Homebuyer Grants and Down Payment Assistance Programs: Making Homeownership More Accessible for Buyers of All Levels

The dream of homeownership often feels out of reach, especially for first-time buyers and those with limited savings. The biggest hurdle? The upfront, out-of-pocket funds needed for the down payment and closing costs.

By Kiley Belanga
December 18, 2025

Fortunately, there are a significant number of programs available that exist to address this challenge. Homebuyer grants and down payment assistance programs are powerful tools that make the path to owning a home more accessible for buyers of all levels.

What are Down Payment Assistance Programs and Homebuyer Grants?

Down payment assistance (DPA) programs are often offered by state and local housing agencies and non-profits and are designed to provide financial aid to cover the initial expenses of buying a home.

Who Qualifies for Down Payment Assistance?

While eligibility requirements vary by program, most down payment assistance and grant initiatives focus on helping those who need it most. This includes:

Income Limits: Most programs offer assistance to low-to-moderate income buyers. Your household income usually must be at or below a certain parentage of the Area Medium Income for your desired location.

First-Time Buyer Status: Many programs prioritize first-time buyers. This is not limited to someone who has never owned a home before. The definition of a first-time buyer extends to someone who hasn’t owned a home in the last three years. There are still some programs available to repeat buyers as well.

Credit Score: A minimum credit score is often required for these programs, typically in the 620-640 range, though this can vary based on each specific program’s requirements.

Property Type and Location: Programs may have limits on the maximum purchase price of the home and may be targeted to specific geographic areas.

To make homeownership more accessible, there are state-specific programs available in the markets that you are looking for:

Florida

Florida Housing Homebuyer Program: Offers 30-year fixed-rate first mortgage loans and access to several second mortgage programs for down payment and closing cost assistance (DPA).

Florida Hometown Heroes Program: Provides down payment and closing cost assistance (up to 5% of the loan amount with a max of $35,000) to eligible full-time working professionals in Florida, including military personnel, veterans, law enforcement, educators, healthcare workers, and more.

Florida Assist (FL Assist): A second mortgage program offering up to $10,000 in DPA as a 0%, non-amortizing, deferred loan. Repayment is deferred until the home is sold, refinanced, or the first mortgage is satisfied.

HFA Preferred and HFA Advantage PLUS Second Mortgage: Offers 3%, 4%, or 5% of the total loan amount as a forgivable second mortgage when used with a Florida Housing conventional first mortgage.

Maryland

Maryland Mortgage Program (MMP) 1st Time Advantage: Provides competitive, low-interest rate 30-year fixed-rate loans for first-time homebuyers and repeat buyers in targeted areas.

Maryland SmartBuy 3.0: A unique program that helps eligible homebuyers with student debt purchase a home. It can provide up to 15% of the home’s purchase price (maximum $20,000) to pay off student debt, plus down payment assistance. The student loan payoff is a zero-interest, deferred loan forgivable after five years.

MMP Down Payment Assistance Options (1st Time Advantage 6000/Flex 5000/3%/4%/5%): These options provide funds for down payment and closing costs, typically as a zero-interest, deferred second mortgage that is repayable upon sale, transfer, or refinance.

HomeAbility: Designed to assist homebuyers with disabilities, offering a first mortgage and a secondary zero-interest loan (up to $45,000) to cover down payment and closing costs.

North Carolina

NC 1st Home Advantage Down Payment: A DPA option available with the NC Home Advantage Mortgage™ for first-time buyers or military veterans, offering $15,000 as a 0%, deferred second mortgage. It is forgiven over years 11-15, with full forgiveness at the end of year 15.

NC Home Advantage Mortgage™: A separate DPA option offering assistance up to 3% of the loan amount for both first-time and move-up buyers.

South Carolina

SC Housing Homebuyer Program: Provides competitive, fixed-interest rate mortgages to eligible low-to-moderate income homebuyers, often used in conjunction with a Down Payment Assistance (DPA) option.

Palmetto Home Advantage: Available for first-time, move-up, and repeat buyers across all counties, offering forgivable down payment assistance options of 0%, 3%, or 4% of the loan amount.

County First Initiative: Offers a special fixed interest rate and forgivable Down Payment Assistance (DPA) to promote homeownership in previously underserved counties.

Tennessee

THDA Great Choice Home Loan: The Tennessee Housing Development Agency (THDA) offers this 30-year fixed-rate mortgage loan for first-time homebuyers, as well as repeat buyers in targeted areas or military members.

THDA Great Choice Plus: This DPA is a second mortgage that must be used with a Great Choice Home Loan. It has two options:

Deferred Option: Up to $6,000 at 0% interest, deferred for the 30-year term and then forgiven.

