Help Is Out There For First Time Home Buyers To Achieve Their Dream

I know that if you are currently renting, buying a home may seem like a dream that is next to impossible to achieve!  High prices - high interest rates - the down payment - all the closing costs you will have to pay - all the money you have to pay to get the loan - appraisal fee - inspection fees - the attorney's cost - and now, you may also have to potentially pay for your buyer agent to assist you with the home purchase!  After you look at all these things, you may be thinking "I will never ever be able to buy my first house!"

It can feel overwhelming trying to figure out where to even start, and it might seem easier to just stay put and keep renting!

But is renting really better in the long run?  I'd say NO, and not just because I am a Realtor!  Renting may be a better option if you want the flexibility to be able to move quickly, or if you need to save up money before buying a house - and you don't have to maintain it!  But if you are renting for a number of years, at the end of the day, you don't own it, and any rent you paid went to pay your landlord's mortgage and to help him (not you) build equity.  I always look at equity as a built in savings account!  Having helped hundreds of first time home buyers over the years, I am always amazed how much equity they have built!  

So if you do decide that you want to make the leap into home ownership, know that there are a lot of options out there to help you!  Here are ones to consider:

MAGGIE WALKER COMMUNITY LAND TRUST 

This is an interesting option!  The Maggie Walker Community Land Trust (MWCLT) is a non profit that makes home ownership more affordable for low to moderate income households by selling homes while retaining the ownership of the land.  This unique setup lowers the cost of buying a home, but because the land is owned by the Land Trust, not all lenders can provide the mortgage.  Fortunately, they have partnered with certain lenders who can.

If you're currently renting, your monthly payment might end up being similar to what you'd pay for a home through Maggie Walker CLT.  But remember, when you rent, you're not building any equity - you're just paying to live there.  With a home purchased through the Maggie Walker Land Trust, you're building equity to move into another home.  Homes through this program are available in Henrico, Chesterfield and the City of Richmond.

VIRGINIA HOUSING

Virginia Housing is a self supporting non profit that was created in 1972 in order to help Virginians attain affordable housing.  Virginia Housing sells bonds to raise money that is then used to help buyers buy their first home (although they may have some options if you are a repeat homeowner).  Virginia Housing has approved lenders that offer the Virginia Housing loan programs to qualified buyers.  Virginia Housing offers low down payment loans, down payment assistance grant money, closing costs assistance grant money.  They offer FHA, VA and conventional loans.  Many of my buyers have worked with lenders who are able to offer the Virginia Housing loans in conjunction with some of the other grant money available from other grant providers other than Virginia Housing.  As with many of the various options noted here, there may be income and credit score requirements and they may also have a limit on the purchase price of a house that this type of loan can be used for.  For instance, in 2024, in Richmond, if your household has 2 or fewer people, your gross income needs to be $86,000 or less, and the maximum purchase price is capped at $500,000.

LOANS WITH LOW DOWN PAYMENTS

You definitely have a few options to consider here.  For instance, an FHA loan will require a down payment as low as 3.5%.  If you are a military veteran with VA eligibility, you might qualify for the VA loan, which offers a 0% down payment and no mortgage insurance.  USDA loans are another great option with a 0% down payment and no mortgage insurance, but the property needs to be in an eligible area according to USDA guidelines.

Many people assume that USDA loans are only for rural areas, but you might be surprised!  Of course, most areas in the city of Richmond, or in areas such as Short Pump, Midlothian, Bon Air won't qualify for USDA loans.  But eastern Henrico, New Kent County, some parts of Chesterfield County, parts of Hanover County may qualify for USDA loans.  

Want to find out more about each of these different loan options?  Talk to your lender or visit their websites ---

• USDA Loans
• FHA Loans
• VA Loans  

FREDDIE MAC HOME POSSIBLE LOAN PROGRAM

Here's another loan option worth discussing with your lender.  It's a conventional loan with just a 3% down payment.  If you have some construction skills, Freddie Mac offers the Home Possible Sweat Equity Loan, which lets you use your skills instead of cash to cover the downpayment and closing costs.  This is a great option if you're willing to buy a home that needs some work and want to build equity by doing much of the work yourself!

FANNIE MAE HOME READY LOAN PROGhRAM 

Another loan option to talk to your lender about is a Fannie Mae Home Ready loan program.  This is a conventional loan with a 3% down payment that is great to use if for some reason it is not possible to do an FHA loan.  For instance, if you are buying a condo that is not FHA insurable (meaning that the complex has not gotten FHA approval), this may be a great alternative to use.  But in addition to this, Fannie Mae may still be offering a $2500 credit that can be used towards the down payment and closing costs.

