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Virginia First-Time Home Buyer Programs of 2018

July 30, 2018
Finding the Right Mortgage, Mortgages
virginia-first-time-home-buyer-programs
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Hopeful first-time home buyers in Virginia have access to state programs that can help them make a down payment or qualify for a home loan. For nearly 50 years, the not-for-profit Virginia Housing Development Authority has worked with lenders throughout the state to make homeownership a reality for thousands of residents.

National first-time home buyer programs

Since you’re doing a bit of research, it can’t hurt to look into national programs aimed at potential home buyers with modest incomes. You’ll find options for loans with low or no down payments.

Conventional mortgage

National program

Best for

Low down payments

Limited mortgage insurance premiums

What you need to know

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans,

 

FHA loans

National program

Best for

Low credit score

Low down payment

What you need to know

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment

 

VA loans

National program

Best for

Military

Low down payment

What you need to know

The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most

 

USDA loans

National program

Best for

Low down payment

Rural

What you need to know

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit

 

Virginia Housing first-time home buyer programs

If you live in Virginia, VHDA programs offer first-time home buyers some unique benefits, ranging from down payment grants to federal tax breaks.

VHDA highlights and eligibility requirements

Highlights

  • Down payment grants available.
  • 30-year fixed-rate loans.
  • Some programs allow zero down payment.
  • Many loan programs are eligible for federal tax credits.

Eligibility

  • Required credit score varies by program; lowest is 620.
  • Haven’t owned a home in the past three years (except in certain areas).
  • Maximum income and loan limits vary by home’s location.
  • The home must be your primary residence; no business use.
  • Applicants must complete homeownership education class.

» MORE: Tips for first-time home buyers

Down payment assistance grant

State program

Review VHDA lenders

at NerdWallet

Best for

Down payment assistance

What you need to know

This is perhaps the most meaningful benefit offered by the VHDA. Qualified first-time buyers can receive up to 2.5% of a home’s purchase price to apply to a down payment — no repayment required. The grant is combined with a VHDA loan, and household income limits are considered.

 

Granting Freedom

State program

Review VHDA lenders

at NerdWallet

Best for

Military

What you need to know

For military members or veterans with service-connected disabilities, this program offers a grant of up to $4,000 to pay for home modifications that increase accessibility, such as widening doorways and adding wheelchair ramps.

 

Mortgage credit certificates

State program

Review VHDA lenders

at NerdWallet

Best for

Tax credits

What you need to know

The VHDA issues Mortgage Credit Certificates to qualified home buyers who receive a loan commitment through an approved lender. It’s a dollar-for-dollar federal tax credit that may reduce your tax liability. And it’s valid for the life of your loan, while the home remains your primary residence.

 

Fannie Mae Preferred with reduced mortgage insurance

State program

Review VHDA lenders

at NerdWallet

Best for

Low mortgage insurance

What you need to know

This program is for first-time buyers or homeowners looking to “move up.” The down payment can be 3% — even lower, with a VHDA down payment grant (see below). While this program requires a borrower to pay for mortgage insurance, the premium is discounted. You’ll need a credit score of at least 640

 

Fannie Mae 97% no mortgage insurance

State program

Review VHDA lenders

at NerdWallet

Best for

Low mortgage insurance

What you need to know

Identical to the Fannie Mae Preferred program in most respects, but you won’t have to pay mortgage insurance. That likely means your interest rate will be a tad higher. And your credit score needs to be slightly better, too: 660.

 

FHA Plus

State program

Review VHDA lenders

at NerdWallet

Best for

Government-backed loans

What you need to know

FHA-backed loans are the go-to mortgage program for first-time home buyers. It seems VHDA has made them even better with this program. Rather than the standard 3.5% FHA down payment, a built-in second mortgage allows up to 100% financing. While a minimum 620 credit score is required, a higher score

 

USDA (Rural Housing Service)

State program

Review VHDA lenders

at NerdWallet

Best for

Rural

What you need to know

USDA loans also offer zero down payments on homes in rural and suburban areas. The VHDA participates in a pilot program that allows the financing of existing manufactured housing up to 10 years old. USDA previously financed only new manufactured housing.

 

Your next step

Talking to a lender, preferably at least a couple, will get you started. Lenders affiliated with the VHDA know all the ins and outs and can help you navigate the process. Why talk to more than one? Because terms, interest rates and even customer engagement can vary from lender to lender. It’s satisfying to find someone you like to work with who also looks out for your best interests.

For details on any Virginia Housing Development Authority program, visit the VHDA website.

Here are lenders that participate in VHDA programs.

» MORE: See the best Virginia mortgage lenders

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