What to Know about Homes for Sale in Virginia Beach
Buying your first home is often perceived as difficult. It is, not surprisingly, overwhelming because the home buying process is such a huge undertaking for a first-time homebuyer. There are so many things you have to prepare, so many things you have to know and do in the home buying process. How will you get about it?
Then there is the real estate situation. Prices of homes for sale in Virginia Beach have been rising. Another reason to intimidate home buyers. But fret not, there’s a great deal of help at hand in the form of professional advice from real estate agents to homebuyer education seminars to cash grants or even loans to assist you in your down payment. Get in touch with Barry Jenkins – Better Homes & Gardens Real Estate | Real Estate Agency in Virginia Beach, VA for guidance and details.
Who Qualifies as a First-time Home Buyer in Virginia?
A family or any individual who has never owned a home, in the past three years at least, is the definition of a first-time home buyer in Virginia.
First-Time Homebuyer Programs in Virginia
The state has two organizations with programs that help out first-time homebuyers statewide. These are the Virginia Department of Housing and Community Development (Virginia DHCD) and Virginia Housing, formerly the Virginia Housing Development Authority (VHDA). Other programs are mentioned below.
Virginia homebuyer overview
The average for the price of homes for sale in Virginia had risen some 16%+ in May 2020-May 2021. This stat would make you feel that saving to raise your down payment is going to be almost like a crisis. We’re going to share how to get through with your down payment (and closing costs, too), like a down payment assistance program or down payment assistance grant.
Virginia down payment costs is based on the most recent average home for sale prices. You can assume a 3% down payment on a conventional mortgage plus a credit score of at least 620. The VA and USDA loans do not require any down payment for qualified applicants, hopefully, you are.
Virginia First-time Home Buyer Grants and Loans
If you’re a first-time home buyer in Virginia (Virginia Beach and other cities statewide) with a 20% down payment, you can get a conventional loan with a low-interest rate. And you never have to pay for private mortgage insurance (PMI). Of course, few first-time buyers have saved enough for 20% down. But the good news is, you don’t need that much. Not by a long shot. Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment loan programs:
As a first-time homebuyer, you can get a conventional loan at a 20% down payment and with a low-interest rate. You won’t have to pay for the PMI (private mortgage insurance), too! Yes, 20% is not commonly at hand for most first-time buyers. But there are programs that don’t demand that much of you. There are low down payment loan programs that require only 0%-3% down payments!
Types of Loan
These programs, except for the conventional loans, require you to own a primary residence, one that you’re living in, not as an investment property or a second home). You will have to decide on the mortgage rate you want, a fixed-rate mortgage or an adjustable-rate one.
A fixed-rate mortgage has a set interest rate and monthly payment. Adjustable-rate loans, on the other hand,
1. USDA Loan
This program is for low-to-moderate incomes planning to buy in particular rural areas and requires zero down payment. The credit score required is often 640 and the annual mortgage interest rates are low.
2. VA Loan
Qualified applicants are only veterans and service members for this program backed by the Veterans Affairs department. No down payment requirement with a minimum credit score requirement often pegged at 620. After the closing, there will be no ongoing mortgage insurance to be paid. If you are eligible, be sure to apply to these best mortgage programs available.
3. FHA Loan
This loan is bankrolled by the Federal Housing Administration, with only a 3.5% down payment and 580 minimum credit score requirements. However, you have to include mortgage insurance among your payables until you pay off your loan. Or if you refinance to a different kind of mortgage.
4. Conventional 97
This loan is backed by Freddie Mac or Fannie Mae, requiring a 3% down payment and a 620 minimum credit score. Mortgage insurance payments usually last only a few years, but the mortgage has to be within the local conforming loan limits.
Conforming loan limits refer to the maximum cash amount a homebuyer can borrow from a lender through a conventional loan. The FHFA (Federal Housing Finance Agency) sets these limits yearly to determine the exact amount a buyer can borrow without a Jumbo Loan, that is, an amount above the conventional conforming loan limits.
5. Virginia Department of Housing and Community Development
This loan provides down payment assistance and may have competitive interest rates.
First time Home Buyer Grants and Programs in Virginia
Virginia Housing
There is a down payment assistance grant program offered by Virginia Housing (formerly VHDA Virginia Housing Development Authority), that allows 2-2.5% of the home purchase price to eligible homebuyers. And it doesn’t have to be paid back.