Amortizing Option: Up to 5% of the sales price up to $15,000 with a monthly payment over 30 years, and the interest rate is the same as the first mortgage.

THDA Homeownership for Heroes: Offers the benefits of the Great Choice program plus a reduced interest rate to veterans, active-duty military, and first responders.

District of Columbia (DC)

DC Open Doors: A program for qualified first-time and repeat homebuyers, offering home purchase loans, and down payment/closing cost assistance via a Down Payment Assistance Loan (DPAL). The DPAL is a deferred, 0% interest, non-amortizing second loan.

DC4ME: Provides first-trust mortgages at a reduced interest rate for qualified DC government employees. It also includes an option for DPA of up to 3% of the home price as a 0% deferred loan

Home Purchase Assistance Program (HPAP): Provides deferred interest-free loans for down payment and closing cost assistance to eligible, first-time, low-to-moderate-income homebuyers.

Virginia

Virginia Housing Down Payment Assistance (DPA) Grant: A true grant for eligible first-time homebuyers, covering 2% to 2.5% of the purchase price toward the down payment that never needs to be repaid. Buyers must contribute at least 1% down.

Virginia Housing Plus Second Mortgage: Offers DPA as a second mortgage for first-time and repeat homebuyers. It can also cover part of the closing costs for eligible borrowers.

Virginia Housing Closing Cost Assistance Grant: To help reduce the out-of-pocket expenses during the homebuying process, this grant helps cover the extra costs that come with buying a home.

Don’t let the savings barrier hold you back from your homeownership journey. These are just some of the many grant and down payment assistance options available. Contact a Southern Trust Loan Officer for assistance navigating different programs available and what would best help you with finding your next home.

Additional requirements and qualifications may apply for each state’s Down Payment Assistance and Homebuyer Grants. Consult with your loan officer to see if you qualify.

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FHA Loans: What You Need To Know

As one of the most popular loan options available for First-Time Homebuyers, the FHA Loan provides many great benefits when it comes to buying your dream home

By Kiley Belanga
December 16, 2025

What is an FHA Loan?

An FHA Loan is a type of mortgage loan that is insured by the Federal Housing Administrations (FHA). FHA Loans have more flexible qualifying guidelines than that of a conventional loan, allowing for many great benefits like:

Low Down Payment Requirements: You can secure your loan with as little as 3.5% down, compared to the typical 5% for many conventional loans.

Higher Debt-to-Income (DTI) Ratio: A more generous DTI Limit, sometimes up to 50% or more, helps borrowers with other monthly payments, like car or student loans, qualify for a mortgage.

Flexible Credit Requirements: Borrowers may qualify with less-than-perfect credit. However, a lower score may require a slightly higher down payment than the minimum.

Competitive Interest Rates: Buyers can enjoy stable monthly payments with competitive, fixed interest rates.

Gift Funds Allowed: Borrowers can utilize gift funds from eligible sources to help cover their down payment and closing costs.

These benefits significantly lower the barrier to entry into the housing market, making the dream of homeownership achievable for more people.

What are the Key Requirements for an FHA Loan?

While FHA Loans are flexible, they do have specific requirements. In addition to the property needing to be your primary residence and having proof of steady income and employment, you will need to consider:

Mortgage Insurance Premium (MIP): All FHA Loans require an MIP. This includes an upfront premium and an annual premium. Unlike Conventional Loans, the annual premium is typically required for the life of the loan, however, many borrowers choose to refinance later to remove it.

Down Payment and Credit Requirements: Your FICO score determines the minimum required down payment.

FICO score of at least 580: Qualifies for the minimum 3.5% down payment

FICO Score between 500 and 579: Requires a 10% down payment

Debt-to-Income Ratio: While exceptions exist, your total monthly debts should generally not exceed 43% of your gross monthly income

Worried you might not meet all the requirements? Talk with one of our experienced Loan Officers today, there are still options and strategies to get you to the closing table!

What are the property requirements for an FHA Appraisal?

When purchasing a home with an FHA Loan, the property must meet the FHA’s Minimum Property Standards (MPS) for safety, security, and structural soundness.

Your FHA-approved appraiser will look for common issues like:

Missing handrails or exposed wiring (safety hazards)

Peeling paint (especially in homes built before 1978 due to lead concerns)

Non-functional or deficient utilities like heating, water heater, or electrical

Signs of active water damage or structural issues

Important Note: If your appraiser flags a necessary repair, it usually must be completed before the loan can close.

Additional Info You Should Know

Do FHA Loans have Loan Limits?
Yes, FHA Loans have maximum loan limits that vary by county and are updated annually by the Department of Housing and Urban Development. Most areas have a baseline limit, but high-cost areas usually have a higher limit. Before you start looking for homes, it is important to confirm the current loan limit for your area.

