage Credit Certificate

What is it?

  • Dollar-for-dollar credit for first-time homebuyers toward federal income tax liability.
  • The credit can be for up to 20% of annual mortgage interest.
  • Good for the life of the mortgage as long as you’re living in the home.
  • May be no cost if issued with a VHDA loan.
  • Can be combined with a VHDA Plus Second Mortgage or Down Payment Assistance Grant.

Requirements

  • Must be a first-time homebuyer unless you’re buying a home in a targeted area.

How to apply

To apply for a Mortgage Credit Certificate, first find an approved MCC lender. You should then fill out the MCC Homebuyer Application and Fact Sheet and give that to your lender. Also, get an MCC commitment from the VHDA before you close.

Fannie Mae HFA Preferred with Reduced Mortgage Insurance program

What is it?

Requirements

  • Minimum 640 credit score.
  • Minimum 3% down payment. Can be lower if combined with the VHDA Down Payment Assistance Grant.
  • Maximum 45% debt-to-income ratio.
  • Maximum 3% seller concessions (or 6% if making a down payment of 10% or greater).
  • Must complete a free homebuyer education course.

How to apply

To apply for a Fannie Mae HFA Preferred with Reduced Mortgage Insurance, first sign up for a free homebuyer education course. The one-day course is about eight hours long and can be taken online or in person. If you’re buying the house with someone else, they’ll have to take the class, too.

Next, find a participating lender. The lender can pre-qualify you for the loan and fill out all the paperwork.

Fannie Mae 97% No Mortgage Insurance program

What is it?

  • 30-year, fixed-rate loan for first-time and repeat homebuyers.
  • Doesn’t require monthly mortgage insurance.
  • Can be used for limited cash-out transactions and purchases.
  • Eligible for the VHDA’s Plus Second Mortgage and Mortgage Credit Certificate.
  • Flexible down payment sources are allowed, including gifts, FNMA Community Seconds, VHDA Down Payment Assistance Grant funds and VHDA Plus Second Mortgage

Requirements

  • Minimum credit score of 660
  • Down payment of 3% required, but may be lower if combined with the Down Payment Assistance Grant.
  • Maximum 45% debt-to-income ratio.
  • Maximum 97% loan-to-value ratio.
  • Maximum seller concessions of 3% (or 6% if making a down payment of 10% or greater).
  • Must complete a homebuyer education course.

How to apply

Your first step in qualifying for a Fannie Mae 97% No Mortgage Insurance loan is to sign up for a free one-day homebuyer education course. The class can be taken online or in person. Any co-borrowers will have to take the class as well.

After that, find a participating lender, who’ll determine whether you’re eligible and help you apply for the loan.

VHDA Federal Housing Administration (FHA) program

What is it?

  • A 30-year, fixed-rate FHA loan that offers 100% financing.
  • Insured by the FHA.
  • Down payment of 3.5% or as low as 1% if using the Down Payment Assistance Grant
  • Eligible for the Mortgage Credit Certificate and the VHDA Plus Second Mortgage (if not using the down payment grant).

Requirements

  • Must be a first-time homebuyer unless buying in a targeted area.
  • Minimum credit score of 620.
  • Maximum debt-to-income ratio of 45%.
  • Must complete a homebuyer education course.

How to apply

You’ll need to take a free, eight-hour homebuyer education course to get started. Next, contact a participating lender, who can tell you whether you qualify for the program and help you fill out the paperwork.

VHDA Veterans Affairs (VA) program

What is it?

  • 30-year, fixed-rate VA loan for eligible veterans that offers 100% financing.
  • No down payment for those who qualify.
  • Guaranteed by the VA.
  • Can be combined with the VHDA’s Closing Cost Assistance Grant.
  • Eligible for the Mortgage Credit Certificate.

Requirements

  • Minimum credit score of 620.
  • Must be a first-time homebuyer unless buying in a targeted area.
  • Maximum debt-to-income ratio of 45%.
  • Must complete a homebuyer education course.

How to apply

To get started, take the free homebuyer education course. You can take the one-day course online or in person. Anyone buying the house with you will have to take the class, too.

Next, search for a participating lender. They’ll work with you to see if you’re eligible and walk you through the lending process.

VHDA Rural Housing Service (RHS) program

What is it?

  • Thirty-year, fixed-rate USDA loan
  • Guaranteed by the Department of Agriculture.
  • 100% financing available for eligible rural properties.
  • Low mortgage insurance costs.
  • Eligible for VHDA’s Closing Cost Assistance grant and the Mortgage Credit Certificate

Requirements

  • Home must be located in a rural area, which is generally defined as having a population of 35,000 or less.
  • Maximum 45% debt-to-income ratio.
  • Minimum credit score of 620.
  • Must complete a homebuyer education course

How to apply

To receive a VHDA RHS loan, you and anyone else you’re buying the house with will need to sign up for a free one-day homebuyer education course, which you can take online or in person. The course is about eight hours long.

Find a participating lender next. The lender can pre-qualify you for the loan and guide you through the application and lending process.

VHDA Plus Second Mortgage

What is it?

  • Eliminates the need for a down payment for first-time homebuyers by combining a VHDA mortgage with a second VHDA mortgage that covers the down payment cost.
  • First mortgage is a 30-year, fixed-rate loan with no prepayment penalty.
  • Borrowers with credit scores of 680 and above can finance some of their closing costs, too.
  • Can be combined with down payment assistance programs from other organizations.
  • Eligible for the Mortgage Credit Certificate.

Requirements

  • First mortgages must be a VHDA FHA, VHDA Fannie Mae No Mortgage Insurance or VHDA Fannie Mae Reduced Mortgage Insurance loan.
  • Depending on your credit score and the type of first mortgage, the second mortgage can only be for 3% to 5% of the purchase price.
  • At closing, borrowers must have 1% of the purchase price in reserves or available funds.
  • Minimum loan-to-value (LTV) ratio of 90% on the first mortgage.

How to apply

Your first step in applying for a VHDA Plus Second Mortgage, is to find a participating lender. Your lender will see if you qualify and start the application process if you do.

National assistance

Virginia offers many options for new homebuyers, whether you want help with down payment or closing costs, or are looking to save on a 30-year, fixed-rate loan.

But you’re not limited to state programs. You can also extend your search to national programs. To learn more, check out LendingTree’s guide to national first-time homebuyer programs.

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