If you live in Virginia, the Virginia Development Housing Authority (VHDA) has a program called an FHA Plus loan that will allow you to finance up to 101.5% of the purchase price of a home.
Here’s how it works: you get a 1st mortgage for 96.5% of the purchase price and then you get a second mortgage for either 3.5% (qualified borrowers with credit scores ranging from 620-679) or a second mortgage for 5% (qualified borrowers with credit scores above a 680). If you qualify for the second loan of 5%, that means the extra 1.5% leftover will be applied to your closing costs. Here’s an example from a client scenario I worked up yesterday:
| Purchase Price |
$145,000 |
| 1st Mortgage |
-$139,925 |
| 2nd Mortgage (3.5%) |
-$5,075= |
| Total Down Payment |
$0 |
| Closing Costs |
$5275.02 |
| 1.5% from 2nd Loan |
-$2175 |
| Seller Paid Closing Costs |
-$3,000= |
| Total Cash to Close |
$100.02 |
Here’s a breakdown of what that payment would look like based on today’s par interest rate from VHDA of 3.375% (apr 3.488):
| 1st Mortgage | $629.43 |
| 2nd Mortgage | $32.05 |
| Estimated Taxes and Insurance | $304.05 |
| Estimated Monthly Payment | $965.53 |
For program details and eligibility requirements, visit VHDA’s website. If you live in Virginia and would like to see if you qualify for a VHDA Plus loan, please contact me for a free personalized mortgage analysis.
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