First-Time Home Buyer Grants vs. Loans in Virginia (2027)

First-time buyer help in Virginia comes in five forms, and the difference that matters is what you owe later. Grants, such as Virginia Housing's Down Payment Assistance Grant, are never repaid. City forgivable loans are repaid only if you sell, rent out or move out early. Second mortgages are repaid monthly. Tax breaks lower your tax bill, not your cash to close, and seller credits are negotiated in the contract. As of October 29, 2026, there is no federal first-time buyer tax credit and Virginia Housing's Mortgage Credit Certificate is suspended. Amounts, income limits and application steps are in our Virginia down payment assistance guide.

Program	Type	Maximum (as of Oct 2026)
FHA / VA / Conv 97 / USDA	First mortgage	3.5% / $0 / 3% / $0 down
Virginia Housing DPA Grant	Grant, never repaid (FHA or conventional bond loan)	2% (conventional) or 2.5% (FHA) of price
Closing Cost Assistance Grant	Grant, never repaid (VA or USDA bond loan only)	2% of purchase price
Plus Second Mortgage	Second mortgage, repaid over 30 years	3% to 5% of price, by credit score and loan type
Mortgage Credit Certificate	Federal tax credit	Suspended; no new certificates
Seller concessions	Negotiated credit	3% to 6% of price by loan type (VA: 4%)
City HOME programs	Forgivable second loan, income at or below 80% of area median	$14,500 to $40,000, by city

Grants you never repay

Virginia Housing offers two true grants, each tied to a loan type:

• DPA Grant: 2% of the price with a conventional bond loan or 2.5% with an FHA bond loan, for the down payment only. You still contribute 1% (a gift counts).
• Closing Cost Assistance Grant: up to 2% with a VA or USDA bond loan, for closing costs or the VA funding fee or USDA guarantee fee.

Both require a first-time buyer (no owned and occupied primary residence in 3 years, unless you buy in an Area of Economic Opportunity), homebuyer education, and, in Hampton Roads, income at or below $97,000 for one or two people or $113,000 for three or more, with a $575,000 price cap (effective August 1, 2026). Bond loans can carry a federal recapture tax if you sell, so ask your lender for the disclosure.

Second mortgages you repay

The Plus Second Mortgage is a 30-year fixed second loan with no prepayment penalty behind a Virginia Housing FHA or conventional first mortgage: 3.5% of the price on FHA (5% with a 680+ score) or 3% on conventional (4.5% at 680+). Repeat buyers qualify, and the income limit on non-bond loans is $175,000, so it is the usual option for buyers who earn too much for the grants. The cost is a second monthly payment.

The first mortgage and seller credits

Every program sits on a first mortgage, and the loan type decides which help you can use:

• FHA: 3.5% down; pairs with the DPA Grant or Plus Second.
• VA: $0 down; pairs with the Closing Cost grant.
• Conventional 97: 3% down; pairs with the DPA Grant or Plus Second.
• USDA: $0 down in eligible areas; pairs with the Closing Cost grant.

Seller credits are negotiated, not a program, and are capped by the loan: 6% of the price on FHA and USDA, 3% on conventional with less than 10% down, and on VA no cap on normal closing costs but a 4% limit on concessions. They generally cannot pay the down payment. Compare loan types in our guide to first-time buyer loan programs in Virginia.

VA loan benefits that lower cash to close

For eligible veterans, service members and surviving spouses, the VA loan does much of what assistance programs do: no down payment when the price does not exceed the appraised value, no monthly mortgage insurance, and seller concessions up to 4% of reasonable value. The funding fee (2.15% on first use with under 5% down) is waived for veterans receiving VA disability compensation, surviving spouses receiving Dependency and Indemnity Compensation, and active-duty members with a Purple Heart or a pre-discharge rating issued before closing. See our VA loan closing costs guide.

Forgivable city loans

Chesapeake and Portsmouth (up to $25,000 each), Norfolk (up to $40,000 through NRHA), Suffolk (up to $14,500) and York County, Poquoson and Williamsburg (10% up to $14,500) offer HOME-funded help as forgivable second liens. The balance is forgiven over 5 to 10 years if the home stays your primary residence and is repaid if you sell, rent out or transfer it early. Most cap income at 80% of area median ($86,150 for four people in the HRPDC programs, as of May 1, 2026) and require approval before you ratify a contract. HRPDC lists no Virginia Beach program at this time. Terms and contacts are in our city and county programs table.

Tax credits and tax breaks

• No federal first-time buyer credit. The last one covered 2008 to 2010 purchases. New credits have been proposed in Congress, but none was law as of October 29, 2026.
• MCC suspended. Virginia Housing's FAQ (revised August 2026) says its Mortgage Credit Certificate program is suspended. Existing holders still claim it on IRS Form 8396.
• IRA withdrawals. Up to $10,000 (lifetime) from an IRA for a first home avoids the 10% early-withdrawal penalty if spent within 120 days. Here first-time means no ownership interest in a main home in 2 years. Income tax can still apply.
• Virginia first-time home buyer savings account. Earnings on a designated account at a Virginia financial institution are subtracted from Virginia taxable income (principal up to $50,000, balance up to $150,000) when used for the down payment or closing costs on a Virginia single-family home for someone who has never owned one.
• After you buy. Itemizers deduct mortgage interest on up to $750,000 of debt, and the mortgage insurance deduction (PMI, FHA premiums, VA funding fee, USDA guarantee fee) returned for tax year 2026, phasing out between $100,000 and $109,000 of adjusted gross income.

Confirm with a tax professional, and see tax benefits of owning a home in Virginia.

How to apply

Virginia Housing grants and second mortgages are approved with your mortgage through a Virginia Housing-approved lender. City programs need their own approval first. Take the free Virginia Housing homebuyer course early, get preapproved with a lender from our Hampton Roads lenders list, apply for any city program before you write an offer, and ask for seller credits in the offer. The full order is in our how-to-apply checklist and our first-time home buyer guide for Hampton Roads.

Frequently Asked Questions

Do I have to pay back first-time home buyer assistance?

Not grants. Virginia Housing's DPA and Closing Cost grants are never repaid. City HOME loans are forgiven over 5 to 10 years if you keep living in the home and repaid if you leave early. The Plus Second is repaid monthly.

Is there a first-time home buyer tax credit for 2027?

Not federally as of October 29, 2026, and the MCC is suspended. The IRA penalty exception, Virginia's savings account subtraction and the mortgage insurance deduction are available now.

Can I use the DPA Grant with a VA loan?

No. It works only with Virginia Housing FHA and conventional bond loans. VA buyers can use the Closing Cost Assistance Grant with a VA bond loan.

What counts as a first-time buyer?

It varies: no owned and occupied primary residence in 3 years for Virginia Housing, no ownership interest in a main home in 2 years for the IRA exception, and never owned a single-family home for Virginia's savings account.

Can seller credits pay my down payment?

Generally no. They can pay closing costs and prepaid items, but the down payment must come from you, a gift or a down payment program.

Sources & further reading

• Virginia Housing
• Virginia Housing — program guidelines and FAQs
• Virginia Housing — income and sales price limits
• HRPDC — homebuyer assistance programs
• VA — Home Loan Programs
• VA — Funding fee and closing costs
• HUD — Buying a home
• IRS Publication 590-B
• IRS Publication 936
• Virginia Tax — first-time home buyer savings account

Checked on official Virginia Housing, HRPDC, VA, HUD, IRS and Virginia Tax pages on October 29, 2026. Programs change and local funds run out, so confirm details with your lender, the program administrator or a tax professional.