How to Buy a House in Virginia: 6 Steps

Purchasing a house is a major financial decision that requires careful consideration and planning. In Virginia, the average home value is $395,685, higher than the national average of $362,481. This difference highlights the need to be well-informed about the financial commitments of homebuying.

Understanding down payment assistance programs, mortgage types and Virginia's specific regulations and requirements can ensure a smooth journey toward homeownership in the Old Dominion. MoneyGeek has compiled essential pointers to help you navigate the homebuying process in Virginia, from saving the down payment and choosing the ideal location to finding the best financing option for your particular needs and credit history.

According to the U.S. Census Bureau, the homeowner vacancy rate in Virginia for the second quarter of 2024 was 1.2%. The homeowner vacancy rate measures the percentage of homes that are vacant and for sale at a given time and provides insights into the housing market's supply and demand dynamics.

Typically, a stable vacancy rate is around 2%, allowing homebuyers some choice and flexibility. With a rate between 1.0% and 1.9%, buyers face increased competition for fewer available homes and higher prices.

Before buying a house in Virginia, assess your financial and credit history. A strong financial profile improves your chances of getting approved when applying for a mortgage because lenders examine financial stability and creditworthiness to determine eligibility and loan terms.

Your credit score plays a significant role in determining the mortgage loans and interest rates you qualify for. A higher score increases your chances of securing a reasonable rate. According to Experian, the average credit score in Virginia in the third quarter of 2023 was 722.

If you have bad credit, or a score between 300 and 579 on the FICO scale, buying a house is still possible, but getting approved for a mortgage may be challenging. Check the table below to see which mortgage type is ideal based on the minimum credit score requirements.

Source: Experian

Your debt-to-income ratio (DTI) is a crucial metric for lenders to understand how much of your monthly income is dedicated to debt payments and how much mortgage debt you can responsibly take on. In Virginia, the average mortgage debt was $278,177 in the third quarter of 2023, according to Experian. This figure reflects the financial responsibility that comes with homeownership.

Monthly debt payments factored into your DTI include mortgages, credit cards, student loans and other loan obligations. Use our debt-to-income ratio calculator below to determine your front-end DTI, which includes housing expenses, and back-end DTI, which consists of all your debt obligations.

Buying a house that exceeds your financial limits can lead to stress and financial hardship. To avoid this, consider using the 28% rule, which suggests you should not spend more than 28% of your gross monthly income on mortgage payments.

According to the U.S. Bureau of Labor Statistics, the median annual income in Virginia as of April 2024 was $49,920. This translates to a gross monthly income of $4,160 before taxes. With the 28% rule, your monthly mortgage payment should not exceed $1,165.

Use our mortgage calculator below to get a ballpark figure of your monthly mortgage payment in Virginia.

A down payment is an initial payment made when buying a home, typically 20% of the purchase price. However, for many, this standard can be a significant hurdle. The average home value in Virginia is $395,685, or a 20% down payment of $79,137. For homes above average or $415,000, the down payment increases to $83,000.

Fortunately, a 20% down payment isn't mandatory. Most mortgage options allow for lower down payments. For example, VA loans offer the possibility of purchasing a home with 0% down, while FHA loans require just 3.5%.

If you choose to put down less than 20%, your lender might require you to obtain private mortgage insurance. This insurance protects the lender in case of default but adds to your monthly expenses. Our PMI calculator can estimate your monthly premium based on your credit score and down payment.

The Virginia Department of Housing and Community Development (VDHCD) offers down payment assistance programs to help make homeownership a reality for many residents. Please refer to the table below for specific information on the available programs.

Finding the right location in Virginia requires evaluating several factors. Consider the average house price in your desired area and how close it is to family, friends and work or school. Access to public transportation, parks, restaurants and shopping centers can also influence your decision.

The cost of living is another consideration. According to the Missouri Economic Research and Information Center (MERIC), Virginia's cost of living index in the first quarter of 2024 was 101.3, slightly above the national average of 100. Here are some essential expenses to consider:

• Food
• Health care
• Clothing
• Utilities
• Education
• Transportation
• Entertainment

Check the table below to see the average home values of some cities in Virginia based on recent data. You can also use our cost of living calculator to help you estimate how much to pay for all the essentials in different locations.

Source: Zillow

Working with a real estate agent can expedite your house hunt in Virginia. They can provide expert advice, handle paperwork, offer access to a wider range of properties and recommend service providers like title companies and inspectors.

When selecting a real estate agent, conduct thorough research and interview those with experience in your desired neighborhoods. Consider the following tips:

• Find someone compatible with your needs and personality
• Verify the agent's credentials, training and licensure
• Ensure they have in-depth knowledge of the area
• Shop around for agents and compare their rates

You can also use the license holder search tool from the Virginia Department of Professional and Occupational Regulation to find or verify real estate agents.

