HOMEownership Down Payment Assistance Program

The HOMEownership Down Payment Assistance Program, formerly the down payment assistance portion of the combined DHCD/VHDA Single Family Regional Loan Fund, operates through local partnerships with governmental entities, non-profit housing service providers, and mortgage lenders across the Commonwealth.

Saving enough money to cover the required down payment and closing costs for the purchase of a home is one of the biggest hurdles that potential first time homebuyers face. Therefore, DHCD offers a down payment and closing cost assistance program in the form of second mortgage deferred loan.

The HOMEownership Down Payment Assistance Program makes purchasing a home more affordable for low-to-moderate income families and individuals by offering assistance in the form of down payment and closing costs to eligible borrowers.

HOME Loans are zero percent interest, non-amortizing second mortgage loans, which means you do not make any monthly payments. You repay the loan if you sell the home, transfer ownership, refinance the first mortgage, or cease to occupy the home. Recipients of the HOME loan will not repay the loan as long as they continue to live in the home.

You may qualify for this loan if your income is at or below 80% of the (AMI) adjusted for household size. The program offers up to 10% of the purchase price of the home, (up to 20% in high cost localities), to assist with down payment and closing costs.

Your down payment, closing costs (costs and fees that are part of receiving a home loan) and prepaid costs (set-up of escrow accounts for future payments of taxes and insurance) are three primary costs associated with the actual process of purchasing a home. Recognizing that coming up with the funds to cover these costs is often a major stumbling block for many low- and moderate-income homebuyers; DHCD reserves a portion of its annual allocation of the federal HOME Partnership Investment Fund to compliment the homebuyers’ transactions with down payment monies and closing costs. The program offering down payment and closing cost assistance targets individuals and families whose income is at or below 80% of the Area Median Income. For example, a homebuyer meeting the income eligibility may receive 10% of the purchase price of a home to go toward the down payment plus up to $2,000 to pay for the cost of closing; i.e., attorney’s fee, title insurance, taxes, etc.

The Sponsoring Partnerships and Revitalizing Communities (SPARC) is the first mortgage program available through the VHDA. It was developed to provide comprehensive home ownership assistance for low-income, first-time homebuyers across the state. The Virginia Department of Housing and Community Development (DHCD) participates by providing down payment and closing cost assistance along with VHDAs mortgage resource for a comprehensive package allowing the transition into homeownership to be less burdensome. Discounted first mortgage monies are made available by VHDA for first-time homebuyers who are credit-eligible and can qualify for VHDA financing. Mortgages are originated through an approved VHDA-approved lender.

HOME funding can be used with Rural Development products and community lending initiatives also to help address the needs of clients that cannot qualify for financing through VHDA or other VHDA-approved lenders. This type of flexibility assists us in making the best use of all available loan resources to benefit clients below the Area Median Income.

The funds used for down payment and closing costs are administered through local partnerships with governmental entities, non-profit housing service providers, and mortgage lenders across the Commonwealth. Currently, a statewide network of administrators is under contract with DHCD to offer housing counseling, and intake services for pre-qualification screening for eligibility. The funds are provided on a first-come, first-serve basis. The program structure promotes equitable access to the fund by entitlement and non-entitlement communities and is based on income and credit criteria.