February 26, 2020

Financial Assistance for Virginia Homebuyers and Homeowners

Financial Assistance for Virginia Homebuyers and Homeowners

Location, location, location! It is no surprise that the location of your home affects its value. In 2019, the median home price in Northern Virginia counties rose 4% to $614,236, which is 120% higher than the median home price in Virginia overall. The DC-area continues to be an attractive place for companies, which means the high demand for housing is here to stay. The Virginia Housing Development Authority (VHDA) and the Virginia Department of Housing and Community Development (DHCD) offer financial assistance to first-time homebuyers, repeat homebuyers, and current Virginia homeowners.

For First-Time Homebuyers

Homeownership Down Payment Assistance (DPA) Grant

The HOMEownership Down Payment Assistance (DPA) program is a grant for first-time homebuyers in Virginia. An income eligible homebuyer can receive up to 10% or 15% of the home sales price, and this grant can be paired with other non-VHDA down payment assistance and with a Mortgage Credit Certificate (MCC).

Other eligibility requirements include:

A mandatory “affordability period” applies in which the buyer continues to occupy the home as a primary residence. Read more about the affordability period on Page 8 of the Affordable and Special Housing Needs Guidelines.

Closing Cost Assistance Grant

The Closing Cost Assistance program is a grant for first-time homebuyers in Virginia. An income eligible homebuyer can receive up to $2,500 to help pay for the cost of closing, including attorney’s fees, title insurance, and taxes. This grant can be paired with other non-VHDA assistance and with a Mortgage Credit Certificate (MCC).

Other eligibility requirements include:

Applicants should be at or below 80% of the area median income (AMI) level.

Mortgage Credit Certificate

The Mortgage Credit Certificate (MCC) is a federal income tax credit that equals 20% of the mortgage interest you pay that year (plus you can still deduct the remaining 80% on your annual income taxes). As long as you live in the home, the MCC remains in effect. Do note that if you obtain an MCC then sell your home in the first nine years of ownership, you may be subject to the Federal Recapture Tax.

Eligibility requirements include:

Learn more on the VHDA website.

For All Homebuyers

Acquire, Renovate, Sell Program

The Acquire, Renovate, Sell (ARS) program provides assistance to homebuyers who plan to flip the residence and sell it to a low- to moderate-income (LMI), first-time Virginia homebuyer. The program administrator is the DHCD and the financial backer of the program is the VHDA. The homebuyer acquires an undervalued home using his/her own line of credit, uses ARS funding and other sources to renovate, and then resells the residence at fair market value to a first-time homebuyer. After the sale of the property, the original homebuyer repays the ARS funding and uses the net proceeds from the sale to reinvest in local, affordable housing efforts and cover a portion of the ARS administrative costs.

Learn more on the DHCD website.

Virginia Individual Development Accounts Program

The Virginia Individual Development Accounts (VIDA) program helps qualified individuals save money for a down payment on a home. Chosen participants receive training, support, and match funding on their savings. Currently, the VIDA match rate is $8 for every $1 the participant saves, up to a $4,000 match. Homebuyers can use VIDA with other DHCD programs such as the DPA Program and the Neighborhood Stabilization Program (NSP).

For more information about the VIDA program, visit the DHCD website or contact a VIDA intermediary.

Virginia Livable Home Tax Credit

The Virginia Livable Home Tax Credit (LHTC) provides state tax credits to help Virginia residents make their homes more accessible and universally visitable. Tax credits up to $5,000 are available for the purchase of a new housing unit or equal to 50% of the cost to retrofit an existing housing unit (not to exceed $5,000). Any tax credit that exceeds the recipient’s tax liability may be carried over for up to seven years. If the DHCD exceeds its tax credit allocation for the fiscal year, then DHCD will pro-rate the total credit amount among all eligible applicants.

Learn more on the DHCD website.

Various Loans

The VHDA offers competitive loans for first-time and repeat homebuyers when they purchase homes in the state of Virginia.

  • Fannie Mae HFA Preferred with Reduced Mortgage Insurance Conventional Loan
  • Fannie Mae 97% No Mortgage Insurance Conventional Loan
  • FHA Loan
  • Veterans Administration (VA) Loan
  • USDA Rural Housing Service Loan
  • VHDA Plus Second Mortgage

Visit the VHDA’s webpage to learn more about each loan and eligibility. If you are interested in applying for these loans, contact a VHDA-approved lender.

For Homeowners

The DHCD offers financial assistance to eligible Virginia residents for home improvements. Learn more about each program and eligibility requirements on the DHCD website or by clicking the links below.

DISCLAIMER: The information gathered here is deemed reliable as of the date of publication, but each aforementioned agency has the right to change its information and processes. Contact each organization for specific answers and the most updated information.

For additional information on this topic contact Evelyn Miller, Partner, at 202-753-7400.

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