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Mortgages

First-Time Home Buyer Programs in Virginia

Updated May 02, 2023   |   11 mins read
Written by Aly Yale  
Updated May 02, 2023

Many Americans want to buy a home—at least, eventually. But rising housing costs in some areas can make that difficult. Fortunately, federal and state-based help is available. 

Use this guide to learn about first-time home buyer programs in Virginia.

In this guide:

First-time home buyer programs in VA

The Virginia Housing Development Authority (VHDA) aims to make housing affordable and accessible for every Virginian. 

The agency backs a variety of home loans facilitated by approved lenders, a home buying education course, down payment- and closing cost-assistance grants, community revitalization funding, and more. 

Through a variety of VHDA programs, Virginia first-time home buyers can get the help they need to purchase a home. Here they are:

Fannie Mae HFA Preferred with Reduced Mortgage Insurance

This 30-year, fixed-rate loan is available to both first-time and experienced home buyers. The loan requires a 3% down payment and comes with minimal mortgage insurance. You can also use it to refinance an existing mortgage loan.

Benefits

  • 30-year, fixed-rate loan.
  • Low mortgage insurance.
  • Just 3% down payment required (lower if you combine with a VHDADown Payment Assistance grant).
  • Can be used to refinance.
  • Available for first-time and experienced buyers.
  • Can be used with VHDA’s down payment grants.
  • Can be used with VHDA’s Mortgage Credit Certificate program.

Additional eligibility requirements

  • You must have a credit score of at least 640.
  • Your debt-to-income ratio must be 45% or lower.
  • The purchase price of the home must fall under conforming limits for your area.
  • You must fall under income limits for your region. These limits are lower if you’re using a Down Payment Assistance grant.
  • The home must be your primary residence.
  • First-time buyers must take a HUD-approved home buying education course, which the VHDA facilitates. 
  • You can’t have had a foreclosure or bankruptcy within the last three years.

Fannie Mae 97% No Mortgage Insurance

This VHDA loan requires just a 3% down payment and no mortgage insurance, meaning you could see lower monthly payments than other options. It’s open to first-time and repeat buyers, and you can use it to refinance, too. 

Benefits

  • 30-year, fixed-rate loan.
  • No mortgage insurance required.
  • Just 3% down payment required (lower if you combine with a VHDA DPA grant).
  • Can be used to refinance.
  • Available for first-time and repeat buyers.
  • Can be used with VHDA’s down payment grants.
  • Can be used with VHDA’s Mortgage Credit Certificate program.

Additional eligibility requirements

  • You must have a credit score of at least 660.
  • Your debt-to-income ratio must be 45% or lower.
  • Your loan-to-value ratio must be over 80%.
  • The purchase price of the home must fall under Fannie Mae conforming limits for your area.
  • You’ll need to fall under the income limits for your region. These limits are lower if you’re using a Down Payment Assistance grant.
  • The home must be your primary residence.
  • First-time home buyers must take a HUD-approved home buying education course. 
  • You can’t have had a foreclosure or bankruptcy within the last three years.
  • The home must be a single-family, one-unit property or an approved condo.

Granting Freedom

This is VHDA’s grant program for disabled veterans and military members. These grants go up to $6,000 per residence, and grantees can use funds to make home modifications to increase accessibility on existing property. 

Benefits

  • Up to $6,000 to make home modifications.
  • Can be used on rental units with approval from the landlord.
  • Can apply for one grant every five years.

Additional eligibility requirements

  • You must have documentation from the Department of Veterans Affairs or the Medical or Physical Evaluation Board confirming your disability. 
  • You must include contractor estimates and detailed descriptions of your planned modifications when applying.
  • You’ll need to include the title deed, mortgage statement, or property tax assessment if you own the home. If you rent, you’ll need a letter from your landlord authorizing the modifications.

VHDA FHA loan

The VHDA also supports FHA loans, mortgage loans guaranteed by the U.S. Federal Housing Administration. These loans have some of the lowest credit score requirements of all mortgage programs. 

FHA loans typically require a 3.5% down payment, but you can combine it with a VHDA Down Payment Assistance grant to reduce this amount to as low as 1%. 

Benefits

  • 30-year, fixed-rate loan.
  • Just 3.5% down payment required (lower if you combine with a VHDA DPA grant).
  • Low credit score requirements.
  • Can be used with VHDA’s down payment grants.
  • Can be used with VHDA’s Mortgage Credit Certificate program.

Additional eligibility requirements

  • You must have a credit score of at least 620.
  • The purchase price of the home must fall under the required FHA loan limits for your area.
  • You must be a first-time home buyer (you have not owned a home in the last three years).
  • You’ll need to fall under the income and home price limits for your region. These limits are lower if you’re using a Down Payment Assistance grant.
  • The home must be your primary residence.
  • Your debt-to-income ratio must be 45% or lower.
  • You must take a HUD-approved home buying education course. 
  • You can’t have had a foreclosure or bankruptcy within the last three years.
  • The home must be a single-family, one-unit property or an approved condo.

VHDA VA loan

For military members, veterans, and their spouses, the VHDA backs loans offered by VA lenders. Backed by the U.S. Department of Veterans Affairs, these loans have low credit score requirements, and require zero down payment and no mortgage insurance.

Benefits

  • 30-year, fixed-rate loan.
  • VA mortgage interest rates tend to be low.
  • No down payment.
  • No mortgage insurance.
  • Low credit score requirement.
  • Can be used with VHDA’s closing cost assistance grants.
  • Can be used with VHDA’s Mortgage Credit Certificate program.

