First-Time Home Buyer In Virginia (VA): A Guide To Programs And Grants

Whether you’re new to Virginia or you’ve lived there your entire life, you could be eligible for many different programs specifically for first-time home buyers. These programs can help make your dream of homeownership more achievable by providing down payment assistance, special loan programs and more.

Keep reading to learn more about your options as a first-time home buyer in Virginia.

Qualifications For Virginia First-Time Home Buyers

Many home-buying programs, both in Virginia and elsewhere, are only available to first-time home buyers. However, the definition of a first-time home buyer may be broader than you’d think.

While each program can technically set its own criteria for a first-time home buyer, many use the definition used for federal government programs, which is any person who hasn’t owned a principal residence during the previous three years. This litmus test applies to spouses separately, so if either spouse hasn’t owned a home in the past 3 years, you may qualify for first-time home buyer programs.

There are some additional exceptions to the first-time home buyer rule, including situations where you’re a single parent who previously owned a home with a former spouse, you owned a home that wasn’t on a permanent foundation or you only owned a home that wasn’t in compliance with building codes.

First-Time Home Buyer Programs In VA

Virginia offers various first-time home buyer programs to help make homeownership more attainable and affordable. Each program has unique features and eligibility requirements, so it’s important to research all of your options.

It’s worth noting that there are many local and state programs, which can be complicated and difficult for lenders to accept based on their requirements.

Virginia Housing Conventional

Virginia Housing Conventional is a loan program available to first-time and repeat home buyers. This program offers financing up to 97% – that means a down payment of at least 3% – and a total loan-to-value ratio (LTV) of 105% when combined with an eligible Fannie Mae or Freddie Mac program.

This program offers reduced mortgage insurance, meaning you can make a low down payment without paying as much private mortgage insurance (PMI) as you would with a normal conventional loan. The maximum income for this program depends on your household size and location in Virginia.

• Pros: This loan program can help reduce your cost of homeownership by offering reduced mortgage insurance compared to a standard conventional loan.
• Cons: Virginia’s Housing Conventional has a minimum credit score of 640, a maximum income threshold and is only available as a 30-year fixed-rate loan.

Virginia Housing Conventional No Mortgage Insurance (No MI)

The Virginia Housing Conventional No Mortgage Insurance (No MI) is similar to the normal Virginia Housing Conventional loan but with the added benefit of no mortgage insurance at all. Like the other program, this one requires a minimum down payment of 3%

• Pros: The Virginia Housing Conventional No MI program allows borrowers to buy homes with down payments as low as 3% without paying any mortgage insurance.
• Cons: This program has similar income requirements as the normal Virginia Housing Conventional loan but requires a higher credit score of at least 660.

Virginia Housing Plus Second Mortgage

The Virginia Housing Plus Second Mortgage allows you to combine two mortgages to cover the cost of your home and the down payment. You’ll get a first Virginia Housing mortgage to finance the home itself and a second Virginia Housing mortgage to pay for the down payment. Depending on your credit score and loan type, you may be able to borrow up to 5% of your home’s purchase price.

• Pros: This loan program can help you buy a home without having to save a down payment by offering a second mortgage to help you finance your down payment.
• Cons: The Virginia Housing Plus Second Mortgage is limited to borrowers with good credit ranging from a minimum score of 620 – 680.

DHCD Acquire, Renovate, Sell (ARS)

The Acquire, Renovate, Sell (ARS) is a program offered by Virginia’s Department of Housing and Community Development designed to help low- and moderate-income first-time buyers achieve their goals of homeownership. Under this program, a provider (often a developer) can purchase an undervalued home, renovate the home using ARS funding and resell it to a first-time buyer.

Once the provider sells the home to a first-time buyer, the provider returns the ARS funding to the program. The program can then reinvest those funds, helping create more affordable homes for first-time buyers.

• Pros: This program has multiple benefits, including improving undervalued properties and creating affordable quality homes for low-income borrowers.
• Cons: This program can help create affordable homes for low-income first-time buyers, but it doesn’t offer money directly to them. Instead, it offers it to developers.

First-Time Home Buyer Grants In Virginia

In addition to its various loan programs, the state of Virginia also offers closing cost and down payment assistance grants. These grants can help get first-time buyers into homes more quickly since they don’t have to spend (potentially years) saving up the money for a down payment.

Virginia Housing Down Payment Assistance Grant

The Virginia Housing Down Payment Assistance Grant helps first-time and repeat buyers reduce their upfront housing costs by paying for their down payments when used with a qualifying loan from the state of Virginia. The program also has income limits based on household size and location.

