Saving to purchase a home can be tough, and this is especially true for first-time homebuyers. Luckily, Virginia residents have quite a few options for assistance. From grants and tax credits to affordable mortgage options, here are some of the options to explore:
General Assistance
1. Virginia Housing Development Authority (VHDA) Down Payment Assistance Grant
First-time homebuyers looking for an option with no repayment need not look any further than the VHDA Down Payment Assistance Grant. The grant offers down payment assistance for VHDA-approved loans – up to 2 percent of the purchase price on Fannie Mae loans and up to 2.5 percent on FHA loans. Borrowers are only required to come up with 1 percent of the purchase price on their own.
2. VHDA FHA Plus Loans Combined Assistance
A program designed to helps buyers in need of down payment and closing cost assistance, the VHDA FHA Plus Loans Program offers first and second mortgages to qualified buyers. Both available VHDA-financed mortgages are based on a 30-year fixed-rate plan, and it is important to note that the second mortgage is a variable percentage of the home’s purchase price, beginning at 3.5 percent and maxing out at 5 percent, based on the borrower’s credit score. A buyer contribution of 1 percent is also required for this program.
3. Housing Opportunities Made Equal of Virginia (HOME) Down Payment Assistance
The HOME Down Payment Assistance Loan is unique in that it is forgivable. This loan provides up to $10,000 worth of assistance for down payment and closing cost expenses, but only for borrowers purchasing their principal residence. Stay in the house 5 years, and no repayment is needed.
4. Virginia Department of Housing and Community Development (DHCD) Virginia Individual Development Accounts (VIDA) Program
Saving for a down payment is easy with the VIDA Program. As qualified participants contribute $1 to their savings accounts, the VIDA Program matches it with $8. The program maxes out at $4,000 of contributions. In addition to funding, participants receive training and support in their home-buying endeavors.
Affordable First Mortgages
1. Union Mortgage Group STAR Portfolio Loan Program
Get a loan with as little as zero percent down with the Union Mortgage Group Steps Toward Achieving Results (STAR) Loan Program. This program provides up to $300,000 in financing for borrowers in the form of 30-year fixed-rate loans. Those borrowers with credit scores of over 700 qualify for 100 percent financing. Further, no mortgage insurance is required, so borrowers save costs there, as well.
2. VHDA Fixed Rate Loans
Choose from FHA, VA and Rural Housing Services (RHS) Loans with the VHDA Fixed Rate Loan Program. Each loan, of course, has its own specifications, with FHA loans allowing some fees and premiums to be rolled in, VA requiring no down payment and RHS loans covering up to 100 percent of the sales price or appraised value. FHA and VA loans cover up to 97 percent.
3. United States Department of Agriculture (USDA) Single Family Direct Loan Program
Designed for low-income buyers in rural areas, the USDA Single Family Direct Loan Program provides up to 100 percent loan-to-value financing towards the purchase of safe and sanitary housing. The loans feature very low interest rates and extended repayment periods that can reach up to 38 years in extreme low-income situations. Best of all, no downpayment is required.
4. USDA Single Family Guaranteed Loan Program
The USDA Single Family Guaranteed Loan Program helps lenders help buyers. This program is designed for low- and moderate-income families wishing to purchase a principal residence in a rural area. Through the USDA’s program, borrowers can obtain up to 100 percent financing for the construction, purchase or remodeling of their home.
Tax Credits
1. VHDA Mortgage Credit Certificate (MCC) Program
A long-term money saving solution, the VHDA MCC Program provides a federal income tax break on mortgage interest. This program is open to first-time homebuyers purchasing their principal residence. Instead of being charged for 100 percent of the mortgage interest annually, the borrower pays only 80 percent and the MCC tax credit covers the remaining 20 percent. Borrowers can apply this credit every year for the entire life of their mortgage and net significant savings over time.
Whether you are a low-income buyer or just looking to maximize your money while buying a home, there are numerous programs to choose from in Virginia. Get approved for the option that best suits your needs, then contact us to find the home you have been dreaming of.