What is the FHA Amendatory Clause?
Another benefit of using an FHA loan is that it prevents you from overpaying for the property is the Amendatory Clause. This clause is included in your sales contract and offers you protection if the home’s appraised value comes in lower than the agreed-upon sales price. Meaning if your FHA appraisal is low, you will be allowed to cancel the contract and receive your earnest money deposit (EMD) back or renegotiate the purchase price with the seller.

If you are looking to start your homebuying journey, an FHA Loan, especially when paired with local grant and down payment assistance programs, is a powerful mortgage option for those looking to break into the housing market. Get started with one of our loan officers today!

Please visit hud.gov for more information about FHA Loans and how they may benefit you.

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Virginia Housing Announces $10,000 Community Heroes Grant

Virginia Housing’s Community Heroes Grant becomes available today, December 11, 2025!

By Kiley Belanga
December 11, 2025

This Homebuyer Grant provides eligible first-time homebuyers who work in vital, community service-oriented roles, such as education, public safety, military, and healthcare with funds to help with the down payment and closing costs.

Continue reading for more information about this amazing opportunity from Virginia Housing!

About the Community Heroes Grant:

The grant is exactly $10,000, and the best part is: it’s a gift from Virginia Housing, not a loan. This means it does not have to be repaid! This grant can be used when any of the following VH options are being used (as allowable for the program and with VH requirements):

SPARC Rate Reduction
FirstHome Dream Rate Reduction
Plus Second Mortgage
DPA Grant
CCA Grant

Who is Eligible?

The grant is available to first-time homebuyer (or homebuyers who have not owned or occupied a primary residence in the last 3 years) working in a community-service role. Eligible professions include:

Educators (Teachers, Administrators, Staff)
Law Enforcement Officers
Firefighters
First Responders (EMTs, Paramedics)
Military Personnel (Active Duty, Reserves, National Guard)
Heathcare Workers (Nurses, Doctors, Technicians)

What are the Key Requirements?

First Mortgage Requirement: The grant must be used in conjunction with a Virginia Housing First Mortgage loan Product.
Lender Requirement: You must work with a Virginia Housing-approved lender, like Southern Trust Mortgage
Homebuyer Education: All first-time homebuyers must complete a Virginia Housing-approved Homebuyer Education Course.
Community Heroes Certification: All borrowers must complete and sign the required Community Heroes Certification Form.
Documentation: Borrowers must provide employment and income documentation to verify they meet the Community Heroes definition and Virginia Housing’s standard borrower qualifications. (Additional documentation may be requested if needed.)
Income Limits: Borrowers must meet Virginia Housing’s Standard / Bond income limits. Click here to see the current income limits.
Additional Requirements: Other program requirements apply. The best way to confirm your eligibility is to contact a loan officer.

Ready to Claim Your Grant? Act Fast!

Funds are limited! Don’t miss out on this $10,000 grant that can help make homeowership a reality. Contact us today to find out if Virginia Housing’s Community Heroes Grant is right for you and get started on your journey to homeownership today!

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Renting vs. Buying : The Pros and Cons

If you have been renting for some time, you may be wondering if it’s time to purchase your own place. No matter your reasons for renting or buying, both options have their benefits and drawbacks.

By Southern Trust Mortgage
December 4, 2025

The Benefits of Renting

Less Maintenance Responsibility: The cost of property maintenance is factored into your monthly rent payment. Your landlord is typically responsible for major repairs to keep the property livable, such as issues with heating, plumbing, and water. Always check your rental agreement to confirm what repairs your landlord is responsible for.

Access to Amenities: Many rental properties include amenities such as swimming pools, gyms, and community areas. The cost of maintaining these areas is typically included in your rent payment.

Greater Flexibility to Move: While your rental agreement is a binding contract, leases are usually only valid for a certain length of time (typically one year). At the end of your lease, you can decide if you want to move or stay. Should you need to move sooner than expected, breaking your lease or subletting is typically less expensive than selling a home.

The Cons of Renting:

Limited Personalization: Restrictions on how you can decorate a rental home vary from property to property. Most landlords stipulate that any cosmetic changes made to a property, like painting or inserting nails into walls, need to be reverted or repaired prior to moving out. If your landlord determines the property has not been returned to its original state, they may hold back a portion or all your security deposit to make the necessary repairs.

Unstable Costs: Your rent can increase significantly at the end of your lease. This means a once affordable apartment may no longer be budget-friendly, potentially forcing you to move more often than you anticipated.

Lack of Financial Benefit: While your monthly payment is comparable to a mortgage, you miss out on some of the most valuable benefits of owning a home, such as building equity and accessing potential tax benefits.

