Last Updated on August 7, 2022 by Danielle McDonald
Mortgage Assistance for Homebuyers in Virginia
The Virginia Department of Housing and Community Development (DHCD) offers the HOMEownership Down Payment and Closing Cost Assistance Program to help first-time homebuyers buy decent homes. Their aim is to create sustainable, long-term housing, and growth in personal health for low-income families. This program gathers a group of qualified HUD-certified mortgagors who have outlined plans to be DPA providers and manage DHCD funds.
Homebuyers must have eligible credit and have an income at or under 80% of the HUD proposed area median income (AMI) in order to participate for the HOME program. The AMI is based on the property’s size and location. They must also be first-time buyers who have completed a HUD-certified homeowner education course and received homeownership counseling. Additionally, the applicant must pay 1% of the sale price if their income is between 50-80% of the AMI. Meanwhile, those with lower incomes than 50% will only have to pay $500.
- Single-family property (one unit)
- Two-unit property; one unit is the primary residence, and the other is the HOME rental unit
- Manufactured housing; manufactured housing must have permanent utility hookups. The manufactured housing must also be on land owned by the owner of the manufactured housing unit, or on land for which he has a lease for at least the applicable period of affordability.
Whilst the goals are the same, this is quite different from the first-time homebuyer assistance programs in Washington D.C.
The Virginia Housing Development Authority (VHDA) provides the Down Payment Assistance Grant (DPA) in order to help people get out of the renters’ trap. They realized that not everyone who can afford their monthly mortgage payments has enough money saved to pay a down payment.
The DPA grant provides potential homebuyers with a 2 to 2.5% of their purchase price to help them get the opportunity to make goals of homeownership a reality. Furthermore, this grant can only be used in conjunction with eligible VHDA. It includes VHDA Fannie Mae (both the Reduced MI and No MI purchase programs), VHDA FHA (including FHA–CHR), and VHDA Conventional Bond–CHR. The DPA grant, however, can’t be used with any other down payment assistance programs (including FHA Plus).
This is arguably better than the first-time homebuyer assistance programs in Vermont, where there are no down payment grants
- All applicants must be first-time homebuyers. These are people who haven’t owned or occupied a primary residence within the last 3 years. However, an exception is made if they are buying a home in a Target Area.
- The minimum credit score requirement for FHA loans is 620, Fannie Mae No MI is 660, and Fannie Mae Reduced MI is 640.
- The ratio of debt to income of an applicant must also not exceed 45%.
- The applicant’s household income must be within the program limits. The household income needs to include all earnings of all household members, no matter if they are borrowers or non-borrowers on the title.
The purchased home must become the applicant’s primary residence. They must also live there for at least one year.
Every applicant must attend and complete a homebuyer education course, except if the property is located in a Target Area. They must also take a VHDA course, HUD Approved Counseling Agency, or Fannie Mae Framework course before approval. The validity of the Homebuyer Education Certificate lasts for two years.
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