The VHDA Down Payment Assistance Grant pilot program launched last year with great success. This week the VHDA launches the new DPA grant program giving home buyers another opportunity to have their down payment covered with grant money.
To be eligible for this program, you must lock in your mortgage after grant funds become available on Monday, March 14. If you lock in a loan this week, double check with your lender to make sure you’re doing so at the right time to qualify.
Here’s what you need to know about the program:
The DPA grant program has two key benefits that will ease financial burden for home buyers. First, you don’t have to repay the grant, so the down payment fund comes with no strings attached. DPA borrowers are also eligible for the Mortgage Credit Certificate or MCC. The MCC is a dollar-for-dollar credit you can take against your tax liability at the end of the year on top of your other homeowner tax deductions. The DPA grant coupled with the MCC credit can save you thousands.
Home buyers using VHDA Fannie Mae No MI or VHDA FHA financing are eligible for the DPA grant. Other VHDA products including the VHDA Conventional Bond, FHA Plus, VA and Rural Development financing are not eligible. The DPA grant can’t be used alongside any other down payment or closing cost assistance programs. Mortgages that don’t require a down payment won’t qualify. And grant money can only be used for a mortgage down payment. Closing costs are off limits.
For VHDA Fannie Mae financing, the maximum grant offered is 3% of either the home purchase price or appraised value, whichever one is less. For VHDA FHA financing the grant maximum is 3.5% of the home price or value, whichever one is less. Since demand for the DPA grant is high, the income and loan limits for the program are fairly stringent. To get approved for the DPA grant, you can’t make more than 80% of the VHDA’s current income limits. Check the table below to see if your household income qualifies.
One important thing to note: The income limits take into account everyone who lives inside of the home, not just the borrowers. Be prepared to disclose income for all residents.
Applying for the grant begins and ends with your lender. First you’ll lock in your mortgage and then your lender will reserve grant money through the VHDA grant database. This year the VHDA has upgraded the grant reservation and confirmation process hopefully making it quicker for us to push through your application and to get a response. Once approved, funding happens at closing.
Interested in learning more about your mortgage options or prequalifying for a home loan?