The Details on Getting a Mortgage in Virginia for the First Time
Buying your first home is an exciting and important milestone in life. Not only will you have your own space and be independent, but you’ll also be on the path to building equity which will only grow over time.
But before you can start, you’ll need a to qualify for a mortgage. This can be a big financial as well as time commitment, so you’ll want to make sure you’ve done your homework and are well prepared before you begin.
Let’s take an in-depth look at the details of getting your first mortgage.
The Mortgage Process
There are a few stages you’ll need to go through before you can fully qualify for a mortgage. Generally speaking, they are:
In this stage, you’ll meet with your lender and answer a few basic questions about your credit history. Once this is done you’ll be given a pre-qualification letter which will include an estimate of how much you can borrow.
Pre-approval is where your credit score and credit history will be checked, and your lender will determine more precisely how much of a mortgage you can qualify for. This will save you a lot of time during the home-buying process as you’ll know exactly what price range you should be looking at, as well as signalling to sellers that you’re serious about buying.
This is similar to the pre-qualification process but will be more in-depth, and will require some paperwork to be filled out, such as a mortgage application. There may also be some application fees involved, although this can vary depending on the lender.
Finalizing the Mortgage
Once you’ve been pre-approved and you’ve found the perfect home for you, you’ll need to fill out the full mortgage application. This will be similar to the pre-approval process, and you’ll need to provide some further financial information, including income and tax records, as well as information about the home you want to purchase and details of your down payment.
If this all goes well, you’ll be approved for a mortgage and be ready to go!
While the mortgage process might seem daunting at first, there are quite a few programs available to help you along the way. Some of these are federal programs, and others are specific to Virginia. These include:
The Federal Housing Association has a program designed to help first-time home buyers with lower credit scores. If your credit score is 580 or above, this program allows you to make a down payment of as little as 3.5%. You can even be insured for a mortgage with a credit score as low as 500, although this will require a 10% down payment.
If you live in a rural area, The United States Department of Agriculture can offer zero down payment loans to qualifying backers. There are income restrictions which can vary by region, and if your credit score is over 640 then the application can be processed quicker.
For military veterans, the Department of Veteran Affairs will issue VA loans to help with the cost of a new home. You’ll need a credit score of at least 620 to qualify, plus you’ll need to be able to afford the VA fees of 1.25% to 2.4% of the value of the home you’re buying. However, once you qualify you won’t need a down payment or private mortgage insurance, so it can be a great deal for those who are eligible.
FHA Plus Loans
For those living in Virginia and thinking of utilizing an FHA Loan, the FHA Plus program adds a secondary mortgage that can cover the full down payment cost, as well as some of the other upfront costs of buying the home. The exact range of benefits may vary based on your credit score.
Down Payment Assistance Grant
This program offered by the Virginia Housing Development Authority (VDHA) has strict eligibility requirements, but can be extremely helpful to those who qualify. This program covers up to 2.5% of the value of a home for a down payment, and because it’s a grant, if you qualify, you don’t even need to ever pay it back!
As an added bonus, if you qualify for this grant you’ll also qualify for a VHDA Mortgage Credit Certificate.
VHDA Mortgage Credit Certificate
A Mortgage Credit Certificate is perfect for first-time home buyers who are planning to stay in their home long-term. Under this program, you can claim 20% of your annual mortgage interest as a Federal Tax Credit. This offer is valid for as long as you stay in your home, so the longer you keep the same mortgage, the greater the benefits.
There’s a lot to think about when preparing to buy your first home, but as you can see, there’s plenty of help available to get you started. Consider putting in the time to investigate all your options, and you’ll find yourself living in your dream home in no time.
Originally published June 19, 2019