The Benefits of Homeownership:

A Long-Term Investment: Your monthly mortgage payment goes towards paying off your loan. The amount you pay off is called equity, and options are available to you to use equity for your own financial benefit. If you sell your home for more than you paid for it, you may walk away with a profit. Alternatively, you can convert your home into a rental property, allowing you to collect monthly income.

Financial Stability: Unlike rent, if you have fixed-rate mortgage, your principal and interest payment doesn’t change from year to year. However, property taxes and homeowner’s insurance can change, which may cause small fluctuations in your total monthly payment.

Freedom to Personalize: When you own your home, you can paint, remodel, and decorate without having to worry about restoring things when you move out. Keep in mind you will need to follow local building codes and obtain any necessary permits before starting any major project.

Some neighborhoods are governed by a Homeowners Association (HOA), which do have rules or guidelines for residents to follow. Before buying a home in an HOA, read the rules and determine if they are something you are willing to comply with.

The Cons of Owning a Home:

High Upfront Costs: One of the biggest reasons people choose to rent over buying is the high upfront cost. While the initial fees are significant, there are loan options starting with as little as 3.5% down with an FHA Loan and plenty of down payment and closing cost assistance programs available when buying a home. Connect with a Southern Trust Mortgage Loan Officer to see what you may qualify for.

Additional upfront costs include:

Property taxes

Mortgage Insurance

Home Inspection Costs

First-Year Homeowner’s Insurance Premium

Title Search

Title Insurance

Points (optional prepaid interest on the mortgage)

Full Responsibility for Maintenance and Repairs: If your air conditioner breaks or the basement floods, the responsibility of fixing and paying for the repair falls entirely on the homeowner. Unlike renting, there is no landlord to call. You must be prepared to handle both routine upkeep and emergency costs.

When buying a home, you have the option to purchase a home warranty. This warranty can help cover the repair and replacement costs for major appliances and home systems like plumbing and electrical.
Important Note: Be sure to read your home warranty contract carefully to understand your coverage, deductibles, and limits, as warranties do not cover all issues.

There are many other factors to consider when deciding whether to rent or buy, and every buyer’s situation is unique. At Southern Trust Mortgage, we have a team of specialists and experts available to help you decide whether homeownership is the right choice for you and your family or what steps you would need to take to make it possible. Contact us to be matched with a local lender to help make home happen for you!

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2026 Conforming Loan Limits: What the New $832,750 Max Means for Homebuyers

The Federal Housing Finance Agency (FHFA) has officially released the 2026 Conforming Loan Limit (CLL), bringing great news for prospective homebuyers!

By Kiley Belanga
December 1, 2025

For most of the U.S., the baseline limit for a one-unit property has increased to $832,750, up $26,250 from 2025. This means more borrowers can access affordable conventional financing, providing more buying power in the 2026 housing market.

What does this increase mean for 2026 homebuyers? Read on for the full breakdown.

Understanding Conforming Loan Limits (CLL)

The conforming loan limit is the maximum amount of money a homebuyer can borrow when using a conventional loan. A conventional loan is a mortgage not backed or insured by a government agency (like the FHA or VA). Each year, the Federal Housing Finance Agency (FHFA) evaluates and adjusts the limit based on the national average home price.

While most areas fall under the baseline limit, areas with above-average home prices will have higher high-cost area limits. This maximum limit for a one-unit property in a high-cost area is set at 150% of the baseline limit ($1,249,125). A higher loan limit gives borrowers more purchasing power without having to apply for a Jumbo Loan.

Here is a breakdown of the 2026 Conforming Loan Limits based on property type:

Property Type	Baseline Limit (Most Areas)	High-Cost Area Limit (Maximum)
One-Unit	$832,750	$1,249,125
Two-Unit	$1,066,250	$1,599,375
Three-Unit	$1,288,800	$1,933,200
Four-Unit	$1,601,750	$2,402,625

To find the specific loan limits for your county, please visit the official FHFA website: https://www.fhfa.gov/document/data/fullcountyloanlimitlist2026_hera-based_final_flat.xlsx

Conforming Loans vs Jumbo Loans: What’s the Difference?

The FHFA’s conforming loan limits apply to conventional loans, which must also meet the guidelines set by Fannie Mae and Freddie Mac the government-sponsored enterprises that purchase mortgages from banks and lenders.

The standard requirements for Conforming Loans are:

A Minimum Credit Score of 620

Minimum of 3% Down Payment

Debt-to-Income Ratio of 43% or lower

Please note: Conventional Loan requirements may vary between lenders.

Conventional mortgages that exceed the Conforming Loan Limit are referred to as Jumbo Loans.

