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Three Things to know about VHDA loans

If you are buying a home in Virginia, chances are you’ve heard the phrase “VHDA loan” once or twice. Simply put, VHDA (Virginia Housing Development Authority) loans are a type of loan unique to the commonwealth of Virginia. The goal of a VHDA loan is to offer affordable housing opportunities to residents of the commonwealth of Virginia who might otherwise not be able to purchase a residence of their own. The information available on VHDA loans is substantial, so we have pared it down into three concise points that, while not exhaustive, give a good picture on what getting a VHDA loan could mean for you.


1. What are the requirements to qualify for a VHDA loan?

VHDA loans are designed specifically for first-time homebuyers, meaning that eligible applicants must have no property ownership to their name within the past three years. To qualify for a VHDA loan you must not exceed the maximum income requirement and you must complete the VHDA’s Homeownership Education Class, among other credit requirements. You must also intend to occupy the property as your primary place of residence, and the home you plan to purchase must not exceed certain lot sizes and sale prices.

2. Who benefits most from VHDA loans? Are grants available?

Anyone who is a first-time homebuyer can apply and be checked for eligibility, but certain benefits to the program are offered to borrowers the VHDA has called community heroes. By partnering with the FHLB (Federal Home Loan Bank), VHDA now offers a grant program called The Community Heroes Grant. This grant is available to people who meet the initial VHDA requirements and fall into one of the following groups:

  • Educators: employees of accredited, state-recognized, or public schools, certified teachers or administrators in education agencies, or employees of post-secondary level public education institutions.
  • Law enforcement officers, firefighters, and first responders: employees of law enforcement agencies or fire departments on a federal, state, or local level, or any other first responder, including emergency medical technicians (EMTs), National Guard, and reservists.

Another benefit offered with VHDA loans is the Down Payment Assistance (DPA) grant. Through this grant, eligible borrowers can receive a percentage of the purchase price to help with the down payment. Maximums and restrictions do apply to this grant (for example, the DPA grant can only be used with eligible VHDA loans), but there is no repayment, and you could potentially receive up to 2.5% of the purchase price of your home.

A third grant offers qualified borrowers closing cost assistance, with some borrowers receiving as much as $1,500 towards their closing costs. Since it is a grant, no repayment is required, and it can potentially be used in conjunction with other grants such as the DPA grant.

As is the case with all grants and assistance, restrictions apply and certain requirements must be met. To see which grants or assistance programs you might qualify for, contact your loan officer.

3. What is the most popular type of VHDA loan?

By far, the most sought-after type of VHDA home loan is the FHA Plus loan. This loan -which is technically two loans- is financed by the VHDA and insured by the FHA. In addition to the mortgage on the residence, this loan includes a second mortgage to help fund the down payment and closing costs. The upside to this is if you qualify, you can potentially finance 100% of your house through the two loans, with a fixed rate for 30 years on both the first and second mortgage.


The VHDA loan is a great product that has helped thousands of first-time homebuyers just like you realize their dream of homeownership. To learn more about VHDA loans, the requirements, restrictions, guidelines, or to have any of your remaining questions concerning VHDA loans answered, contact Southern Trust Mortgage today.

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