Ask Eli: Loan Programs for Virginians

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Are there any special loan programs in Arlington or Virginia that I should look into?

Answer: The Virginia Housing Development Authority (VHDA) offers a great loan program that includes closing cost and down payment assistance. There aren’t any Arlington-specific loan programs available, but some special programs are made available based on your income and sale price based on the local (Arlington) averages, which are both high. There is a specific Arlington Housing Grant Program available for those who qualify and I’m happy to send additional information on this program if you are interested, but there are too many caveats/requirements to provide specifics here.

As usual, when I get financing questions, I like to turn to one of Northern Virginia’s top lenders, Troy Toureau of McLean Mortgage, to provide a detailed response.

Take it away Troy…

Despite the many changes in home financing which have occurred during the past decade, one important fact has never changed:  The government has several programs to help buyers purchase a home. Here is a quick summary of the major “government sponsored” home financing alternatives. 

The Virginia Housing Development Authority 

Authorized by the Federal Bond Subsidy Act, this state agency issues bonds, which enables it to offer below market interest rates and government down payment assistance on mortgages.  VHDA offers several programs and most recently has issued a Grant program, which can help with closing costs and a down payment.  The VHDA can also issue Mortgage Credit Certificates, which will help defray the cost of the payment by providing a tax credit for a certain amount of interest paid.

VHDA requires that the homebuyer has not owned a home in the past three years and also has maximum income and asset limits. For those purchasing in certain targeted areas, there is flexibility with regard to these restrictions.   The income limits in the Washington, DC area are $121,900 (2-person families) or $142,300 (3+ person families) and the sales price limit is $500,000. There are some targeted areas in Arlington County and if you are interested in knowing whether a property is in a targeted area, email [email protected].

In addition to the VHDA Grant program, VHDA provides a variety of options to help first time buyers finance a home.  These include VHDA loans guaranteed by Virginia and insured by the Rural Housing Service requiring no-money down.  The VHDA FHA-Plus Program provides a second mortgage for those who need closing cost and down payment assistance and the conventional VHDA alternative requires a down payment of only 3.0% with private mortgage insurance.  Keep in mind that the three-year history, income, and asset limits noted above still apply.

The Veterans Administration (VA)

VA loans require no down payment and no monthly mortgage insurance.  Closing costs can be paid by the seller or through a lender rebate. The homebuyer must be a veteran or active military.  National Guardsman and Reservists are also eligible for the program. There is no requirement for the veteran to be a first time homebuyer and no maximum income or asset requirements. 

The Federal Housing Administration (FHA)

FHA loans require a 3.5% down payment, which can be met with grants through VHDA or other housing agencies, if available. FHA also allows the down payment to come from a gift from a relative and closing costs can be paid by the seller or through a lender rebate.  There is no requirement for the applicant to be a first time homebuyer and no maximum income or asset requirements. 

Fannie Mae and Freddie Mac

The conforming agencies both have programs designed to facilitate homeownership for low-to-moderate homebuyers. The requirements vary depending upon the agency, but generally a 3.0% down payment is required and there are maximum income requirements that vary by location. Credit score requirements tend to be slightly more restrictive under these programs, as compared to FHA and VA Loans.

Government aid for home ownership does not end with these programs.  Homeowners of primary residences can deduct interest and real estate taxes from the taxes. This lowers their taxable income and thus their effective housing payment.  We suggest you consult with an accountant or financial advisor to discuss all of the tax benefits of home ownership.

If you would like to know if you qualify for one or more of the government sponsored homeownership alternatives, contact Troy Toureau of McLean Mortgage Corporation at 301-440-4261 or [email protected].  NMLS ID #5618.  McLean Mortgage Corporation| NMLS ID #99665|(www.nmlsconsumeraccess.org)

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.