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2022 Virginia First-Time Homebuyer Programs
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First-time homebuyers in Virginia should know that the state offers many programs geared toward helping you cover your down payment and closing costs. However, in exchange, many of these programs also impose limits on how much you can make, where you can live and how long you need to live there. Keep reading to get a better understanding of the first-time homebuyer programs that the state has to offer.
Virginia statewide and local first-time homebuyer programs
The Virginia Department of Housing and Community Development (VDHD) oversees statewide down payment assistance (DPA) programs, while other programs are administered on a city or county level.
While income restrictions are common, all of these programs have their own eligibility requirements. Below is a closer look at the different programs that are available throughout Virginia and how much they are awarding in aid.
| Program name | Assistance amount | Assistance type | Where it’s available |
|---|---|---|---|
| Virginia Department of Housing and Community Development HOMEownership DPA Program | 10% to 15% down payment plus up to $2,500 for closing costs | Grant | Statewide |
| Virginia Housing Closing Cost Assistance Grant | Up to 2% of the home’s purchase price | Grant | Statewide |
| City of Roanoke DPA Fund | Up to $8,000 | Forgivable loan | Roanoke |
| Loudoun County Down Payment Closing Cost Assistance Program | Up to $25,000 | Second loan | Loudoun County |
What to know about different types of down payment assistance
Most down payment assistance programs for first-time homebuyers will offer aid in the form of either a grant or a forgivable loan. That said, while the money might seem free, it often comes with many stipulations that you need to follow in order to avoid having to pay it back.
Here’s a closer look at how each type of down payment assistance works:
- Forgivable second mortgage: With this type of assistance, your lender puts a second lien against your property. Usually, you’re required to live in the home for a set period of time and, if you do, the loan is forgiven. However, if you decide to move or refinance your loan early, you may be expected to repay a portion of what you were given.
- Grant: On the other hand, grants do not require a second lien to be placed against your home. Still, you may be required to live there for a certain number of years. Otherwise, you may be expected to repay funds.
How Virginia first-time homebuyer programs work
LendingTree analyzed the guidelines from the Virginia Department of Housing and Community Development along with individual program websites to put together the list below. Still, additional programs may be funded throughout the year, so it’s a good idea to check with the housing authority in your area, as well as local nonprofits to see what options are available to you.
In general, there are four steps to being approved for a down payment assistance program.
- Be approved for a mortgage with a participating lender.In order to receive down payment assistance, you will need to be approved for a mortgage. In this case, you will need to do so with a lender who is approved to work with the program.
- Complete any additional requirements.First-time home buyer programs from DPA will have additional requirements, such as a homebuyer education course that you will need to complete before you can receive any aid.
- Learn about income limits.Many first–time homebuyer programs are meant to help those with low to moderate incomes buy a home. As a result, you’re going to want to ensure you fall within the income limits for the program of your choice.
- Consider the repayment terms.You’ll likely need to live in the home for a certain amount of time if you want to avoid repayment. If you decide to move or refinance early, you could get stuck paying back a portion of your aid.
Virginia first-time homebuyer program requirements
Before you spend time applying for a loan, it’s a good idea to make sure you meet the eligibility requirements for the program that’s best suited for you. In many cases, these requirements are more stringent than the minimum requirements for a first-position loan. The table below lists these requirements to help you figure out which program could be the best fit.
| Program name | Credit score minimum | DTI ratio maximum | Maximum income limit | How long you have to live in home |
|---|---|---|---|---|
| VDHCD HOMEownership DPA Program | 620 | 43% | Below 80% of the area median income (AMI) | Five to 15 years, depending on the amount of assistance received. |
| Virginia Housing Closing Cost Assistance Grant | 620 to 660, depending on the program | 45% | $76,000 to $116,000, depending on metropolitan statistical area | None |
| City of Roanoke DPA Fund | None | 45% | Below 80% of the area median income (AMI) | Five years |
| Loudoun County Down Payment and Closing Cost Assistance Program | 620 | 44% | $38,700 to $90,300 | None |
THINGS YOU SHOULD KNOW
You’ll need to learn the income limits for the area in which you intend to buy to ensure you don’t make more than your first-time homebuyer program allows. HUD’s median family income lookup tool lets you check up-to-date income limits by entering your state and county information.
National first-time homebuyer programs
The programs above all require that you be approved for a mortgage. Notably, there are some mortgage programs that are geared toward helping first-time homebuyers become homeowners. These programs are commonly known as the “national first-time home buyer programs.” Although those who have owned a home before can also use them to buy a home.
In particular, Virginia’s first-time home buyer programs can be used in conjunction with the following loan types:
→ Conventional loans. Unlike the other programs on this list, conventional loans aren’t backed by a government agency. As a result, they come with more stringent qualifying requirements. However, in exchange, those who can qualify also receive more favorable loan terms. Freddie Mac Home Possible and Fannie Mae HomeReady are two conventional first-time homebuyer programs.
→ FHA loans. FHA loans are backed by the Federal Housing Administration. This backing allows them to accept borrowers with lower credit scores and higher data income ratios than conventional loans. It’s important to note that FHA borrowers also have to pay two types of FHA mortgage insurance, one upfront and one on an annual basis.
→ VA loans. VA loans are guaranteed by the Department of Veterans Affairs (VA). They are also some of the most flexible loans on this list. They typically don’t come with a minimum credit score or down payment requirement. Still, if you decide to use a VA loan you can use funds from a first-time homebuyer program to help cover your closing costs.
→ USDA loans. USDA loans are backed by the United States Department of Agriculture. They give low to moderate income home buyers the chance to buy a home in a designated rural area. These loans also do not come with a down payment requirement. However, the funds from a DPA program can be used to cover your closing costs.
FAQs about Virginia’s first-time homebuyer programs
Who qualifies as a first-time homebuyer in Virginia?
According to the Department of Housing and Urban Development (HUD), you can still be considered a first-time home buyer if you’ve owned a home before. You just can’t have owned a home in the last three years.
Most programs use HUD’s definition, which means that you may qualify for down payment assistance even if you aren’t a “true” first-time home buyer. Still, some programs may have more lenient or more stringent requirements, so it’s a good idea to contact the program administrator to see if you qualify.
Can I qualify for down payment assistance in Virginia?
Each DPA program has its own eligibility requirements, so it’s hard to give a one-size-fits-all answer for who qualifies. That said, if you fall within the income limits and meet the credit score requirements, there is a good chance you might be able to qualify for assistance, provided funds are still available.
How much of a down payment do I need to buy a house in Virginia?
Depending on which loan program you use for your first mortgage, you may not need to make a down payment at all. However, even if you do, you’ll typically only be expected to put down between 3% and 3.5% of the home’s purchase price.
Home price trends in Virginia major areas
Home prices in Virginia have risen significantly in the past year. Home prices in Charles City County (Richmond) rose 15.8% from the fourth quarter of 2021 to the same quarter in 2021, climbing to a median home price of $205,367. The increase made the average monthly mortgage payment jump from $657 to $787. Similarly, home prices in Norfolk City (Norfolk) rose by 14.6% to a median price of $264,044. In that case, the average monthly mortgage payment rose from $853 to $1,012.