First-Time Homebuyer Programs in Virginia

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Virginia, where the average home value is $392,434, a 20% down payment to avoid private mortgage insurance would be $78,487.

Fortunately, first-time homebuyer programs in Virginia can help you achieve homeownership. Some mortgages allow first-time homebuyers to put less down on a home, though they often come with income requirements and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

Virginia offers grants and loans to assist first-time homebuyers with down payment and closing costs. We compiled the first-time homebuyer programs offered by Virginia Housing to help you find the best option for your particular needs and situation.

The Virginia Housing Conventional Programs include two loan options tailored for first-time and repeat homebuyers seeking affordable financing.

• Virginia Housing Conventional: Offers a 30-year fixed-rate mortgage with a 3% down payment (1% or 0% with specific assistance programs). It requires a 640 minimum credit score, allows up to a 50% debt-to-income ratio, and has the lowest conventional mortgage insurance costs. The program accepts flexible down payment sources and has income limits.
• Virginia Housing Conventional No Mortgage Insurance: Also a 30-year fixed-rate loan, but without mortgage insurance. It requires a slightly higher minimum credit score of 660 and similarly allows for a 3% down payment or no down payment with eligible assistance.

Virginia Housing's Government Loan Programs include three federal loan types tailored for first-time and repeat homebuyers.

• FHA Loan: Requires a 3.5% down payment (or as low as 1% with Virginia Housing assistance) and has flexible credit requirements with a minimum credit score of 620. FHA loans are eligible for the Virginia Housing Down Payment Assistance Grant or Plus Second Mortgage.
• USDA Loan: Offers 100% financing for rural properties and low mortgage insurance, requiring a minimum 620 credit score. It is eligible for Virginia Housing’s Closing Cost Assistance Grant.
• VA Loan: Designed for veterans, this loan provides 100% financing with no down payment requirement and liberal credit qualifications, requiring a minimum credit score of 620. The VA Loan is also eligible for Virginia Housing’s Closing Cost Assistance Grant.

The Down Payment Assistance Grant from Virginia Housing provides funds to help first-time homebuyers with down payment costs. This grant offers 2% to 2.5% of the home’s purchase price, depending on the mortgage type selected, and does not require repayment. Funds must be used with a Virginia Housing bond loan, and applicants must meet specific income and loan requirements to qualify.

The Closing Cost Assistance Grant is designed to reduce out-of-pocket costs for first-time homebuyers using eligible Rural Housing Service (RHS) or Veterans Affairs (VA) bond loans, making these 100% financing programs more accessible. The grant covers up to 2% of the purchase price, which can be applied toward closing costs, RHS guarantees or VA funding fees. Importantly, this grant does not require repayment.

The Virginia Housing Plus Second Mortgage program provides eligible homebuyers with a second mortgage that covers the entire down payment requirement, eliminating upfront costs. Available to both first-time and repeat homebuyers, this 30-year, fixed-rate second mortgage has no prepayment penalty and can also be used to cover part of the closing costs for borrowers with a credit score of 680 or higher. The loan amount can range between 3% to 5% of the purchase price, depending on the borrower’s credit score and the Virginia Housing first mortgage selected.

Aside from statewide first-time homebuyer programs in Virginia, city-specific programs are also available to help you pursue homeownership in a city of your choosing. Check out the table below for some of the cities in Virginia that provide first-time homebuyer programs for potential residents.

Virginia offers zero-down-payment loan programs that eliminate the need for a down payment when buying a home. USDA and VA loans are two government-backed options that allow you to purchase a home with no money down.

USDA loans are designed to assist homebuyers in rural areas. These loans are issued by the U.S. Department of Agriculture through its Rural Development Guaranteed Housing Loan program.

USDA loans offer several benefits, including no down payment and competitive interest rates. These loans aim to make homeownership more accessible for individuals and families in rural communities. The conditions of a USDA loan often include requirements for property location and size, ensuring that the home meets specific criteria for rural living.

To qualify for a USDA loan, your property must be 2,000 square feet or below and located in a USDA-eligible rural area with a population under 35,000. Additionally, you must meet income limits that vary by location. For example, in Bath County, Virginia, the income limit is $63,750, while in Louisa County, Virginia, it is $75,500 for a four-person, low-income household. These limits ensure that the loans are targeted to those who need them most.

VA loans are a type of mortgage issued by the U.S. Department of Veterans Affairs and are designed to help veterans, active-duty service members and eligible surviving spouses become homeowners.

VA loans offer several advantages, including the absence of a down payment requirement. They also do not require private mortgage insurance (PMI), which can save borrowers a significant amount of money over the life of the loan. Additionally, VA loans come with lower interest rates compared to private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in Virginia is 6.25%, while a 30-year fixed-rate VA loan is 6.38%.

To be eligible for a VA loan, you must meet specific requirements related to your length of service or service commitment, duty status and character of service. You must also meet certain income limits depending on where you live and provide a valid certificate of eligibility (COE).

First-time homebuyers in Virginia can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

FHA loans and conventional loans are the two most common types of mortgages. FHA loans require a minimum down payment of 3.5%, making them accessible for buyers with limited savings. Conventional loans can require as low as a 3% down payment for first-time homebuyers but generally have stricter credit score and debt-to-income ratio requirements than FHA loans.

Interest rates are another important factor to consider. As of November 2024, the current APR for a 15-year fixed-rate conforming loan is 6.04%, while the APR for a 15-year fixed-rate FHA loan is 8.04%. APRs on FHA loans can be higher because there tend to be more fees and extra costs associated with borrowing money on government-backed loans.

Use our FHA vs. conventional loan calculator to help you compare FHA and conventional mortgage programs and find the best option for you.

We answered some frequently asked questions about first-time homebuyer programs in Virginia to help you get closer to homeownership.

Explore additional MoneyGeek resources for first-time homebuyers in Virginia to help you with the homebuying process.