• Pros: This loan program can cover 100% of a first-time or repeat borrower’s down payment and can be combined with other non-Virginia housing assistance.
• Cons: This program must be combined with a Virginia Housing loan and is subject to lower maximum income limits than loans without down payment assistance.

Virginia Housing Closing Cost Assistance Grant

The Virginia Housing Closing Cost Assistance Grant helps first-time and repeat buyers reduce their upfront housing costs by paying for their closing costs. To qualify for this program, a borrower must buy in an Area of Economic Opportunity and must have a bond Rural Housing Service or Veterans Affairs loan from Virginia Housing. Finally, like other Virginia Housing programs, this loan is subject to certain income limits.

• Pros: This loan program can be worth up to 2% of the purchase price of a home of a first-time or repeat borrower’s closing costs and can be combined with other non-Virginia housing assistance.
• Cons: This program can only be combined with Rural Housing Service or VA loans and is subject to lower maximum income limits than loans without down payment assistance.

DHCD HOMEownership Down Payment Assistance Program (DPA)

The HOMEownership Down Payment and Closing Cost Assistance program is offered by the Department of Housing and Community Development to help homeowners cover the upfront costs associated with buying a home. Program eligibility is limited to those with incomes at or below 80% of the area median income. The program can provide 10% – 15% of the home’s sale price for a down payment, as well as $2,500 for closing costs.

• Pros: This program helps low-income borrowers buy homes by covering 100% of their down payment, as well as up to $2,500 for closing costs.
• Cons: This program is only available to borrowers with incomes equal to or less than 80% of the area median income, meaning many won’t qualify.

Loan Options For First-Time Home Buyers In VA

While Virginia Housing offers several programs to help first-time buyers access homeownership, they aren’t the only options. Buyers in Virginia should also consider conventional and government-backed loans.

Conventional Loans

A conventional loan is technically any loan that isn’t a part of a government program. Conventional loans can be either conforming or nonconforming. Conforming loans can be purchased by Fannie Mae and Freddie Mac, while nonconforming loans can’t.

Conventional loans have some key benefits. Unlike some government-backed loans, they don’t have strict eligibility requirements. You can qualify with fair credit or a down payment as low as 3%. And if you’re buying a higher-priced home, you can use a nonconforming conventional loan to exceed normal loan limits, though higher credit score and down payment requirements may apply.

Government-Backed Loans

If a conventional loan isn’t a good fit, consider one of these government-backed loans. Each program has different benefits and eligibility requirements, so it’s important to understand the differences and which is the best fit for you.

• FHA loans: An FHA loan, which is backed by the Federal Housing Administration, can help you buy a home with a down payment as low as 3.5%. Even with poor credit, you may still qualify for a competitive interest rate.
• VA loans: The Department of Veterans Affairs insures loans through the VA loan program. These loans are available to eligible military service members and veterans and don’t require down payments or mortgage insurance.
• USDA loans: USDA loans are backed by the U.S. Department of Agriculture, helping low and moderate-income borrowers in rural areas access homeownership. Like VA loans, USDA loans don’t require a down payment.

Additional Programs Available For First-Time Home Buyers In Virginia

In addition to those programs we’ve already mentioned, there are a few others you can use to achieve your goal of homeownership for the first time.

ONE+ By Rocket Mortgage^®

The ONE+ by Rocket Mortgage program offers down payment assistance to reduce your upfront costs of homeownership. This loan program offers a grant of 2% for your down payment while you pay the rest (at least 1%, but no more than 3%).

This program isn’t solely available to first-time buyers, but it is a good option for them since they don’t have the equity built up in a previous home to make a large down payment. Additionally, the program is limited to borrowers with incomes at or below 80% of the area median income.

Regional Programs

Many of the programs we’ve mentioned make homeownership more accessible. However, as homeownership isn’t the right fit for everyone, there are also programs designed to increase access to rental housing, usually for low-income families.

• PDC Housing Grant Program: The PDC Housing Development Program was created by Virginia Housing to increase the production of affordable housing in Virginia. The program doesn’t provide funds to individual home buyers. Instead, it creates funds for the development of housing units. As a relatively new program, the PDC Housing Development Program started its first project on June 1, 2022, has created 15 units so far and has hundreds more in progress.
• Housing Choice Voucher Program: The federal government offers a Housing Choice Voucher program for low-income families. This program has income limits to ensure that those who truly need assistance are the ones that benefit from it. Virginia Housing administers the voucher program in Virginia.

The Bottom Line

Buying a home is a dream for many people, but it’s one that comes with a large price tag. Luckily, there are plenty of programs available that can make homeownership more achievable and affordable through specialty loan programs, down payment assistance and more.

If you’re a first-time home buyer preparing to buy a home in Virginia, start the approval process with Rocket Mortgage today and find out how much you qualify for.