Qualifications are approval for a Virginia Housing first mortgage and a first-time homebuyer, plus, most importantly, income that must not go beyond the organization’s set income limits.
At the same time, the organization also offers a grant program to assist you to meet your closing costs. The program beneficiaries are Virginia homebuyers who are getting a VA Rural Housing Service (RHS) home loan, two federal loan programs without down payment requirements, and only below-market interest home loans.
The closing cost assistance grant is for closing costs and is worth up to 2% of the purchase price of your home, which you do not have to pay back after the closing process. You must first get an RHS or VA first mortgage through a lender-partner of Virginia Housing. You can also learn more about how to determine your home value.
Virginia Credit Union First-time Homebuyers Program
Members of the Virginia Credit Union get to avail of this program for first-time homebuyers, which gives lower-interest loans at fixed or adjustable rates. You can also apply for a special rebate of up to $2,500 with your home loan.
Virginia Tax First-time Homebuyer Savings Account Subtraction
Virginia Tax (Department of Taxation) has a savings account program for first-time homebuyers to help them save up for their home’s purchase price. The incomes from the account, like interest and capital gains, are tax-free statewide. At the same time, that income can be subtracted from your federal adjusted gross income to compute your Virginia adjusted gross income for a tax credit.
Your savings account must have only up to $50,000 in principal and $150,000 in principal + interest. This can be used only for the down payment and closing costs, not for other expenses in your first home buying process.
This program is available in most banks all over the state.
Department of Housing and Community Development Down Payment Assistance
The Department of Housing has another program for low-income homebuyers, statewide, not just in Virginia Beach. As a first-time homebuyer with an income of 80% or less of the region’s area median income, you are eligible to apply for an assistance grant for your down payment of up to 15% of the home’s purchase price. Then you can qualify for a $2,500 monetary gift too, for closing costs, attorney’s fees, title insurance, and other housing needs. You will be responsible for 1% of the sales price of your home from your savings.
Things to Know for Virginia Beach First-time Homebuyers
For Virginia Beach properties, the median listing price of homes for sale as of mid-2021 was $314,000, which is up by 4.8% in successive years. It means that prices and homes for sale price inflation are lower in Virginia Beach than the statewide average. Check out the real-time market reports in Virginia Beach, VA.
Homes for Sale in Virginia beach at the mentioned median price would set your down payment options as
- $9,420 for a 3% down payment, or
- $62,800 for 20% down payment
Like the other major cities in Virginia, the City of Virginia Beach has its own down payment assistance program for home buyers too. It is available for individuals who meet the eligibility requirements, any veteran seeking a VA loan, or even a closing cost assistance grant. For more information on this and any homeownership program or payment assistance programs, you can visit the Virginia Beach government website.
Homes for Sale: Home Buying Process
These would be the process you will undergo with your real estate agent as you go about buying your first home. Some of these can be done simultaneously with your home search.
- Good Credit. Check your credit to be above 600. A higher, i.e., great credit score means you will get to pay a lower interest rate on your home loan and thus help you save money even while buying your own home.
- Get a Mortgage Loan Pre-approval. Homeowners will demand proof of your funds. The pre-approved letter is a verification by the lender of your household income, job history, and credit. And it will let you know how much you can afford to purchase that house, which can guide you and your agent in your home search.
- Loan Type. You have to be candid with the lender, your finances and needs, and being a first-time homebuyer. You would be advised on the loan programs that would best apply to you.
- Loan Amount. You might be offered by your lender a bigger loan amount than you expected. Do not take on more debt than you can afford. Make sure you have some amount for savings every month – for emergencies, personal, family, or home repairs.
- Home Search & Inspection. Once you have found your dream house and fixed all the pre-qualification financial documents. Get a home inspection.
- Contingencies. It is best to have contingency measures. In your case, it is an eventuality clause added to your contract of purchase as a safeguard for you. Aside from a home inspection, there are other kinds of contingencies, like:
- POA or HOA (Property Owner’s Association or Home Owner’s Association).
- Home Sale. This contingency is if you have a current home.
- Custom – This can be a contingency tailored to your needs or preferences.
