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What are your options as a first time home buyer in Virginia?

When purchasing your first home, landing a mortgage is a necessary stepping stone to greater things. The wide variety of financing options available to first-time homebuyers, however, can be incredibly overwhelming. The good news is that a little digging on the basics of property financing can save you time and money and ensure you choose the option that best suits your needs!

Mortgage loans available to first time homebuyers in Virginia

If you’re a first-time homebuyer in Virginia and can afford a 20% down payment, you’re eligible for a conventional loan with a low interest rate. That said, very few first-time homebuyers have can afford 20%. Thankfully, you don’t actually need that much. It’s common to get into that new home with as little as 3% or even 0% with one of the following low-down-payment programs:
  • Conventional 97: Courtesy of Freddie Mac or Fannie Mae, the 97% loan-to-value loan program allows you to buy a single-family home, condo, co-op, or planned unit development (PUD) with 3% down and a minimum credit score of 620. The mortgage must be conforming, and you can usually stop paying mortgage insurance after several years.
  • FHA loan: You’ll need 3.5% down and a minimum credit score of 580 to nab a loan backed by the Federal Housing Administration (FHA). But—you’ll have to mortgage insurance until you refinance, switch homes, or pay off your mortgage altogether.
  • VA loan: No down payment or mortgage insurance is required with a VA loan, which is specifically catered to veterans and military service members. The typical minimum credit score varies but is usually around 620. If you’re eligible, be sure to apply, as these loans are a quality deal.
  • USDA loan: Designed for people with low-to-moderate incomes in designated rural areas, United States Department of Agriculture (USDA) loans do not require a down payment, offer low mortgage insurance rates, and minimum credit scores typically hover around 640.

Virginia first-time home buyer programs

It’s worth noting that in addition to the basic first-time options listed above, there’s no shortage of Virginia-specific support programs for first-time home buyers. For nearly 50 years, Virginia Housing (formerly the VHDA) has worked with lenders to offer first-time home buyers a range of benefits, from down payment grants to federal tax breaks, loans, grants, education, and other types of assistance. The Virginia Department of Housing and Community Development (Virginia DHCD) likewise offers many programs and resources to first-time homebuyers. While you’ll need to check eligibility requirements when applying for a program with either organization, there are a few common guidelines you can expect to be faced with:
  • A household income that does not exceed 80% of the median income in your area
  • A cap on the sale price of your new home
  • An obligatory course on homebuyer education
  • The mandatory use of an approved lender
Bottom line: because every provider is different, it’s crucial that you do your homework and thoroughly explore any offering you’re considering to ensure you make the most beneficial choice. If you’re not sure which program to choose for your first mortgage loan, or whether to consider applying for Virginia-specific assistance, your mortgage broker can help you create a solid plan based on your personal finances and your goals as a homebuyer.

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