Jumbo Loans typically require:

A minimum down payment of 10%-20%.

Higher Minimum Credit Score Requirements

Jumbo rates are higher than conforming

Southern Trust Advantage: ARM Options for More Flexibility

If your purchase sits above the new conforming limit, Southern Trust offers adjustable-rate mortgages (ARMs) that can provide lower introductory payments.

Example: 5/1 ARM

Fixed, lower rate for the first 5 years
Adjusts annually in years 6–30 based on market conditions

This can be a smart strategy for buyers planning to move, refinance, or simply want a lower initial payment.

More Buying Power: What the 2026 Limit Increase Means for You

The higher conforming loan limit means more buying power for both buyers and existing homeowners in the new year.

For Homebuyers: The 3.26% increase for the new limit of $832,750 means more housing inventory is now available to homebuyers who qualify for conventional loans. You can now shop for slightly more expensive homes while keeping the benefits of a conventional loan.

For Homeowners (Refinancing): The higher limits don’t just help new buyers; they also benefit homeowners looking to refinance. If your current loan balance was just above the 2025 limit ($806,500), the new 2026 limit of $832,750 may now allow you to access the lower rates and requirements of a conventional refinance, potentially saving you thousands.

If you have been thinking of making the move, make 2026 your year!

Ready to take advantage of the new 2026 Conforming Loan Limits? Contact a Southern Trust Mortgage Loan Officer today to get started and see how much home you can afford today!

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Moving During the Holidays: Pros and Cons of a Festive Move

Buying a home and making the move is a significant undertaking at any time of year, but what about moving during the holidays? While the flurry of festivities might make it seem impossible, there are unique financial and logistical benefits to moving during the most wonderful time of year. Let’s unpack the pros and cons of an off-season move!

By Kiley Belanga
November 27, 2025

Pros of Moving During the Holidays:

Less competition in the Housing Market

The real estate market tends to cool down during colder months. This often means less competition, fewer bidding wars, and more negotiating power. Sellers are often eager to close before the new year, making them more open to offers and potentially saving you money on your new home purchase.

An Abundance of Time Off

Most people have more time off during the holidays, providing a valuable window to plan, pack, and move. When house hunting, packing, and settling into a new home, every extra day off makes a significant difference in reducing stress.

Easier Moving Logistics

Just like in real estate, the moving industry tends to slow down during the winter. This means scheduling your move just got easier! You are much more likely to secure your preferred move-in date and may even find more competitive rates. Remember to still plan ahead and confirm your movers’ holiday availability when scheduling.

Holiday Sales on Home Essentials

The holiday season offers an abundance of sales on big-ticket items like furniture, appliances, paint, and décor. This is also true for services you may need, like professional cleaning or hiring movers.

Mortgage Tip: Do not open any new lines of credit or make any large purchases while you are in the process of securing a mortgage.

The Year-End Tax Benefit

Closing on a home before December 31st allows homeowners to claim valuable tax deductions (such as mortgage interest and property taxes) when filing their taxes for that year.

Please consult your tax advisor.

A Fresh Start for the New Year

Picture ringing in the new year in your beautiful new home! Use the process of packing and moving as an opportunity to declutter and reorganize so that you can start the year feeling fresh and settled.

Cons of Moving During the Holidays:

Inclement Weather

Winter weather can be unpredictable. Be prepared for potential cancellations or delays when scheduling your move in case you run into a sudden snowstorm or icy conditions. Remember to always have a backup plan.

Added Holiday Stress

The holidays are already a busy and stressful time with gift shopping, family obligations, and meal preparation. Adding a move on top of this can feel overwhelming. To make it more manageable:

Stay organized and set realistic expectations.
Lean on your family and friends for help.
Prioritize your well-being during the transition.

Limited Daylight

With shorter days during the winter, you have less daylight for the moving process. Don’t let the lack of light deter your move, but be wary of black ice and icy conditions, and take necessary safety precautions for yourself and anyone helping you.

Essential Tips for Moving During the Holidays:

Plan and Budget Ahead

The earlier you start planning, the smoother your move will be. Create a comprehensive moving checklist, organize, pack, and label your boxes clearly. Crucially, budget for extra moving expenses alongside your holiday spending. The holidays are a great time to save on moving supplies with sales like Black Friday or Cyber Monday, so plan your purchases!

Monitor the Weather Closely

Don’t be caught off guard by inclement weather. Check the forecast regularly for updates on snow, ice, or rain. Keep winter essentials (coats, gloves, and scarves) readily available, along with tools like a shovel and rock salt to clear your walkways and driveway.

