A blog about Virginia Real Estate
Homeownership may be easier than you think.. USDA (U.S. Department of Agriculture) Loans
The USDA’s Single Family Housing Guaranteed Loan Program offers mortgage benefits designed to promote homeownership in rural and eligible suburban areas.
| Benefit Category | USDA Loan Benefits |
| Financing | Zero down payment ($0 required), making homeownership accessible for those with limited savings. |
| Affordability | Competitive interest rates, often lower than conventional loans, due to government backing. |
| Credit | Flexible credit guidelines; while a 640+ FICO score is preferred for streamlined processing, lower scores may still be approved. |
| Fees | Lower ongoing mortgage insurance costs (annual fee) compared to Private Mortgage Insurance (PMI) on some other low-down-payment loans. |
| Closing Costs | Closing costs can often be rolled into the loan or covered by seller concessions (up to 6%). |
| Property Use | Can be used to purchase, build, rehabilitate, or improve a home in an eligible rural area. |
Keep in Mind: USDA has a direct program or loans through lenders. Lenders may have their own criteria added to USDA’s criteria.
Key Limitations:
- Geographic Restriction: The property must be in a USDA-designated eligible rural or suburban area.
- Income Limit: Household income cannot exceed 115% of the area’s median income.
Virginia Housing (VH) Loans and Grants
Virginia Housing (formerly VHDA) offers a variety of loans, grants, and programs primarily focused on making homeownership affordable across the state, often for first-time or lower-to-moderate-income buyers.
| Benefit Category | Virginia Housing (VH) Loans and Grants Benefits |
| Down Payment/Closing Costs | Down Payment Assistance Grant: Provides funds for a down payment that do not need to be paid back (true grant). |
| Closing Cost Assistance | Closing Cost Assistance Grant: Reduces out-of-pocket expenses at closing, especially when paired with an eligible VH loan. |
| Flexible Financing | VH home loans are often 30-year fixed-rate mortgages that may allow for low or zero down payments and lower credit scores (e.g., as low as 620). |
| Second Mortgage Option | VH Plus Second Mortgage: Can be used to cover the entire down payment and closing costs, eliminating the need for cash upfront (paid back over time). |
| Accessibility | Accessibility Grants: Offer funds (up to $8,000) that do not need to be repaid for making home modifications (ramps, chairlifts, etc.), including a dedicated grant for disabled Veterans and service members (Granting Freedom). |
| Targeted Assistance | Programs are available for first-time homebuyers and specific groups like Veterans, teachers, or public safety officers. |
Key Limitations:
- Eligibility: Many programs are limited to first-time homebuyers and have income/purchase price limits specific to the county.
- Location: Not restricted to rural areas like USDA, but specific grants and loans are only available for properties within Virginia.
Sources: Virginiahousing.com, USDALoans.com
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