Today you’re going to learn how the Virginia Housing Program works as we answer the following questions:
What is Virginia Housing?
Communities are improved through affordable homes with accessible jobs, good schools, and transportation. Virginia Housing can attest to that.
Founded in 1972, Virginia Housing is a nonprofit organization developed by members of the Commonwealth of Virginia to help Virginians obtain affordable housing.
Looking for the Virginia Housing program that works for you? Worry no more. We’re here to walk you through everything you need to know.
What does Virginia Housing entail?
For almost 50 years, Virginia Housing, formerly known as Virginia Housing Development Authority (VHDA) has teamed up with lenders across the state to make homeownership possible for many residents.
Virginia Housing offers state programs for first-time homebuyers that can help them attain quality, affordable housing by minimizing the amount of down payment they have to come up with, and it comes in three forms.
Who is classified as a first-time homebuyer for Virginia Housing?
Naturally, if you’ve never bought a home before, you’re a first-time homebuyer. Although, if you haven’t owned a home in the last three years, you are then considered a first-time home buyer again.
Who is eligible for the Virginia Housing Program?
First-time homebuyers who have a two-year work history, pay their bills on time, but just don’t have that massive amount of cash for the down payment, are eligible to buy a house without spending a terrible amount of money through the Virginia Housing Program.
In addition, members of the military are also eligible to use the Virginia Housing Program. If they’re first-time homebuyers, they can get 100% financing and a 2% grant to help them pay their closing costs.
What are the 3 forms of Virginia Housing?
The Virginia Housing Program comes in three different forms for different qualifications that can be used in all of Virginia addresses. These programs include:
Grant
The first form is through a grant in which you’re going to end up coming up with 1% for a down payment. Then, you have to account for closing costs.
Closing costs are the fees and expenses to be paid when you close a real estate transaction.
Economically speaking, the grant is the best option. It’s not as risky because it will give you the lowest payment and the lowest interest rate.
100% Financing
The second option is through 100% financing where you’re going to get a first and second trust to cover 100% of the purchase price, but you have to account for closing costs. There’s no grant on this program.
In the state of Virginia, closing costs are typically going to run you about two to three and a half percent of the loan amount, depending on how much you borrow. The less you borrow, the higher that number is.
However, closing costs are not necessarily shouldered by home buyers, you can actually ask the seller for it. You can even use a lender credit or a discounted commission to pay for your closing costs.
101.5% Financing
The third way is through 101.5% financing wherein they’re lending you over the sales price, and the extra money you’re going to get can help you pay your closing costs. This option is the least amount as it also minimizes the amount of down payment you have to pay.
To tie it all together, the 101.5% financing option allows you to use your debit card to pay for your earnest money deposit and appraisal. At settlement, you’ll get your earnest money deposit back and after it goes through post-closing, the lender can get your appraisal money back as well.
This means that if you go with the 101.5% financing, and you get either a small lender credit, a little bit of seller concession, or maybe even a discounted real estate commission, you’re actually funding your earnest money deposit and getting it back at closing. After the loan goes through post-closing, you’re getting your appraisal money back. Basically, you’re funding money and getting it back, and you’re being handed keys to start making mortgage payments.
With this option, the lender can ask the seller for one or two percent concessions that can cover the rest of the loan amount. Concessions are where the seller pays a portion of the buyer’s closing costs.
The only thing that the lender can’t get you the money back for is the home inspection as it is not required by them. Still, a home inspection is recommended for you to know everything about the house you’re going to buy.
From this particular program, you can also ask the seller for closing costs, and you almost really get your money back. You just have to ask the seller for less since you’re already covered in the one and a half percent part of your closing costs.
What are the interest rates for programs offered by Virginia Housing?
In gist, the grant option has the best interest rate, while the 100% financing and 101.5% financing options have the same interest rate. In addition, you can ask for seller concessions or closing cost assistance from the seller on these three programs.
What is the minimum credit score for the Virginia Housing Program?
When applying for the grant or the 100% financing option, it’s recommended that you have a credit score of 620. If your credit score is 680, you’re qualified for the 101.5% financing option, which basically gives you extra money to help you pay your closing costs.
What are the 3 financing options provided by Virginia Housing?
Virginia Housing offers several affordable financing options available for first-time homebuyers. Homebuyers who are eligible for one of these loans may also benefit from Virginia Housing’s Mortgage Credit Certificate program. These loan programs include:
Conventional
This loan has an affordable monthly payment and the lowest mortgage insurance requirements.
FHA
This loan has a low down payment, and it’s eligible for Virginia Housing’s Down Payment Assistance (DPA) grant, which provides eligible first-time homebuyers with funds to help with the down payment.
VA
This loan requires a $0 down payment for eligible veterans, and it’s eligible for Virginia Housing’s Closing Cost Assistance (CCA) grant, which provides eligible first-time homebuyers with funds to help with the closing costs.
What is Virginia Housing’s Mortgage Credit Certificate?
Typically, if you’re buying your first home, you can get a Mortgage Credit Certificate (MCC) from Virginia Housing, which can save you thousands of dollars by reducing the amount of federal income tax you owe.
The MCC is not the same as an income tax deduction. Instead, an MCC is a dollar-for-dollar credit against your federal income tax liability. This credit is equal to 10% of the annual mortgage interest you pay, while the remaining 90% could still be taken as a tax deduction.
The Mortgage Credit Certificate is effective for the life of your mortgage. As long as you live in the home, you are able to get an MCC through Virginia Housing at no charge. This is definitely an added benefit because if you were to go outside of Virginia Housing, you can still get an MCC, but there would be a charge for it.
How to get Virginia Housing’s Homebuyer Education Class certification?
If you’re planning to buy a home and unsure where to begin, Virginia Housing’s free First-time Homebuyer Class got you covered. The class is required for individuals applying for a Virginia Housing home loan.
Virginia Housing’s free First-time Homebuyer Class will guide you through the entire home buying process where you’ll learn the ropes of being a responsible homeowner.
In order to get Virginia Housing’s Homebuyer Education Class certification, you need to complete the free training, which is available in person or online. Nonetheless, it’s still up to the customer’s preference whether they want to take the training in-class or online. Here’s the difference between the two:
In-class
If you come to the class face-to-face, you’re not required to take a test anymore.
Online
If you choose to take the class online, you have to take a test and pass it.
If you want to know what the income qualifications are, feel free to check out these Steps To Buying a Home with the Virginia Housing Program to find out more information.
Conclusion
Overall, you have learned everything you need to know about the Virginia Housing Program that’ll help you determine which options are suitable for you.
Which Virginia Housing Program are you most interested in?
We’d love to hear all about it.
