Last Updated on: 31st July 2023, 04:10 pm
Owning a home is a dream for many Virginia residents. However, the costs associated with getting a loan and putting up a downpayment can create major roadblocks for many people, especially if you’ve never owned a home before. Luckily, first-time homebuyer programs in Virginia make the barriers to getting home more manageable, especially for those who don’t meet the requirements of a traditional bank loan.
Virginia first-time homebuyer programs come in many forms, including forgivable grants, down payment or closing cost assistance, and loans with flexible terms. A first-time homebuyer could be someone who has never owned a home or has not owned a home for a specific period – typically three years. So many different residents can qualify as first-time home buyers in Virginia. Here are a few of the programs you should consider.
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First Time Home Buyer Tax Credits & Down Payment Assistance in Virginia
First-time home buyer programs in VA don’t always include a loan, and often they come in the form of down payment and closing cost grants. These programs help to reduce some of the additional expenses associated with buying your first home, which can help make the costs more manageable. Here are some of the main statewide programs you should consider if you’re looking to buy a home.
The Virginia Housing Development Authority offers a down payment assistance grant to help first-time homebuyers find the property of their dreams faster. It’s a true grant, which means that the money does not have to be repaid and can be put toward the downpayment on your mortgage. Applicants must have a minimum credit score of 620 – 660 (depending on the loan program). They must also meet the following requirements:
- Must be a first-time homebuyer or a repeat buyer purchasing in areas of economic opportunity
- Must have an FHA or Conventional No MI loan from the Virginia Department of Housing
- Household income must be within Virginia Housing’s Income Limits
- Sales Prices/Loan Limits must be within the standards set by Virginia Housing (see link above)
Anyone who meets the minimum requirements of this down payment assistance program in Virginia can receive the funds they need to get a low-interest loan without having to save for years to afford the down payment.
Another popular first-time home buyer grant in Virginia is the closing cost assistance program from Virginia Housing. Like the down payment grant, the funds do not need to be repaid and can go toward paying out-of-pocket expenses related to obtaining a loan, such as lender fees, taxes, appraisal, inspection fees, etc.
Applicants must have at least a 620 credit score and meet all the same requirements of the downpayment assistance program. Buyer closing costs typically add up to 3-6% of the loan amount, so this Virginia first-time homebuyer program can save you a substantial sum which you can use to put toward the down payment or pay down the mortgage faster.
First-Time Home Buyer Loans in Virginia
Beyond grants, residents will find many first-time home buyer programs in Virginia that come as affordable loans. These loans feature flexible requirements that are more manageable for new homebuyers and come with other attractive features that can benefit a variety of borrowers.
Virginia Housing Conventional
The Virginia Housing Conventional loan is a low-interest, 30-year fixed-rate loan insured by the Virginia Department of Housing. Although you do not need to be a Virginia first-time home buyer, they are popular among new property owners looking for a low-cost loan. Applicants can qualify with a 640 credit score (660 to avoid PMI), a 3% down payment, and a 45% debt-to-income ratio.
The Virginia Housing Plus Second Loan is a good option for those who need assistance with the down payment and closing costs. It’s technically two separate loans, a primary mortgage to pay for the home and a second mortgage that is put toward those additional expenses. Both loans are 30-year fixed-rate mortgages with no prepayment penalty. Applicants must be first-time home buyers within limits set by the Department of Housing and have at least 1% of the sales prices available to put toward closing costs or held in reserve.
The Virginia Housing Loan Combo combines a few different first-time home buyer programs in Virginia with additional resources to educate applicants. This loan program includes a down payment grant with a Virginia Housing Conventional mortgage and a free home buying course to help you better understand the process.
An FHA loan is a popular loan program for first-time home buyers in Virginia with bad credit. The Federal Housing Administration insures the loan, which makes it available to applicants all over the country, including Virginia first time home buyers. To qualify, you must have at least a 580 credit score, a 3.5% down payment, and a DTI ratio of 43% or lower.
USDA loans are insured by the Department of Agriculture and designed specifically for rural homeowners. Applicants must have a 640 credit score, a debt-to-income ratio below 43%, and an income that does not exceed 115% of the area’s median income. But you can get a loan for 0% down and interest rates as low as 1%.
VA loans are also popular among applicants looking for first-time home buyer programs in Virginia with bad credit. Residents can qualify with a credit score of 580 or better and 0% down. Although they’re insured by the veteran’s administration and only available to retired or active-duty military personnel.
First-Time Home Buyer Programs in Richmond, VA
Residents of Henrico County may qualify for financial assistance with a down payment or closing costs. Assistance is offered based on need and structured as a deferred (forgivable) loan. The county partners with two different non-profits to administer the program:
The Southside Community Development and Housing Program: Applicants must be first-time homebuyers with at least a 640 credit score, $2000 in savings, and an annual income of at least $40,000. Enrollment in the program also includes financial counseling from a home loan specialist who will help you prepare for the loan application process and provide you with additional advice.
Housing Opportunities Made Equal of Virginia, Inc. (HOME): Applicants must be first-time homebuyers with an annual income above $30,000 and below 80% of the area median income. Your credit must be reasonably good, with no collections or outstanding judgments. Applicants are also required to take an online course in responsible home ownership and meet with a counselor to discuss your financial goals.
Chesterfield County also partners with several federally-funded grant programs to assist with purchasing a home and other essential expenses. Programs administering first-time homebuyer programs in Chesterfield County include:
HUD-funded Community Development Block Grant: Funded by the Department of Housing and Urban Development, community development block grants can be used for a wide variety of housing initiatives and economic development programs. These block grants are administered at the state level and can be used to fund homebuyer assistance programs up to 50% of the lender-required down payment amount.
Home Opportunities Made Equal Virginia, Inc. (HOME): The HOME program is also available to residents in Chesterfield County. The requirements are very similar to Henrico County, and residents must have an annual income of at least $30,000 but no more than 80% of the area median income and reasonably good credit with no outstanding judgments or collections.
Virginia First Time Home Buyer FAQs
Are first-time homebuyers programs with it?
For many residents, first-time homebuyer programs can make buying your first property far more manageable and less intimidating. Many programs offer financial assistance and educational resources that can demystify the process. However, it all depends on whether you need the assistance or not.
What is considered a first-time homebuyer in Virginia?
A first-time homebuyer in Virginia is an individual or family who has never owned a home or has not owned a property in at least three years.
Do you have to pay back downpayment assistance in Virginia?
It depends on the program you use. If you apply for a downpayment assistance grant through Virginia Housing, it does not need to be repaid, but if you get a second mortgage to pay for the closing costs, it does need to be repaid (although, in some cases, it can be forgiven).
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