Protect Your New Home from the Elements

Purchase plastic sheeting, drop cloths, or use old towels to protect your new home’s floors and carpets from mud, snow, and salt brought in by movers and foot traffic.

Day-One Holiday Essentials

Create a clearly labeled essentials box that includes more than just toiletries and snacks. It should have holiday decorations (even just a few small ones) and a few small, wrapped gifts to help you instantly feel festive and settled in your new home.

Send Holiday Moving Cards

Sending out holiday moving cards is a thoughtful and festive way to let your friends and family know your new address! You can even include photos of your new home decorated for the season, giving them a glimpse of your new space.

Ready to Make Your Move?

Don’t miss the chance to save on your purchase and claim that year-end tax benefit! If you’re ready to make a smart move this season, contact us today to get started on your pre-approval!

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Buying a Home with Gift Funds: What You Need to Know

If you are planning to use gift funds to buy your home, there are a few things you should know before accepting the cash.

By Kiley Belanga
November 20, 2025

What are Mortgage Gift Funds?

Mortgage gift funds, often called a down payment gift, are money given to a homebuyer by an approved donor, typically a family member, to help cover the down payment, closing costs, or other expenses when buying a home.

When using gift money, you must strictly follow the rules from your mortgage lender and/or government agency insuring the loan (like FHA or VA).

Why Do Lenders Have Rules About Down Payment Gifts?

Lenders need to verify your income and the source of your funds when you apply for a mortgage. A large down payment demonstrates financial stability. However, if that money comes from somewhere other than your own savings, the lender needs confirmation that it is a genuine gift and not a loan that you will need to repay. Repayments would impact your debt-to-income ratio and your ability to afford the mortgage.

Gift Fund Rules by Loan Type

Each mortgage type, Conventional, FHA, VA, and USDA, has its own specific rules regarding gift funds and how they can be used:

Conventional:

Property Type: Can be used for a primary residence or second home. Cannot be used for investment properties.

Usage Can fund all or part of the down payment, closing costs, or financial reserves, subject to any minimum borrower contribution requirements.

Approved Donors: Can be provided by a relative or non-relative who shares a familial relationship with the borrower.

Prohibited Donors: Cannot be provided by, or have any affiliation with, the builder, the developer, the real estate agent, or any other party interested in the transaction.

Documentation: A gift letter signed by the donor is required.

FHA Loan:

Approved Donors: Can be provided by a family member, employer or labor union, a close friend with a clearly defined and documented interest in the borrower, a charitable organization, or a government agency/public entity with a program assisting low- or moderate-income families or first-time homebuyers.

Documentation: A gift letter signed and dated by both the donor and borrower is required.

VA Loan:

Usage: Use towards the down payment (if you choose to make one), funding fees, and closing costs.

Prohibited Donors: Cannot be provided by anyone with an interest in the transaction.

Documentation: A gift letter must be provided.

USDA Loan:

Usage: You can use gift money towards your closing costs, but not towards cash reserves.

Prohibited Donors: The money can come from anyone not interested in the transaction.

Documentation: A gift letter must be provided.

Writing a Mortgage Gift Letter

The most critical step in using gift funds is providing the paper trail and documentation. Before creating your letter, first check with your lender to see if they have a gift letter template to use. A standard gift letter typically needs to include:

The exact gift amount
The date the money was transferred
The property address you are purchasing
Your relationship with the donor
The donor’s name, address, and phone number
A clear statement that the money is an irrevocable gift and there is no expectation of repayment (this is the most important part).
Both the donor and the borrower must sign (sometimes the letter only requires the donor’s signature, check with your lender).
To verify the transfer, include copies of the donor’s bank statements showing the withdrawal and the buyer’s bank statements showing the deposit.

Do Gift Funds Affect Taxes? (IRS Rules)

While your lender is concerned with the origin of the funds, many donors worry about the IRS Gift Tax.

For the Buyer (Recipient): The great news is that the gift is never considered taxable income for you. You do not pay tax on the gift.

For the Donor (Gifter): The IRS sets an annual gift tax exclusion amount ($18,000 for 2024). A donor can give this amount to any number of people each year without reporting it. However, if a gift exceeds this annual exclusion, the donor must file a Gift Tax Return (Form 709). Filing the form does not usually mean the donor has to pay taxes; it simply tracks the amount against the donor’s lifetime gift and estate tax exemption (a very high dollar amount).

Please consult your tax advisor.

Gift funds are a fantastic way to cover a down payment and other mortgage expenses, but you must be prepared to follow the rules and provide a clear paper trail to verify the money is, in fact, a gift.

If you have questions about using mortgage gift funds or are looking to get pre-approved, contact our team today!

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Pre-Qualified vs. Pre-Approved: What’s the Difference and Which Do You Need?

