VHDA’s (Virginia Housing Development Authority) new Homebuyer Tax Credit Plus Program will allow first-time home buyers to use their anticipated $8,000 tax credit for down payment and closing costs.

Homebuyer Tax Credit Plus Details 

The Homebuyer Tax Credit Plus is a combined second mortgage with a VHDA FHA insured first mortgage. The second mortgage can be up to 5% of sales price or appraised value, which ever is less.  No interest and no payments are due on the second mortgage for the first 12 months of the loan.  This provides the homebuyer sufficient time to receive their federal first-time homebuyer tax credit and use it to repay the loan with no costs or penalty. If the second mortgage is not fully repaid during the first 12 months, the balance will be amortized over the remaining 29 years at the same interest rate as the first mortgage.  If partial repayment is made to the second mortgage during the first 12 months, the loan will be re-amortized at the lower balance for the final 29 years. This will result in a lower monthly payment on the second mortgage.

Homebuyer Tax Credit Plus Eligibility Details

Borrowers must meet VHDA’s mortgage revenue bond First-time homebuyer program guidelines including income and sales price limits. Borrowers must also meet Federal first-time Homebuyer Tax Credit requirements.  As a part of the Federal First-time Homebuyer Tax Credit requirements – all loans must close by November 30, 2009.

VHDA Maximum Mortgage/Minimum Borrower Funds

Like the FHA Plus program, the borrower must obtain a maximum VHDA FHA first mortgage.  The second mortgage must be no more than 5% of the lesser of sales price or appraised value – not to exceed funds required by the borrower for downpayment, closing costs, prepaids and discount points.  Borrower cannot borrow funds in excess of what is needed for closing.  Borrower must have the equivalent of 1% of the sales price documented as their own funds in the transaction or in reserves.  POC items paid by credit cards may not be reimbursed to borrower at closing.

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