It’s steeped in American history, blessed with natural beauty and has some of the country’s lowest crime and unemployment rates to boot. Welcome to Virginia. Are you a first-time homebuyer ready to call this charming state home?
Buying a new home is the single biggest investment you’ll ever make but Virginia has several statewide and local homeownership assistance programs that can help you achieve this milestone purchase. Whether you’re buying a condo in Virginia Beach or settling down in Roanoke — or anywhere in between, read on to learn more about these programs, their eligibility requirements and how to apply.
Who Qualifies as a First-Time Homebuyer in Virginia?
A first-time homebuyer in Virginia is defined as any family or individual who has never owned a home, or at least not in the past three years, depending on the region. It’s worth waiting it out if you’re nearing the three-year mark because these programs could provide a significant financial boost. As always, when you’re doing your research, read the fine print for any limitations.
Statewide Homeownership Assistance Programs
The Virginia Housing Development Authority has a roster of programs that help first-time homebuyers as well as repeat homebuyers or those buying in a targeted area. Across the board, homebuyers will need to complete a homebuyers’ education course. Virginia Housing makes this requirement easy by providing free online and in-person courses.
Here’s a closer look at each program’s details, how to apply as well as the fine print.
Virginia Housing Conventional Home Loan Program
Virginia Housing’s conventional home loans program is the organization’s flagship resource, providing 30-year fixed-interest rate loans with the lowest available mortgage insurance payments. The program comes with the option to use flexible down payment sources, like cash gifts from relatives or Virginia Housing’s own second mortgage and down payment assistance programs. The program also offers a conventional loan without mortgage insurance.
Another massive perk of this type of loan? You only need a 3 percent down payment, or even less if you opt into the second mortgage program — more details on that below.
You can secure a home loan if you’re a first-time or repeat homebuyer. Make sure your credit score is in good standing, as a 640 minimum credit score is required to qualify. You also must have a maximum debt-to-income ratio of 45 percent and stick to income and home purchase price limits that apply to the county you’re buying in.
Read more about the VH Conventional Loans Program on its webpage or in this detailed ebook. You can also look for participating lenders in your area.
Virginia Housing Plus Second Mortgage Program
Saving up for a sizeable down payment is often the main barrier to homeownership. To help, Virginia Housing offers a Plus Second Mortgage program that pairs a Virginia Housing conventional loan with a second mortgage that covers your down payment costs. This program is available only to first-time homebuyers, unless you’re buying in a targeted area.
With Plus Second Mortgage, you can secure another Virginia Housing loan that’s a maximum of 3 to 5 percent of your home’s purchase price, depending on your credit score and the type of Virginia Housing first mortgage you receive. If you have a credit score of 680 or higher, you can also finance part of your closing costs into the second mortgage. You must have 1 percent of the home’s purchase price in your savings. Income limits are a priority, too, so make sure you’re not exceeding limits.
Check out the full details about the VH Plus Second Mortgage Program in the ebook and via a dedicated program guidelines page.
It’s worth noting if you choose this program, you won’t qualify for the down payment assistance or closing cost assistance grant programs. The mortgage credit certificate program — described below — is still fair game, though.
Virginia Housing Down Payment Assistance Grant
Virginia Housing also offers a down payment assistance grant program, which gifts eligible homebuyers with between 2 and 2.5 percent of the home’s purchase price. It’s money you never have to pay back.
To qualify, you must be a first-time homebuyer, and you must be approved for a Virginia Housing first mortgage. Income is the crucial factor here — all household members cannot exceed Virginia Housing’s income limits.
Check out the down payment assistance grant’s full guidelines.
Virginia Housing Closing Cost Assistance Grant
Virginia Housing also runs a closing cost assistance grant program. It’s aimed at helping homebuyers in Virginia who are securing a Rural Housing Service (RHS) or Veterans Affairs (VA) home loan. These are federal loan programs that provide below-market interest home loans without any down payment requirements.
Virginia Housing offers closing cost assistance in the form of a grant worth up to 2 percent of your home’s purchase price, and you never have to pay the money back. You must apply for a VA or RHS first mortgage via a lender partnered with Virginia Housing. You can find a lender here.