When you're starting the homebuying process, you'll hear a lot of new terms. Two that often cause confusion are "pre-qualified" and "pre-approved."

By Southern Trust Mortgage
November 13, 2025

While pre-qualification and pre-approval might sound similar, they represent two very different stages in the mortgage process. Understanding the distinction is crucial for any homebuyer because one of these steps brings you much closer to closing on your dream home.

Understanding Pre-Qualification

Think of a pre-qualification as the first, informal step. It’s an initial estimate of how much you might be able to borrow. When you start this process, your mortgage lender will perform a soft inquiry or soft pull on your credit. This type of credit check doesn’t impact your credit score, making it a low-risk way to get started.

How it works: You contact a mortgage lender and provide them with some basic, self-reported financial information, such as your income, existing debts, and a rough estimate of your credit score. Based on this information, your lender gives you a general idea of the loan amount you could potentially be approved for.

What to remember: A pre-qualification is not a guarantee of a loan. It’s a quick, helpful way to set a realistic price range for your home search. It’s a good starting point, but it’s not what sellers and their real estate agents will consider a serious offer.

Understanding Pre-Approval

A pre-approval is a much more significant and formal step. It’s a conditional commitment from a lender to provide you with a mortgage up to a specific amount.

How it works: To get pre-approved, you’ll submit a full mortgage application and provide the lender with required financial documentation. This typically includes:

Recent pay stubs
W-2s or tax returns
Bank statements
Documentation of other assets and debts

Your loan officer will thoroughly review these documents and verify your financial information, including pulling a hard inquiry on your credit report. Once this comprehensive review is complete, your lender will provide you with a pre-approval letter stating the exact amount they are willing to lend you.

What to remember: A pre-approval letter is a powerful tool. It shows sellers that you are a serious, qualified buyer who is ready to make an offer. In a competitive housing market, having a pre-approval can give you a significant advantage over other buyers.

Common Homebuying Mistakes to Avoid

The journey from thinking about buying a home to getting to the closing table is filled with potential pitfalls. Here are a few to watch out for:

Relying on inflated credit scores: Be cautious about using third-party credit reports that may not be accurate. Always verify your credit history and credit score with one of the three major bureaus.
Making big financial moves: Avoid opening new lines of credit, such as a store credit card or a new car lease, which may hurt your credit scores while you are in the process of getting a mortgage. These actions can lower your credit score and negatively impact your debt-to-income ratio, jeopardizing your approval.
Being dishonest about your finances: Transparency is key. Be upfront with your lender about all financial matters, including alimony payments, tax liens, or recent financial gifts. Surprises can cause delays or even cancel your loan.

Preparing for the Homebuying Process

Even before you start the pre-qualification process, you can get your financial house in order. A year out is an excellent time to:

Monitor your credit: Check your credit report for any errors and start paying down debt.
Assess your down payment: Get a realistic idea of how much you can afford to put down.
Connect with professionals: Talk to a real estate agent and a mortgage lender early. They can help you understand the process and set expectations, especially if you have a non-traditional income, such as commission-based pay.

The Final Takeaway

While a pre-qualification is a good first step, it’s the pre-approval that truly opens the door to homeownership. It’s a crucial milestone that shows sellers you are ready to buy.

Ready to take the next step? Our seasoned mortgage lenders are here to help. Contact us today to get started on your pre-approval and move one step closer to your new home!

Need to get approved fast? Learn more about our Priority Approval and see how you can get approved in 24 hours!

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VA Loans: Essential Information for Service Members and Veterans

VA Loans are a benefit designed to honor and provide essential housing assistance to our service members and veterans.

By Southern Trust Mortgage
November 6, 2025

What is a VA Loan?

A VA Loan is a mortgage loan guaranteed by the United States Department of Veterans Affairs (VA). It offers long-term financing to eligible American veterans and their surviving spouses. The primary goal of the program is to provide eligible veterans with home financing that requires no down payment.

Who Can Apply for a VA Loan?

Active-duty service members
Veterans
National guard members
Reservists
Cadets in the Air Force, Coast Guard or U.S. Military
Officers of the National Oceanic and Atmospheric Association (NOAA)
Individuals who have served 181 continuous days during peacetime or 90 days during wartime
Veterans who enlisted after September 7, 1980, or began service after October 16, 1981, must have served a minimum of 6 years (criteria apply)
The surviving spouses of veterans who died from service-related disability or during active duty

Benefits of a VA Loan

For active-duty service members, veterans, and their surviving spouses, this is a valuable lifetime benefit that can be used multiple times. Other significant benefits include:

No down payment required
Competitive interest rates
Limited closing costs
No Private Mortgage Insurance (PMI) requirement

VA Renovation Program

If you own a home that needs minor repairs, but you lack cash on hand, you may be able to renovate using VA loan benefits. The VA Renovation Program helps the men and women who serve our country repair or upgrade their homes using the competitive rates offered by VA lending programs.