Additional eligibility requirements

  • You must obtain a Certificate of Eligibility from the Department of Veterans Affairs.
  • You must have a credit score of at least 620.
  • You must be a first-time home buyer (you have not owned a home in the last three years)
  • You’ll need to fall under the income and home price limits for your region.
  • The home must be your primary residence.
  • Your debt-to-income ratio must be 45% or lower.
  • You must take a HUD-approved home buying education course. 
  • You can’t have had a foreclosure or bankruptcy within the last three years.
  • The home must be a single-family, one-unit property or an approved condo.

VHDA USDA loan

For buyers interested in a rural real estate, USDA loans may be an option. These are insured by the U.S. Department of Agriculture and encourage homeownership in less populated areas. They require zero down payment and low mortgage insurance premiums.

Benefits

  • 30-year, fixed-rate loan.
  • No down payment.
  • Low mortgage insurance premiums.
  • Can be used with VHDA’s closing cost assistance grants.
  • Can be used with VHDA’s Mortgage Credit Certificate program.

Additional eligibility requirements

  • You must have a minimum credit score of 620.
  • Your debt-to-income ratio must be 45% or lower.
  • You must purchase a property in an eligible rural area.
  • You must be a first-time home buyer (you have not owned a home in the last three years).
  • You’ll need to fall under the income and home price limits for your region.
  • The home must be your primary residence. 
  • You must take a HUD-approved home buying education course. 
  • You can’t have had a foreclosure or bankruptcy within the last three years.
  • The home must be a single-family, one-unit property or an approved condo.

VHDA Plus Second Mortgage

The Plus Second Mortgage Program is a second mortgage loan to cover your down payment and a portion of your closing costs. It is a 30-year, fixed-rate loan that can finance up to 5% of your home’s purchase price. 

Benefits

  • 30-year, fixed-rate loan.
  • Can cover down payments up to 5% of the home’s sale price.
  • May be used to finance closing costs, such as origination fees and mortgage insurance.
  • Higher income limits cater to borrowers who don’t qualify for grants.
  • Can be combined with other down payment assistance programs.
  • Can be combined with the Mortgage Certificate Program.

Additional eligibility requirements

  • You must have a 680 credit score or higher.
  • You must have at least 1% of the purchase price in reserves.
  • You’ll need to fall under the income and home price limits for your region.
  • The home must be your primary residence. 
  • First-time buyers must take a HUD-approved home buying education course. 
  • You can’t have had a foreclosure or bankruptcy within the last five years.

VHDA Down Payment Assistance Grant

The Down Payment Assistance Grant can be used to cover some or all of your down payment. These grants go up to 2.5% of the purchase price and do not need to be repaid. You can combine with other assistance and mortgage programs.

Benefits

  • Can cover up to a 2.5% down payment.
  • Does not need to be repaid.
  • Can be combined with other assistance and mortgage programs.
  • Can be combined with the Mortgage Credit Certificate program.

Additional eligibility requirements

  • It must be used with a VHDA loan.
  • You must have a sales contract in place before funds can be granted.
  • You must be a first-time home buyer (you have not owned a home in the last three years).
  • You may need to fall under the income and home price limits for your region.
  • The home must be your primary residence. 
  • You must take a HUD-approved home buying education course. 
  • You can’t have had a foreclosure or bankruptcy within the last five years.

VHDA Closing Cost Assistance Grant

The VHDA’s Closing Cost Assistance Grant can help cover many of the upfront fees and other costs of closing on your home. Funding goes up to 2% of the purchase price and does not need to be paid back.

Benefits

  • Can cover closing costs up to 2% of the purchase price.
  • Can cover VA funding fee and USDA guarantee fee.
  • Does not need to be repaid.
  • Can be combined with the Mortgage Credit Certificate program.
  • Can be combined with other down payment assistance programs.

Additional eligibility requirements

  • It must be used with a VHDA USDA or VA loans.
  • You must be a first-time home buyer (you have not owned a home in the last three years).
  • You may need to fall under the income and home price limits for your region.
  • You must take a HUD-approved home buying education course. 
  • The home must be your primary residence. 
  • You can’t have had a foreclosure or bankruptcy within the last five years.

Mortgage Credit Certificate

A VHDA Mortgage Credit Certificate (MCC) can reduce the amount of federal income tax you owe each year. The certificate qualifies you for a tax credit up to 20% of mortgage interest you pay each year for as long as you own the home. 

Note: This is a dollar-for-dollar reduction in taxes owed, different from the tax deduction for mortgage interest the IRS allows homeowners, which reduces your taxable income.

Benefits

  • Can reduce your annual tax burden.
  • Can be used as long as you live in the home.

Additional eligibility requirements

  • You must be a first-time home buyer (you have not owned a home in the last three years).
  • You’ll need to fall under the income and home price limits for your region.
  • You must take a HUD-approved home buying education course if your loan was originated by VHDA.
  • The home must be your primary residence. 

Other first-time home buyer programs

In addition to the VHDA first-time home buyer programs in Virginia, you may find assistance through national first-time home buyer programs, including Good Neighbor Next Door or Native American Direct Loans through the VA.

Whichever loan program you choose, shop around before applying with a lender. Get quotes from several of the best mortgage lenders, and compare rates and terms. Doing so could save you significantly, both up front and over the life of your mortgage loan.