Loan Programs for First Time Homebuyers in Northern Virginia
Thinking about buying your first home? We have helped many people become homeowners, so we know that this is an equally exciting and nerve-wracking time. You get to think about all the fun stuff, like what color you'll paint your walls, where to place the farm table you've been dreaming of, and possibly getting a pet without paying an extra security deposit to a landlord. But you also have to think about the less-fun aspects of purchasing a home, like the financial investment.
The good news is that there are a lot of first-time homebuyer programs available to make it easier to get into your first home. Below is a rundown of some of the programs available in Northern Virginia.
VHDA - Virginia Housing Development Authority:
The VHDA offers a variety of programs for first and repeat buyers with down payments between 0%-3%.
For a standard VHDA loan in Loudoun, Fairfax, and Arlington Counties, the max income limit for 2 or fewer people is $145,000 ($170,000 for households with 3 or more people) and requires 3% down payment. The maximum purchase price is $550,000. You can read all about the income and purchase price limits here.
VHDA also offers a zero down payment loan called VDHA Plus Second Mortgage. This loan requires no down payment. How is that possible? With this program, you actually get two different mortgages. The second mortgage is for up to 3- 5% of the purchase price which acts as your down payment. The max percent of the loan depends on your credit score and the program used for the first mortgage. The VHDA standard income limits apply.
The VHDA also offers a Down Payment Assistance Grant. The grant provides 2-2.5% of the purchase price to be used towards a downpayment when using a VHDA loan. The best part about this program is that the Down Payment Assistance Grant has no repayment. The max income limit for 2 or fewer people is $116,000 and $136,000 for households with 3 or more people. You can read more about the eligibility requirements here.
Fun fact: The Virginia Housing Development Authority considers a first-time homebuyer someone who has not owned a home for the last three years. So even if you previously owned a home, you could still take advantage of some of their programs.
Only “rural” properties are eligible for this loan, however, there are parts of Loudoun County that are in eligible zones. You can check if an address is eligible here. Most of us would not consider Ashburn a rural area, but there are addresses there (and in neighboring areas) that qualify. A USDA loan requires zero downpayment. The income limits are a bit complicated for this loan, but for a quick example, a household of 2 people with a max income of $71,500 would be considered low income and a max income of $102,800 would be considered moderate income for properties in the Northern Virginia area. You can read more about the income limits here. Because USDA loans are insured by the U.S Department of Agriculture, the interest rate for USDA loans are generally lower than market rates for conventional loans. USDA loans are also a great option for those with lower credit scores or little credit history as they are more flexible with their credit guidelines and have no set minimum credit score requirement. A USDA Rural loan is available to both first time and repeat homebuyers.
Fannie Mae HomeReady:
A Fannie Mae HomeReady Loan offers just 3% down payment for low to moderate income buyers. The income limit varies by neighborhood, but generally speaking for Loudoun, Fairfax, and Arlington Counties the income limit is $102,240. You can check income limits for Fannie Mae Home Ready here. The minimum credit score for a Fannie Mae HomeReady Loan is 620. Another nice feature of this loan is that the private mortgage insurance, known as PMI, is lower than an FHA loan and may be canceled once certain loan criteria and requirements are met (if you had a standard FHA loan, you would have to refinance once you were at 20% home equity in order to get rid of the mortgage insurance). Fannie Mae HomeReady loans are available to both first time and repeat homebuyers.
Freddie Mac Home Possible:
The Home Possible Loan program offers loans for as little as 3% down. These loans can be used to purchase 2-4 unit properties, in addition to condos, townhouses, and detached homes. The private mortgage insurance may be canceled once certain loan criteria and requirements are met for single unit properties. The max income limit for Home Possible loans varies by area, but is generally around $102,240. You can check an address’ eligibility here.
Loudoun County Affordable Dwelling Unit:
This is not a loan program, but rather offers newly constructed and resale townhouses and condos for sale at low purchase prices with priority given to those who work and reside in Loudoun County. This program is restricted to first-time homebuyers (or those who have not owned in the last 3 years) who have a total household income of 30%-70% of the area median income. You must apply for the ADU program. You can find information on applying here.
ADU’s however, come with restrictions. If you want to sell your ADU property within the first 15 years of purchasing it, you first give the County the opportunity to purchase the home. If the County waives its option to purchase the ADU, you must then offer it for sale exclusively through the County for at least 90 days at a purchase price set by the County.
After the first 15 years of ownership, the Extended Control Period begins for an additional 35 years. If you wish to sell your ADU during the Extended Control Period, you must give the County first right of refusal to purchase the home at fair market value. You may then offer the home for sale to the public at market value. However, any proceeds from the sale must be shared with the County of Loudoun Housing Trust Fund. An ADU property must be your primary residence the entire length of ownership and ADU properties cannot be inherited. You can read more about ADUs here directly from the County.
If your head is swimming, don’t panic! These programs all have qualification restrictions, so it’s important to have a trusted advisor walk you through your options so that you can find a program that is right for your unique situation. If you want to learn more, let us know! We can answer any questions you have and connect you with a great lender who specializes in programs for first-time buyers.