You can choose from various mortgage types in Virginia, including conventional, jumbo, FHA, VA and USDA loans. You also have the flexibility to select terms ranging from 10 to 30 years. Additionally, you can decide between a fixed-rate mortgage or an adjustable-rate mortgage (ARM). Selecting the right financing option not only increases your chances of approval but also helps in saving money over time.

Interest rates on a mortgage can fluctuate daily due to various factors, including the type of mortgage, the lender and the overall economy. While the interest rate is a percentage of the loan amount charged annually by the lender, the Annual Percentage Rate (APR) encompasses the interest rate and other costs associated with the loan, providing a clearer picture of the true cost of borrowing.

As of October 2024, the APR for a 30-year fixed conforming loan in Virginia was 5.97%, while the APR for a 30-year fixed-rate FHA loan was 7.64%. The table below shows the current rates in Virginia by mortgage type.

Getting pre-approved for a mortgage in Virginia involves a comprehensive evaluation of your financial status, giving you a realistic picture of the mortgage amount you can afford. Lenders will issue a mortgage pre-approval letter, which can make you a more attractive buyer to sellers. The letter is typically valid for 60 to 90 days, giving you a window to make offers.

To get pre-approved, you must submit several documents demonstrating your financial stability. These documents include:

• Proof of income, such as recent pay stubs or tax returns
• Credit history
• Employment verification
• Identification documents
• Bank statements

It's important to distinguish between mortgage pre-approval and prequalification. Prequalification provides a general idea of how much you might be eligible to borrow based on self-reported information. Pre-approval, however, involves a detailed examination of your financial background for a more accurate estimate of your borrowing capacity.

Home inspections in Virginia provide a thorough assessment of a property's condition. Inspectors examine critical components such as the roof, foundation, plumbing, electrical systems and HVAC systems and report findings on the structural integrity, safety issues and necessary repairs.

For example, an inspection revealing major issues such as a compromised foundation or faulty electrical wiring could negatively affect the property's appraisal value. This might lead to complications in securing a mortgage, negotiating the sale price or buyers rescinding their offer to avoid the financial burden of extensive repairs.

Virginia regulates home inspections through the Board for Asbestos, Lead, and Home Inspectors, operating under the Department of Professional and Occupational Regulation (DPOR). Licensed home inspectors in the state must adhere to a strict set of standards of practice and are subject to periodic audits by the DPOR to ensure compliance, maintain high standards and protect homebuyers from issues.

When searching for a home inspector in Virginia, ensure they are licensed. You can verify this using DPOR's license look-up tool. Additionally, read online reviews and ask for references.

Home appraisals provide an unbiased estimate of a property's market value, which is essential for buyers, sellers and lenders. This valuation helps ensure that the price agreed upon reflects the home's actual worth. According to the 2023 Appraisal Survey from the National Association of Realtors (NAR), the median appraisal cost in 2023 was $500.

While inspections and appraisals both assess a property, they serve different purposes. An appraisal determines the market value, whereas an inspection evaluates the home's condition. Lenders require appraisals to confirm that the property's value supports the loan amount.

Closing is the final step in purchasing a home in Virginia, marking the transfer of ownership and the moment you receive the keys to your new property. Your lender will provide a closing disclosure document three days before closing. This document outlines your loan terms, projected monthly payments and closing costs. As you approach the closing day, plan a final walk-through with your real estate agent to ensure the property is in the expected condition.

On closing day, you'll review and complete various paperwork to finalize your home purchase. These documents are crucial to ensure everything is in order.

• Final loan application: This document confirms the details of your mortgage loan. It's your last chance to verify the information before the loan is finalized.
• Deed transfer: The deed transfer officially and legally moves ownership of the property from the seller to you.
• Promissory mortgage note: This is your written promise to repay the mortgage loan. It outlines the loan terms, including the interest rate and repayment schedule.
• Homeowners insurance: Homeowners insurance in Virginia protects your new home from potential damages or losses. It provides peace of mind by covering repairs or replacements in case of unforeseen events.

Closing costs are the fees you pay when finalizing a home purchase. In Virginia, the average closing cost is $4,001, according to NAR. This cost includes the following:

• Appraisal fee: This covers the cost of appraising the home appraised to determine its value.
• Title search and insurance fee: This fee ensures there are no liens or legal issues with the property's title.
• Escrow deposit: An escrow deposit is often required to cover future property taxes and insurance.
• Prepaid costs: These include advance payments for items like homeowners insurance and property taxes.
• Other closing costs: This category covers additional fees such as recording and underwriting.

Learning about the different first-time homebuyer programs in Virginia can help you achieve homeownership faster.

Buying a house in Virginia is a financial commitment that lasts for years. We answered some frequently asked questions about buying a house in Virginia to kickstart your homebuyer journey.