In Virginia, military veterans and rural dwellers represent two distinct homebuying groups. Consider the following two scenarios:
- Returning stateside after his third tour of duty overseas, Jeff was eager to jumpstart his civilian life. Job one: finding a home his family would love, and his budget could afford. Not the easiest task in the world, as he soon discovered …
- After growing up in rural Southwest Virginia, George and Susan met in college, married and moved to the city. But after 35 years as urbanites, they decided it was time to return to their roots and country living.
VHDA’s Closing Cost Assistance Grant program went into effect in November 2018. This income-restricted grant is only available to first-time buyers, and it must be paired with either a VA or an RHS first mortgage from VHDA. It provides funds of up to two percent of a home’s sales price or appraised value, whichever is less. The money can only be used to cover closing costs, including discount points, prepaid items, and the funding fee (for VA loans) or the upfront guarantee fee (RHS loans). Best of all, it never has to be repaid.
The new Closing Cost Assistance Grant program will undoubtedly change Virginia’s real estate landscape. For veterans and rural residents buying a first home, it lowers their out-of-pocket expenses and eliminates the need to fold their closing costs into long-term financing that carries interest charges. In many cases, a Closing Cost Assistance Grant could mean the difference between their offer being accepted or declined.
As for the bigger picture, this program is expected to create a wider and deeper pool of new homebuyers – and to position at least some of them to make offers on properties that would otherwise have been out of reach.
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VHDA’s Closing Cost Assistance Grant at a Glance:
- For first-time homebuyers only (at least three years removed from owning and occupying a primary residence).
- Must be paired with a Veterans Affairs (VA) or Rural Housing Services (RHS) first mortgage from VHDA. (Home refinances do not qualify.)
- Funds are limited to the lesser of two percent of the home’s sales price or the appraised value.
- Grant funds must be applied to closing costs, discount points, prepaid items, and the funding fee (VA loans) or upfront guarantee fee (RHS loans).
- Grants do not have to be repaid.
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