With the help of Virginia down payment assistance programs, many residents can afford a mortgage payment and the costs associated with owning their own home. The thought of raising a substantial down payment by themselves often discourages them from taking the plunge. There are federal institutions and charitable organizations available to help these buyers with the problem.
Both federally run and non-profit Virginia down payment assistance programs assist interested home buyers get funding for a down payment on a home. The home seller helps the buyer by contributing a part of sale proceedings to the buyer during closing. State and federal laws dictate that sellers cannot offer the funds directly to the buyer. Hence, the assistance programs offer a work around in a way that the sale remains within federal guidelines. The type of loan being applied for will determine the amount.
The seller will enroll the home in a down payment assistance program. He or she will then contribute the amount needed by the buyer for closing. Here, a certain fee is applied. When the seller and buyer get to the closing table, the chosen assistance program wires the required funds to the selling agent. The seller cannot have any part in the funds transfer, by law.
The FHA (Federal Housing Authority) offers the best source of funding. Its prime responsibility is to administer government programs for home loans. Since the FHA insures the loan, the lender is protected should a default occur. In addition, the FHA looks at debt-to-income ratios in a different perspective. This offers an advantage to buyers with less than perfect credit.
A homebuyer should be aware that sellers may inflate the selling price of a home he or she is interested in. They do this to recover their fees that may be needed to enroll the home with a certain organization.
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Virginia Down Payment Assistance Programs
Down Payment Assistance Program This Virginia down payment program is for Virginia borrowers, who are at or below 80 percent of their area’s median income, may get Virginia down payment assistance of up to 10 percent of the purchase price, or up to 20 percent in certain areas that are high cost or economically depressed. In addition, some Virginia borrowers may receive up to $2,500 in closing costs. The Virginia down payment assistance is issued in the form of a conditional grant that the home buyer is not required to pay back. home buyers must sign an agreement to remain in their homes for a certain period of time. Virginia borrowers who agree to stay in a home for five years are eligible for $1,000 to $14,999 in assistance. Those who agree to stay 10 years are eligible for $15,000 to $40,000, and those who agree to stay 15 years are eligible for amounts over $40,000. Virginia borrowers who sell or refinance before these time periods must repay the assistance in full. Homeowners who take out a home equity line of credit also must repay the assistance. home buyers must contribute 1 percent of the sales price, or a minimum of $500.
Individual Development Accounts This Virginia down payment program matches the savings of eligible Virginians so they can apply the funds to, among other things, a Virginia down payment. Every $1 a participant saves is matched with $2, up to $4,000 in matching funds. Income guidelines apply.
Regardless of which type of down payment program, you will first need a mortgage. Below are mortgages that require low or no down payments:
No Down Payment Mortgages – mortgages that require no down payment
USDA Rural Loan – the purpose of the Single Family Housing Direct Home Loan is to assist low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. There is no down payment. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.
VA Home Loan – VA helps Service members, Veterans, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy. There is no down payment as long as the sales price doesn’t exceed the appraised value.
Low Down Payment Mortgages – mortgages that require up to 3.5% down payment
FHA Mortgage Loan – the purpose of the FHA Home Mortgage Loan is to provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. A down payment of just 3.5 percent is required and may consist entirely from “gift funds.” The credit score requirement is 580.
Home Possible® Advantage Mortgage – the purpose of the Home Possible® Advantage mortgage by Freddie Mac is to offer low down payments for low- to moderate-income homebuyers or buyers in high-cost or underserved communities. Down Payment can come from a variety of sources, including friends and family, employer-assistance programs and secondary financing.
The HomeReady™ Mortgage – the purpose of the HomeReady™ mortgage by Fannie Mae is to provide flexibility for applicants buy home with down payments as low as 3%, below market mortgage rates, co-borrower flexibility, additional income sources and reduced mortgage insurance costs.
More places to find assistance on down payment:
The US Department of Housing and Urban Development (HUD) offers the following programs:
The Good Neighbor Next Door Program was created by U.S. Department of Housing and Urban Development (HUD) to help law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians buy homes. The biggest benefit of the Good Neighbor Next Door Program is the 50% discount of the home’s list price. The only catch is that the home owner must commit to live in the property for 36 months as their sole residence.
To learn more about the Good Neighbor Next Door Program, click here.
The Section 184 Indian Home Loan Guarantee Program is a mortgage for American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities. In 1992 Congress created this program to help Native American Communities with homeownership.
Section 184 loans helps borrowers buy homes with a low down payment and flexible underwriting. Moreover, the loan does not need to be used only on properties on native lands. Purchase of an existing home for single-family residences. Also allowed are new construction, rehabilitation, and refinance.
To learn more about Section 184, click here.
Virginia Housing Agencies
Virginia housing agencies are your best resource for down payment assistance programs. Through funding from HUD, the purpose of these agencies is to ensure that affordable housing is available for everyone.
- Virginia Association of Housing and Community Development Officials
- Roanoke Redevelopment and Housing Authority
- Richmond Redevelopment and Housing Authority
- Bristol Housing Authority
- Charlottesville Housing Authority
- Fairfax County Redev and Housing Authority
- Danville Redevelopment and Housing Authority
- Franklin Redevelopment and Housing Authority
- Hampton Redevelopment and Housing Authority
- Newport News Redevelopment and Housing Authority
- Norfolk Redevelopment and Housing Authority
- Virginia Housing Authority
- Waynesboro Redevelopment and Housing Authority
- Virginia Housing Development Authority