Virginia Downpayment Assistance and First Time Home Buyers Programs — An Update

This is an update of a previous article.
Virginians looking to buy a home in Virginia who need down payment assistance and or are a first time home buyer have many Down Payment Assistance and Home Buyer Programs in Virginia available through the Virginia Housing Development Authority (VHDA) and the Virginia Department of Housing and Community Development (VDHCD).

Virginia HOME Ownership Down Payment Assistance Program

The Virginia Department of Housing and Community Development offers the HOME Ownership program through participating VHDA approved lenders for down payment and closing cost assistance to qualified home buyers whose income is at or below 80 percent of the Area Median Income as set by HUD. Home buyers using this program could get up to 10% of the sales price of the home for down payment and an additional $2,500 for closing costs. Home buyers using this program must be first time home buyers and must qualify for home financing through VHDA approved lenders.

Virginia Housing And FHA Plus Loan Program

The FHA Plus Loan Program from VHDA provides second mortgage for down payment and closing cost assistance. This mortgage is payable over 30 years and will cover up to 5% of the sales price or appraised value to be used for down payment if necessary (other than FHA loans which require only 3.5%).
Home buyers must be first time buyers to be eligible for this program unless purchasing a home in selected target areas. Target areas are Areas of Economic Opportunity, also known as Federal Targeted Areas which are areas deemed important for the economic growth of a regional urban or rural area. Home buyers must have income under median income limits for the area where they are looking to purchase a home. Also, home values must be under predetermined limits. In selected target areas, VHDA may relax the first time home buyer, income and property restrictions.
Home buyers are considered first time buyers if they have not had prior ownership in a home for the past three years. Other eligibility requirements include: successful completion of VHDA’s Homeownership Education class, demonstrate creditworthiness and stable income, and must intend to occupy the property.

Standard Fixed Rate Down Payment Assistance Loans

VHDA also provides funding for 30 year, fixed rate mortgages that are typically below market interest rates. These loans are available as standard conventional loan programs as well as FHA and VA loan programs. Rural Housing loans, VA and FHA loans are available under this program.

Homebuyer Tax Credit Plus

The VHDA offers a Homebuyer Tax Credit Plus program for first time homebuyers. It allows borrowers to take advantage of the Federal First-Time Home Buyers Tax Credit to finance downpayment and closing costs up to 5% of the sales price, using a second mortgage.
The contract must be executed before May 1, 2010 and the loan must close before July 1, 2010. Borrowers must meet Federal First-Time Home Buyers Tax Credit requirements to be eligible, as well as have no prior ownership of a residence for the past 3 years. The VHDA’s First-time Homebuyer Class must be completed as well.

Sponsoring Partnerships and Revitalizing Communities (SPARC)

SPARC offers a unique opportunity for first time home buyers working through local housing groups such as the Piedmont Housing Alliance, Better Housing Coalition, and the Center For Community Development, Inc. Mortgage loans obtained through these housing groups are typically one half to one percent below the VHDA’s published First Time Homebuyer Program rates. In some areas, special income and other criteria may apply as determined by the particular housing group a home buyer works with to get funding.

What Is The Virginia Individual Development Account Program (VIDA)?

This program from VDHCD allows qualified participants to contribute on a monthly basis at least $25 per month into a savings plan. The state of Virginia will match a participant’s contribution 2:1 up to $4,000 in matching funds. A household may have 2 participants using this fund to purchase a home, start a business, or be used for post high school education. One key requirement of this program is that participants must have incomes below specified limits which are based on the total number of people per household.
For further information on VHDA’s first time home buyer programs and down payment assistance programs visit the VHDA’s website: VHDA.com and the Virginia Department of Housing and Economic Development website: DHCD.Virginia.gov.