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First-time homebuyer programs in Virginia you should know

A happy agent and her clients

Investing in luxury homes in Williamsburg, VA may appear to be a tough mountain to climb if you’re a first-time homebuyer. But like modern climbing expeditions to Everest, your first home can be a luxury property with the right tools and Realtor by your side.

There are also countless resources that can help you inch closer to your dream home, regardless if it’s considered high-end or not. In Virginia, you may be able to benefit from any of the first-time homebuyer programs below, courtesy of the Virginia Housing Development Authority (VHDA). 

What makes a house a luxury home?

Like other residential real estate, luxury homes come in different shapes and sizes. What makes it stand out from the rest of the housing stock is its price. But that doesn’t mean a luxury home is always priced in the millions.

Location plays an important role in determining which home is high-end. If a property is considerably more expensive than other homes in the market, it is a luxury home. In Williamsburg, VA, where the average market value of homes is $380,171, you can consider homes well above that price to be luxury.   

Of course, other factors like the quality of finishings and the amenities play a part, too. But if you want an easy way to determine if you’re looking at a piece of luxury real estate in the market, taking a look at its price relative to the neighborhood takes only minutes.

Down payment assistance grant (DPA)

Down payments can be challenging to make, but VHDA’s down payment assistance grant makes the load easier. If you’re qualified, you can receive up to 2.5% of your first down payment. You can pair this with a Mortgage Credit Certificate (MCC) to lower your monthly housing payments even further.  

Requirements:

  • You must be a first-time homebuyer
  • You should have a credit score of at least 620 (FHA), 660 (Virginia Housing Conventional No Mortgage Insurance), 640 (Virginia Housing Conventional)
  • Your household income should not exceed the program limits

Learn more about DPA here.

Virginia Housing Conventional

Another solution for your down payment woes is the Virginia Housing Conventional grant. It can lower your down payment to only 3% and, if you also qualify for a DPA grant, just 1%. You can also combine this with MCC and Plus Second Mortgage.

Virginia Housing Conventional can finance up to 97% of your home purchase. Combined with the fact that it requires mortgage insurance (with discount premiums), this is one of the best programs for first-time buyers—or anybody who wants to “move up.”

Requirements:

  • You must have a minimum credit score of 640

Virginia Housing Conventional No Mortgage Insurance (MI)

If you like the benefits of the Virginia Housing Conventional loan but don’t want to get mortgage insurance, here’s your alternative. As its name implies, it doesn’t require you to get one. 

Two other things that differentiate it from its with-MI counterpart are the interest rate and the credit score requirement. Since you don’t have to get mortgage insurance, you’ll have to pay higher interest rates. And in order to qualify for this  loan, you must have a credit score of at least 660.

Mortgage credit certificates (MCC)

Exclusive for first-time homebuyers, mortgage credit certificates are beneficial if you want to earn tax credits from your home purchase. The credit you receive is equal to 10% of your annual mortgage interest, which means thousands of dollars in savings. This is valid for the rest of your loan’s term so long as you live in the home you bought. 

Requirements:

  • You must have a commitment with your chosen approved lender
  • You must be a first-time homebuyer or haven’t lived in a home you owned within the past three years
  • Your household income shouldn’t exceed the income limits
  • The purchase price of the home you intend to buy should be below the maximum sales price/loan limits (for Williamsburg, it’s $390,000)

Given the sales price/loan limit stipulation, qualifying for a mortgage credit certificate may be challenging if you want to buy a luxury home. That said, this is useful knowledge to have in case your plans change.

You can read more about mortgage credit certificates here.   

Consult a Williamsburg, VA Realtor

Unsure if you qualify for a certain loan program? Perhaps you’re having trouble weighing your options. Sound advice from an experienced local Realtor will help you immensely.

Let Coldwell Banker Traditions help you explore your options, not only with loan programs, but also with luxury homes for sale in Williamsburg, VA. Get in touch with us today at 757.229.9595 / info(at)cbtraditions(dotted)com.