FHA 203K LOANS FOR RENOVATIONS AND REPAIRS

If the house you are considering needs major repairs, or even just some updating, and you don't have the construction skills to do it yourself, another option is to go with a renovation loan.  Not all lenders offer renovation financing, so you want to make sure the lender you use does the renovation financing themselves (rather than referring it to another lender to do the loan) and that they understand the process.  In the Richmond area, there are not a lot of lenders I would say to go to for this type of loan.  But the beauty of this loan is that the down payment is low and you are able to complete the repairs without having to go into a savings account to cover the costs.

BANKS OFFERING THEIR OWN IN-HOUSE DOWN PAYMENT ASSISTANCE PROGRAMS

Many banks have their own in-house down payment assistance programs.  Each of these will have different requirements in terms of credit scores, down payment assistance funds, education requirements, maximum purchase price, etc.  But some of the banks that my buyers have used over the years to buy their homes with these in-house grant programs include:

• Bank of America:  Their Community Homeownership Commitment can help with up to $17,500 when combining the down payment and closing costs assistance programs in select markets.  These grants are not a loan and do not need to be repaid.  Check with a Bank of America loan officer to find out what they are offering in the Richmond area and what their requirements are in order to qualify for these funds.
• Chase:  Chase has a DreaMaker grant program that offers up to $7,500 towards closing costs.  In addition, if you are also getting a VA loan with Chase, there may be an additional $2,000 Chase VA Purchase Closing Cost Benefit that you could use.  Check with a Chase loan officer to find out what they are offering in the Richmond area and what their requirements are in order to qualify for these funds.
• Truist:  Truist offers a CHIP (Community Homeownership Incentive Program) that has down payment assistance programs and down payments as low as 0% and with no mortgage insurance.  Check with the Truist loan officer to find out what they are offering in the Richmond area and what their requirements are in order to qualify for the CHIP program.
• Wells Fargo:  Wells Fargo offers several different programs that could help with your first home purchase.  There is a $10,000 Homebuyer Access grant as well as a $5,000 for their DREAM.PLAN.HOME grant.  Not all of these are offered in all areas and there are qualifications that a buyer must meet, so it is best to talk to the Wells Fargo loan officer to see what is offered in the Richmond area and what the qualifications are.

These are just a few and it would be worth taking a few minutes to talk to your bank to see if they are offering any down payment assistance programs, and if so, what they are and what the qualifications are.

HOUSING OPPORTUNITIES MADE EQUAL (HOME)

HOME is a non profit that works with home buyers to get into their first home.  They offer down payment assistance programs.  There are income restrictions (for example, in the Richmond area your maximum income for a 1 person family cannot exceed $61,800).  There are also education requirements - you would need to complete a home ownership class that they offer.  

FIRST HOME LOAN BANK OF ATLANTA & FIRST HOME LOAN BANK OF PITTSBURGH

These grant funds are sent by these two funding entities to their member banks, to be used in providing down payment assistance grants.  This means that the local banks that will offer these grant funds will generally be the smaller, local banks and you won't be able to get these through the larger banks such as Bank of America, Wells Fargo, etc.  These funds can be used in conjunction with loans such as those offered by Virginia Housing.  There are income restrictions on the grant funds and once the funds are gone for the year, there will not be any until the next year.

SOUTHSIDE COMMUNITY DEVELOPMENT AND HOUSING 

Not only do they offer down payment assistance programs, but they work in conjunction with Virginia Housing to provide a 1% mortgage interest rate reduction through the SPARC program and they will work with qualified individuals to save for a down payment through the VIDA Match Program.

HENRICO COUNTY EMPLOYEE DOWN PAYMENT ASSISTANCE PROGRAM

This is a relatively new program that has been rolled out by Henrico County for the benefit of their employees.  If you have had 12 months of continuous full time employment with Henrico County and you have a performance appraisal of acceptable or better, then you may be eligible to receive up to $25,000 towards your down payment and closing costs to purchase your first home in Henrico County.

VIRGINIA FIRST TIME HOMEBUYER SAVINGS PLAN

This plan was rolled out in 2014, and I am still amazed at how many people are still unaware of this plan.  In Virginia, you can set up a savings account at the bank for up to $50,000 that can be used towards closing on a new home.  The interest and capital gains on the interest earned on this account are free from Virginia state taxes.  To make sure that this is set up properly, I recommend that you talk to your bank or your accountant.

As you can see, there are a lot of resources out there.  But I do know that the landscape is always changing, new programs are always coming out, old ones are ending or even changing.  But if you want to buy your first home, there are definitely resources out there to help!  Remember, that your first house is probably not going to be  your last house.  The first house may be the stepping stone to build equity, keep your payment stable and not subject to rent increases year after year and to make memories in! 

And if you do decide that it is time to make the journey, but still have a lot of questions, or maybe you need a referral to some lenders that can help, reach out and let's talk!  I am here to guide you through the process!