The VA Renovation Program allows for minor renovation costs to be included in the loan amount of a home purchase, or for repairs being done to an existing home with equity. This program is ideal for small repairs, such as repainting and fixture swaps, or for accessibility upgrades like ramps and rails.

Program Features Include:

Up to $35,000 in renovation costs
No minimum repair amount (includes minor and non-structural repairs)
Accessibility upgrades
Flexible delivery channels
For purchase or refinance properties
Cosmetic repairs allowed
No consultant required

Additional VA Programs:

Interest Rate Reduction Refinance Loan (IRRRL)

A great VA Loan Refinance Option, the IRRRL or the Streamline Refinance Loan can help borrowers obtain a lower interest rate by refinancing your existing VA Loan.

Native American Direct Loan (NADL) Program:

Specifically designed to help eligible Native American Veterans finance the purchase, construction, or improvement of homes on Federal Trust Land, or reduce the interest rate on a VA Loan.

Adapted Housing Grants:

Designed to help veterans with a permanent and total service-connected disability purchase or build an adapted home or to modify an existing home to account for their disability.

Selling or Buying a Home with an Existing VA Loan? Explore a VA Loan Assumption.

One of the lesser-known benefits is the VA Loan Assumption. Assumable loans have become increasingly attractive to today’s buyers, particularly in a high-interest-rate environment.

An assumption allows a homebuyer, whether they are a veteran or not, to take over a VA Loan, including its interest rate and remaining balance. This can be a powerful selling point for VA homeowners as assumptions typically come with lower fees and fewer closing costs.

Benefits:

Lower Interest Rate: the buyer inherits the seller’s existing interest rate.
Lower Costs and Fees: Assumptions typically involve lower fees and fewer closing costs. The only mandatory fee is the Funding Fee, equal to 0.5% of the loan balance.
Simpler Qualification Process: Often a less intense process than applying for a new mortgage.
Open to all Buyers: the buyer does not need to be a veteran to assume the loan.

Cons:

Equity Payout Requirement: To close the deal, the buyer must have sufficient cash to cover the difference between the home’s sales price and the remaining loan balance (the seller’s equity).
Entitlement Risk for Seller: If a non-veteran assumes the loan, the seller’s VA Loan entitlement will remain tied to that property until the loan is fully paid off.
Continued Liability Risk: Until the seller receives a formal “release of liability” from the lender, they can remain financially responsible if the new borrower defaults on the loan.

Ready to Explore Your VA Loan Options?

Southern Trust Mortgage is proud to deliver affordable VA mortgage financing to eligible veterans and active-duty servicemen and women of the United States’ military. Given that the Southern Trust footprint covers many military areas, our loan officers are extremely experienced in VA lending and all VA programs. Contact us today to get started!

For more information please visit: https://www.benefits.va.gov/homeloans/

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STM Gives Back: Donate Your Halloween Candy to Troops

By Kiley Belanga
October 31, 2025

For a second year in a row, Southern Trust Mortgage is proud to partner with the Soldiers’ Angels Treats for Troops program as an official donation location. This incredible Halloween candy collection initiative allows local businesses, like ours, to gather excess candy to send to the brave men and women serving our country.

Thanks to your generous support in 2024, we were able to collect an amazing 255 pounds of candy! This year, let’s aim even higher and show our service members how much we appreciate their sacrifice.

How to Donate Your Candy:

If you would like to donate this year, we will be accepting donations from November 1st through November 12th. Simply drop off your excess candy at our Virginia Beach location during business hours.

Annapolis

Location: 170 Jennifer Road , Annapolis, MD 21401

Hours: Tuesday, Wednesday, and Thursday, 9:00 AM – 4:00 PM

Fayetteville

Location: 4187 Sycamore Dairy Road, Suite 1, Fayetteville, NC 28303

Hours: Monday – Friday, 8:30 – 4:30

Innsbrook

Location: 4198 Cox Road, Suite 114, Glen Allen, VA 23060

Hours: Monday – Friday, 9:00 AM – 5:00 PM

Newport News

Location: 111 Walt Whitman Avenue, Newport News, VA 23606

Hours: Monday – Friday, 9:00 AM – 4:30 PM

Virginia Beach

Location: 295 Bendix Road, Suite 400, Virginia Beach, VA 23452

Hours: Monday – Friday, 8:30 AM – 5:00 PM

To learn more about the incredible work that Soldiers’ Angels does, and their mission to support military families, visit their official website.