VHDA Loan Program Enhances $8,000 Tax Credit for First Time Homebuyers!
The following comes from the Virginia Housing Department Authority. This is a great program for first-time homebuyers who meet the income and credit score minimums. Take a read and call or email us if you have any questions or need more information!
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VHDA Loan Program Enhances $8,000 Tax Credit for First Time Homebuyers!
Recently, several housing finance agencies in other states created special short-termsecond loans by “monetizing” the new $8,000 first-time homebuyer federal tax credit to assist
homebuyers needing down payment and closing cost assistance.
The Virginia Housing Development Authority looked at the idea of “monetizing” the new
homeownership tax credit, but decided that a program it already has in place – the FHA PLUS
program – provides better value for borrowers without the hassles.
FHA PLUS is a program designed to assist qualified borrowers who need down paymentand closing cost assistance. A second mortgage (the PLUS) is added to a FHA first mortgageloan. Because VHDA is quasi-governmental, it was grandfathered under the recent FHA
regulation changes and allowed to continue offering down payment and closing cost assistance.
The program is one of the few available that allows borrowers to exceed a 100% LTV.
The program offers several benefits to borrowers. First, it’s flexible because FHA PLUS
is based on five percent of the sales price. Using VHDA’s average sales price of $160,000, a
homebuyer could borrow up to $8,000 for down payment and closing costs, the same amount
available through the new tax credit. But while the tax credit is limited to $8,000, VHDA
customers could borrow more than that amount for higher sales prices. For example, someone
purchasing a home in a higher cost area for $250,000 could borrow up to $12,500 using FHA
PLUS.The $8,000 federal tax credit can then be used to fund home improvements, furniture, etc.
Homebuyers also have the option of using their $8,000 tax credit to pay off or pay down their
FHA PLUS second mortgage next year, with no prepayment penalty. By using this newgovernment benefit to reduce their debt, borrowers will have the opportunity to put themselves in
a stronger financial position.
FHA PLUS also offers the same term for both loans – 30 years, which allows for smallermonthly payments, and the interest can be deducted. By contrast, the new down payment
assistance programs in other states have terms as low as 10 years, thereby doubling the monthly
payments for the second loan.
It is important to note that VHDA, as with all state housing finance agencies, has
maximum income limits on its loan programs. These income limits vary from those required by
the new tax credit – sometimes substantially. Therefore, some borrowers may be eligible for the
new tax credit, but ineligible for VHDA’s FHA PLUS program. VHDA’s income limits can befound at:
http://www.vhda.com/vhda_com/Template_app.asp?VHDA_COM_PAGE_NAME=Limits
For more information about VHDA’s FHA Plus program, visit vhda.com or call 1-877-
VHDA-123.
FHA PLUS Facts
• No down payment required.
• Flexible credit qualifying.
• Includes second mortgage to fund down payment and closing costs.
• Fixed rate for 30 years on both mortgages.
• Loans serviced by VHDA.
• FHA’s standard appraisal guidelines accepted.
• Completion of VHDA’s Homeownership Program is required.
About VHDA
As the state’s housing finance agency, the Virginia Housing Development Authority
(VHDA) provides a variety of innovative low-interest loans for Virginians who want to purchase
homes or to build, renovate or refinance rental housing. These loans are designed to meet the
varied needs of today’s housing markets, from high-cost, high-growth areas to older cities
grappling with revitalization issues and slow growth communities. Visit VHDA at
www.vhda.com.