Virginia first-time homebuyer assistance programs
Virginia may be for lovers, but it’s for homeowners, too. Over 67 percent of the state’s residences are occupied by their owners, according to 2022 U.S. Census figures. First-time homebuyers are essential to that trend.
Virginia Housing is a state-created not-for-profit organization that offers programs for repeat and first-time homebuyers, including loans, grants, education and other forms of assistance. Let’s break down what they offer.
Virginia first-time homebuyer programs
Virginia Housing Conventional programs
Virginia Housing offers two 30-year, fixed-rate conventional loan programs:
- Virginia Housing Conventional
- Virginia Housing Conventional No Mortgage Insurance
The primary difference between the two programs is that the latter does not require the borrower to pay mortgage insurance, which is an additional cost on top of the monthly mortgage payment. Both loan programs provide first-time borrowers with up to 97 percent financing, and they can be paired with other programs that offer down payment assistance or a tax credit.
Borrower requirements:
- 3 percent down payment (down payment assistance available)
- 640 minimum credit score for Conventional Loan; 660 minimum credit score for Conventional No Mortgage Insurance Loan
- Maximum 45 percent debt-to-income (DTI) ratio
- Amount borrowed can’t exceed conforming loan limit
- Maximum 3 percent seller concessions (6 percent if down payment is 10 percent or more)
- Must complete homebuyer education course
- Must meet Virginia Housing income limits
Property requirements:
- Must be a single-family, one-unit home or agency-approved condominium; manufactured homes don’t qualify
- Must be in Virginia
- No maximum sales price nor acreage limitation unless loan is combined with down payment assistance or tax credit
Virginia down payment assistance
Virginia Housing Plus Second Mortgage
The Virginia Housing Plus Second Mortgage saves first-time homebuyers from having to come up with substantial funds out-of-pocket for a down payment. The program pairs an eligible Virginia Housing first mortgage — either a Virginia Housing Conventional, Conventional No Mortgage Insurance or FHA loan — with a Virginia Housing second mortgage.
The second mortgage is capped at 3 percent to 5 percent of the purchase price, depending on the borrower’s credit and what type of loan the first mortgage is, to cover the down payment. It is available to first-time homebuyers, but also buyers who are purchasing in a specially designated “Targeted Area.”
Borrower requirements:
- Must have 1 percent of home’s purchase price available for closing costs or prepaids or held in reserves
- Must meet Virginia Housing income limits
- Must complete homebuyer education course
Property requirements:
- Must meet first mortgage requirements
- Must be in Virginia
- No more than two acres, although lenders may consider exceptions for up to 10
- Sales price must not exceed Virginia Housing loan limits
Virginia Housing Down Payment Assistance (DPA) Grant
Virginia Housing’s Down Payment Assistance (DPA) grant provides qualified first-time homebuyers (or those buying in a “Targeted Area”) with up to 1 percent of the home’s purchase price to put toward a down payment. The borrower must use the grant funds in conjunction with a Virginia Housing Conventional, Conventional No Mortgage Insurance or FHA loan — and also meet all of the requirements of that first mortgage — in order to qualify.
Virginia Housing Closing Cost Assistance (CCA) Grant
Virginia Housing’s Closing Cost Assistance (CCA) grant reduces out-of-pocket expenses for first-time homebuyers (or those buying in a “Targeted Area”) seeking a VA loan or USDA loan. The maximum grant is 2 percent of the home’s purchase price, and borrowers can apply the money to closing costs, discount points, prepaid items and the VA funding fee or USDA guarantee fee. Like the DPA grant, the borrower must also meet all of the requirements of the first mortgage in order to qualify.
Other Virginia homebuyer assistance programs
Virginia Housing Granting Freedom program
Virginia Housing’s Granting Freedom program provides up to $8,000 in grant funds for members of the military to make their homes more accessible. The grant is available to Virginia veterans or servicemembers living with a disability because of an injury sustained in the line of duty. The funds can help pay for modifications such as ramps or wider doorways, and apply to work done in both owner-occupied homes and rental units.
Virginia Housing Loan Combo
Through the Virginia Housing Loan Combo program, first-time homebuyers in Virginia can combine a Virginia Housing mortgage, down payment assistance grant and a free homebuyer education course into a single package.
RRHA homeownership initiative
Coming in early 2024, the Richmond Redevelopment and Housing Authority (RRHA) is launching a new homeownership initiative. This program is specifically for public housing residents and voucher holders. It’s proposed to offer closing cost and down payment assistance, paired with below-market interest rates and mortgage insurance relief for qualified buyers in Richmond.
Other Virginia first-time homebuyer loans
On a national level, there are loans geared toward first-time homebuyers that Virginians can take advantage of. Some of the loans you can explore include:
- FHA loans: Loans insured by the Federal Housing Administration (FHA) have more lenient financial requirements than other loans. You can get an FHA loan with 3.5 percent down and a credit score as low as 580.
- VA loans: For active-duty military, veterans and surviving spouses, a loan guaranteed by the U.S. Department of Veterans Affairs (VA) is a great option. These loans typically come with lower interest rates and don’t require a down payment.
- USDA loans: Loans guaranteed by the U.S. Department of Agriculture (USDA) also require no down payment, but you’ll need to buy in a designated rural area and meet area-specific requirements.
- HomeReady and Home Possible loans: HomeReady and Home Possible are loan programs created by government-sponsored enterprises Fannie Mae and Freddie Mac. They’re specifically for first-time homebuyers, requiring only 3 percent down and having more flexible income requirements.
Note that Virginia Housing offers all of these loan types at lower interest rates, which can be paired with closing cost and down payment assistance.
Get started
Once you’ve familiarized yourself with Virginia and national first-time homebuyer assistance programs, it’s time to research the ins and outs of buying a house in Virginia. Depending on where you live, you may have more access to resources. However, there may also be more competition in buying a home in the state’s more popular housing markets.
When you’ve informed yourself and are ready to move forward with buying a home, contact Virginia Housing to start the process of getting assistance.