See the full details on the VH Closing Cost Assistance Program’s official page.
Virginia Housing Mortgage Credit Certificate
A mortgage credit certificate (MCC) provides eligible first-time homebuyers with a nonrefundable federal income tax credit that can be used to reduce the amount of federal income taxes owed.
Qualified homebuyers can credit up to 10 percent of their annual mortgage interest paid against their year-end tax liability. The tax credit is allowable every year for the life of the original loan (up to 30 years) until the loan is paid off or refinanced.
The MCC can only be issued by Virginia Housing through a participating lender before closing and it’s typically set aside for low- to moderate-income homebuyers. Household income limits and purchase price limits apply.
If you can secure an Virginia Housing conventional loan with the lower mortgage insurance premiums, and either a Plus Second Mortgage or down payment assistance grant, you can see if you qualify for an MCC too. At the end of the day, this trio of incentives could lead to tens of thousands of dollars saved over the lifetime of your home loan. This strategy even has a name, the Virginia Housing Loan Combo, which includes the free homebuyers’ course.
Virginia Tax First Time Home Buyer Savings Account Subtraction
The Virginia Department of Taxation (Virginia Tax) offers a first-time homebuyers savings account program to help homebuyers save up for their big purchase. Any income produced by the account, such as interest and capital gains, is tax-free in the state. You can subtract this income from your federal adjusted gross income to determine your Virginia adjusted gross income.
Your account can have no more than $50,000 in principal and $150,000 in principal and interest. The cash in your savings account can only be used for expenses related to buying your first home, specifically your down payment and closing costs.
Most banks across Virginia offer this savings account, so check with your bank to learn more or read more about the first-time homebuyers savings account on its official page and dedicated guidelines page.
Virginia Credit Union First-Time Homebuyers Program
If you’re a member of the Virginia Credit Union, you may be able to take advantage of its first-time homebuyers program, which provides lower-interest loans at either a fixed or adjustable rate. With your home loan in hand, you can apply for a special rebate of up to $2,500.
Learn more about the Virginia Credit Union program.
Virginia Department of Housing and Community Development Down Payment Assistance
Virginia’s Department of Housing is another statewide resource that may be of help to homebuyers, especially if they fall under the low-income category. If you are a first-time homebuyer and earn 80 percent or less of your region’s area median income (AMI), then you could apply for a down payment assistance grant worth up to 15 percent of your home’s purchase price. You may also qualify for a $2,500 monetary gift to cover closing costs, attorney’s fees, title insurance and other housing needs. You’re also responsible for contributing 1 percent of the sales price of your home from your own savings.
Check out the program’s official webpage and eligibility requirements.
Housing Opportunities Made Equal of Virginia (HOME) Steps to Homeownership Program
HOME is a federally funded nonprofit that offers a Steps to Homeownership program, which provides homeownership classes, free financial counseling and down payment assistance.
You’ll need to be a first-time homebuyer who can secure a home loan on your own. HOME doesn’t offer mortgage assistance. It will, however, step in to help you through the process via counseling and education. You need to submit an application, complete the online education workshop and meet with your counselor to qualify for the DPA financial assistance. Check out the program’s full details and how to apply.
Homebuyer Programs by Location in Virginia
While Virginia has a pretty lengthy list of statewide programs to help you with your big purchase, a number of local homebuyer assistance programs may offer additional assistance.
Alexandria provides closing cost and down payment assistance for first-time homebuyers through its Flexible Homeownership Assistance Program. It provides up to $50,000 in funding — the amount you’re eligible for is based on your gross household income, family size and financial need. The funding is provided as a zero interest second mortgage that you’ll repay only when you pay off your mortgage or sell your home.
Another notable initiative is the Office of Housing’s mortgage interest rate reduction for first-time homebuyers, which reduces the interest rate of Virginia Housing home loans by 1 percent. To be eligible, homebuyers must complete a homebuyers’ education class and two hours of individual financial counseling, and secure a Virginia Housing home loan for a new home within Alexandria city limits.
Read through the list of homebuyers’ resources offered by the City of Alexandria.
