Virginia may be for lovers, but it’s for homeowners, too. Two out of every three homes in the state are occupied by individuals who own them, according to U.S. Census figures, and first-time homebuyers are essential to that trend.

The Virginia Housing Development Authority (VHDA), also known as Virginia Housing, offers programs for first-time buyers, including loans, grants, education and other forms of assistance. You’re considered a first-time buyer if you haven’t owned a home in three or more years, so even if it isn’t your actual first time as a homeowner, you could still have access to assistance programs through the state’s housing authority.

Virginia first-time homebuyer loan 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

Sponsoring Partnerships & Revitalizing Communities (SPARC)

Virginia Housing’s Sponsoring Partnerships & Revitalizing Communities (SPARC) program lowers the interest rate on the agency’s 30-year mortgages by 1 percent. This is accomplished through partnerships with local municipalities, nonprofits and housing industry groups, who sponsor the reduced-rate mortgages for qualified first-time homebuyers.

The SPARC Virginia first-time homebuyer program can only be used by buyers purchasing a primary residence. Other borrower and property requirements vary based on the partner sponsoring the reduced rate, but generally fall in line with the same requirements as the 30-year mortgage.

Virginia down payment assistance

Virginia Housing Plus Second Mortgage

The Virginia Housing Plus Second Mortgage saves Virginia 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 2.5 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

Mortgage credit certificate (MCC)

A mortgage credit certificate (MCC) is a dollar-for-dollar federal income tax credit. In Virginia, the MCC equals 10 percent of your annual mortgage interest, and can be combined with a Virginia Housing first mortgage.

Here’s how it works: Say you take out a $150,000 mortgage at 5 percent interest, which means you’re paying approximately $7,500 in interest in the first year of the loan. With the 10 percent MCC in Virginia, you could save a maximum of $750 that year via the tax credit.

The state’s MCC is reserved for first-time homebuyers or buyers purchasing in a “Targeted Area.” MCCs can be leveraged each year you live in the home, and any unused credit can be carried forward for up to three years.

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, mortgage credit certificate and a free homebuyer education course into a single package.

Other first-time homebuyer loan programs

In addition to the Virginia Housing Conventional, Conventional No Mortgage Insurance and FHA loans, the agency offers VA and USDA loans, which might also be combinable with Virginia Housing grants and other forms of assistance. Here is a complete list of first-time homebuyer loan programs to consider.

Get started

Once you’ve familiarized yourself with Virginia first-time homebuyer assistance programs, it’s time to see what you might qualify for. Virginia Housing maintains a list of approved mortgage lenders who can help you navigate your choices. Remember that interest rates, loan terms and requirements vary by lender, so it’s important to compare your options carefully.

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