Virginia Housing Programs for First-Time Buyers: Loans, Grants and Who Qualifies

Virginia Housing helps first-time buyers in three main ways: lower down payment first mortgages, grants toward the down payment or closing costs that never need to be repaid, and a Plus Second Mortgage that finances the down payment. Eligibility depends on income, purchase price, credit score and, for the grants, first-time buyer status. In Northern Virginia, the price and income limits are the deciding factor, so the first step is checking your household income and target price against the current limits with a Virginia Housing-approved lender.

How Virginia Housing works

Virginia Housing (formerly VHDA) is a self-supporting state agency. You don’t apply to it directly. Instead, you work with a participating lender, who originates the loan under Virginia Housing’s guidelines. Some programs are funded with tax-exempt bonds (‘bond’ loans), which come with first-time buyer and purchase price rules; ‘non-bond’ versions are more flexible.

For bond programs, ‘first-time buyer’ generally follows the federal definition: you haven’t owned a principal residence in the past three years. Virginia Housing waives the first-time requirement in designated Areas of Economic Opportunity. Ask your lender whether a specific address qualifies.

First mortgage options

According to Virginia Housing’s home loan overview, the main first mortgages look like this:

Loan	Minimum down payment	Minimum credit score	Notes
Conventional	3%	640	Bond and non-bond versions; non-bond has no sales price limit
FHA	3.5%	620	Bond and non-bond versions; FHA mortgage insurance applies
VA	$0 for eligible veterans	620	Up to 100% financing; VA funding fee rules apply
USDA	$0 in eligible rural areas	620	Limited areas in Northern Virginia; property must be in a USDA-eligible location

Credit score minimums are floors, not targets; pricing and approval also depend on debt-to-income ratio and reserves. My guides to FHA loans and VA loans go deeper on each type.

Grants and second mortgages

Down Payment Assistance Grant

• A true grant: nothing to repay.
• For qualified first-time buyers, or repeat buyers in an Area of Economic Opportunity.
• Must be paired with an eligible Virginia Housing bond FHA or conventional loan.
• Household income and the purchase price must fall within Virginia Housing’s limits.
• Can be combined with some non-Virginia Housing assistance, such as local programs.

Closing Cost Assistance Grant

• Worth up to 2% of the purchase price, with no repayment.
• Paired with a Virginia Housing bond VA or USDA Rural Development loan.
• Can go toward closing costs, the USDA guarantee fee or the VA funding fee.

Plus Second Mortgage

• A 30-year fixed-rate second loan with no prepayment penalty that covers the down payment, up to 5% of the price depending on credit and loan type.
• Open to first-time and repeat buyers within income and price limits.
• Paired with a Virginia Housing FHA or conventional first mortgage; borrowers with scores of 680 or higher may be able to finance some closing costs.
• Unlike a grant, it’s a loan you repay with a monthly payment.

Will the limits work in Northern Virginia?

This is where Northern Virginia buyers need to be careful. Virginia Housing sets income limits and sales price limits that vary by locality and household size, and they’re updated periodically. Northern Virginia’s limits are among the highest in the state, but they may still rule out some buyers in Arlington, Alexandria and the closer-in parts of Fairfax County, where median prices are high. They often fit better for condos, townhouses and homes in Prince William County and parts of Loudoun and Fairfax.

Local governments run their own programs too, such as Arlington’s Moderate Income Purchase Assistance Program, Alexandria’s Flexible Homeownership Assistance Program, and first-time buyer and affordable dwelling unit programs in Fairfax, Loudoun and Prince William. Each has its own rules. My down payment assistance guide and the assistance finder tool list them.

A worked example: grant versus Plus Second Mortgage

These numbers are illustrative only, on a $400,000 condo with a Virginia Housing conventional loan, to show how the options compare. Actual amounts, rates and eligibility come from your lender.

Item (illustrative)	With a grant	With the Plus Second Mortgage
Purchase price	$400,000	$400,000
Buyer’s own down payment cash	About $0 to a small amount	About $0
Source of 3% down payment ($12,000)	Grant (no repayment)	Second loan (repaid monthly)
Extra monthly payment	None	About $80 at an illustrative 7% over 30 years
Who can use it	First-time buyers within income and price limits	First-time or repeat buyers within income limits

In this example, the grant is clearly better for someone who qualifies, because it adds nothing to the monthly payment. The Plus Second Mortgage widens access for buyers who don’t meet grant rules. Either way, closing costs and prepaids still need a plan; see my post on the first-time buyer roadmap for the full sequence.

How to apply, step by step

1. Check your credit and pull together two years of income documents, recent pay stubs and bank statements.
2. Take Virginia Housing’s free homebuyer education course (online, virtual or in person); many loans require it, and the online version takes about eight hours.
3. Use Virginia Housing’s Lending Wizard or call a participating lender to check income and price limits for your household and target area.
4. Get preapproved for a specific Virginia Housing program and ask the lender to show the grant or second mortgage amount in writing.
5. Start touring with your price and program in mind; some condo buildings must meet financing eligibility rules, so ask early.
6. Write offers with realistic closing timelines; assistance programs can add a few days to underwriting.

Common mistakes

• Assuming ‘first-time buyer’ means never having owned. The three-year rule may make a former owner eligible again.
• Choosing a lender who rarely does Virginia Housing loans; experience matters for timing.
• Shopping above the program’s price limit and losing eligibility after an offer is ratified.
• Forgetting that grants have to be reserved and approved through the lender before closing.
• Comparing only interest rates instead of total monthly payment, including any second mortgage and mortgage insurance.

This is general information, not lending advice. Program terms change, so confirm current rules and limits with a Virginia Housing-approved lender.

Frequently asked questions

Who qualifies as a first-time homebuyer in Virginia?

For Virginia Housing bond programs, it generally means you haven’t owned a principal residence in the past three years. The requirement is waived in designated Areas of Economic Opportunity.

Does the Virginia Housing down payment grant have to be paid back?

No. The Down Payment Assistance Grant and Closing Cost Assistance Grant are true grants with no repayment, as long as you meet the program rules at closing.

What credit score do I need for a Virginia Housing loan?

Virginia Housing lists a 640 minimum for its conventional loan and scores as low as 620 for FHA, VA and USDA. Lenders may set their own higher requirements.

Can I use Virginia Housing in Arlington or Fairfax County?

Yes, the programs are statewide, but income and sales price limits apply. In higher-priced parts of Northern Virginia, condos and townhouses are more likely to fit within the limits.