Families moving into Chesapeake could receive up to $13,000 in down payment and closing cost assistance provided by the Call Chesapeake HOME program.
To qualify, you must contribute at least 1 percent of the home’s sales price. As long as you live in the home for five years, the $13,000 is forgiven and gifted to you by the city. You can find the eligibility requirements on the program’s application form or brochure.
Homebuyers with their sights set on the Hampton Roads area should look into the Hampton Roads Loan Fund Partnership. It provides down payment and closing cost assistance to first-time homebuyers in the form of a forgivable, no interest, no monthly payment second mortgage. That means you won’t have to repay the loan at all, as long as you’re staying in the home as your primary residence.
You must be a first-time homebuyer with a household income that’s at or below 80 percent AMI. You’ll also have to qualify for a first mortgage on your own and contribute at least 1 percent of your home’s sales price.
Service areas include James City County, Gloucester, Williamsburg, York County, Poquoson County and Portsmouth.
Read more about the Hampton Roads Loan Fund Partnership, including full eligibility requirements and how to apply.
Families in a low-income household who are ready to move to Harrisonburg should connect with the Harrisonburg Redevelopment and Housing Authority (HRHA) for a helping hand. The HRHA provides down payment assistance of up to $10,000, set up as a five-year loan with a 1.5 percent interest rate, and closing cost assistance of up to $4,000 through a forgivable loan — as long as you use your home as a primary residence, the loan is forgiven after five years.
You don’t have to be a first-time homebuyer to qualify. The priority is helping low-income families, so you’ll need to be within certain income limits.
You can read more about the financial help and how to qualify on the Harrisonburg Redevelopment and Housing Authority website.
If you’re house hunting in the Norfolk-Newport News area, take note: The Norfolk Redevelopment Housing Authority runs a HOME Investment Partnership Program.
The HOME program is aimed at helping first-time homebuyers with down payment and closing cost assistance in the form of a forgivable, no interest and no monthly payment second mortgage. To qualify, you must use the home as your primary residence and stick to income and purchase price limits.
If your HOME second mortgage is $15,000 or less, it’s forgiven within five years, while home loans that are greater than $40,000 come with a 15-year term. Read more about Norfolk’s HOME program.
If you’re shopping for a new home in Richmond, you’re in luck. The vibrant capital city of Virginia has a thriving real estate market with more than 250 new home communities and there is string of local programs to assist you in your homeownership journey; if you’re l.
Richmond provides free credit counseling services and homebuyers’ education courses. If you need down payment or closing cost assistance, you may be able to qualify for a $10,000 loan that’s forgivable as long as you use your home as your primary residence.
There is also a NeighborWorks Second Mortgage Loan Program that provides between 6 and 8 percent of your home’s purchase price in a loan that’s deferred until you sell your home or decide to refinance it.
Check out the city’s full slate of programs available to homebuyers.
Roanoke provides first-time homebuyers with a down payment assistance program that provides up to $8,000 to cover the lump sum deposit in the homebuying process. The cash is provided in a zero interest deferred payment loan that’s forgiven after five years.
You’ll need to check on income limitations to make sure you qualify. You must contribute a minimum of $500 toward your down payment. The maximum value of your home cannot exceed $159,000. Mobile homes, travel trailers and other non-permanent structures are not eligible properties.
Ready to Buy a Home in Virginia?
Whether you’re thinking of settling down in Charlottesville, buying a home in Blacksburg, or looking to retire in a Virginia city suburb, there is no shortage of housing options in Virginia. But wherever you decide to set down roots, be sure to take advantage of the array of first-time buyer assistance programs that Virginia has to offer.
Check out more listings across the state of Virginia and follow us on social media for more home shopping tips and tricks!
The links on this site were researched by NewHomeSource. This is as cohesive a list as possible. Individual homebuyers should contact entities to fully understand requirements and processes.
Other Virginia Resources
Carmen Chai is an award-winning Canadian journalist who has lived and reported from major cities such as Vancouver, Toronto, London and Paris. For NewHomeSource, Carmen covers a variety of topics, including insurance, mortgages, and more.