If you’re short on cash for a sizeable down payment and you have good credit, a VHDA loan might be a great option for you. Also known as an FHA Plus loan, a VHDA loan combines elements of a regular FHA loan with a loan from Virginia taxpayers that eliminates the need for a down payment. This zero down payment loan looks like this: the home purchaser gets two loans – an FHA loan plus a VHDA loan that covers the 3.5% required by a standard FHA loan.
Home buyers who are interested in VHDA loans should know that there are some specific qualifying criteria - for instance, there are income limits. Basically, the Virginia state government wants to make sure that only Virginia residents who have a legitimate financial need are able to qualify for the loan. In the Washington D.C. area (i.e. Fairfax County, Arlington County, Alexandria, and Prince William County), the income limit for a two-person household is $120,900.
There’s also a minimum credit score requirement. Most VHDA loan products require a minimum credit score of 640, with some going as low as 620.
VHDA loans also have certain debt-to-income requirements. The front end ratio (housing expenditure compared to gross income) can’t be more than 31% and the back end ratio (housing expenditure plus other debt compared to gross income) can’t be more than 43%.
These are the major qualification criteria for a VHDA loan. There are some other criteria that your lender could help you understand during a consultation to help determine what loan product best suits your needs.
For more information on VHDA loans, or about the home buying process in general, give me a call on my cell phone at 703-462-0700. I'd be happy to provide you with some recommendations for great lenders, and it would be my pleasure to serve you in your Northern Virginia home search.