Plus Second Mortgage First-Time Homebuyer Assistance Programs

What Is the Plus Second Mortgage? Virginia’s Innovative Path for First-Time Buyers

Virginia Housing’s Plus Second Mortgage is more than a clever name—it’s a springboard. By layering a no-interest, no-payment second loan on top of your primary mortgage, the program can absorb the lion’s share of your down payment and closing costs. For thousands of first-time buyers, that extra boost is the difference between “someday” and “move-in day.”

In the next few minutes you’ll discover how the Plus Second Mortgage works, who qualifies, and how to weave the program into a broader homeownership strategy. We’ll also bust myths, share a real-life case study, and answer the web’s most-searched questions—all without the jargon that usually floods mortgage conversations.

Why Down Payments Trip Up First-Time Buyers in Virginia

The Old Dominion’s housing market has remained hot. According to Virginia REALTORS®, the statewide median home price hovered near $390,000 at the end of 2023. A traditional 5 % down payment on that amount equals $19,500—roughly the state’s average annual childcare bill. When closing costs (typically 3–4 %) join the party, the cash needed at the table can eclipse $30,000.

Savings accounts often can’t keep pace. A Federal Reserve study shows that 35 % of renters nationwide have zero emergency savings. Competing financial goals—student loans, car payments, rising rents—further tighten wallets. The Plus Second Mortgage strikes at the heart of that barrier by giving qualified Virginians a silent partner in the form of a second lien that requires no monthly repayment.

How Does the Plus Second Mortgage Work?

Loan Structure in Plain English

• Two loans, one closing. You pair a standard Virginia Housing first mortgage with a second-lien Plus loan.
• Second loan covers up to 3 % of the purchase price. Funds can be used for both down payment and closing costs.
• 0 % interest, no monthly payments. Repayment happens only when you sell, refinance, or pay off the first mortgage.
• No early-payment penalty. Come into extra cash? Clear the second lien anytime without extra fees.

Think of the Plus second trust financing as an interest-free parachute. You glide into homeownership without watching your checking account plunge.

Who Qualifies for the Plus Second Mortgage in Virginia?

Eligibility isn’t a one-size-fits-all sweatshirt, but the guidelines are straightforward:

• First-time buyer status. You haven’t owned a principal residence in the past three years, unless you’re purchasing in a federally designated target area.
• Income limits. Household income must fall below Virginia Housing’s county-specific caps (often 80–100 % of area median income).
• Credit profile. A minimum 620 FICO generally applies, though lenders may layer their own overlays.
• Homebuyer education. Completion of Virginia Housing’s free online course is non-negotiable.
• Debt-to-income ratio. Standard VH guidelines typically cap DTI at 45 %, but automated underwriting can bump that number slightly.

Lenders approved by Virginia Housing are the gatekeepers; they’ll document your income, pull your credit, and confirm the property meets purchase-price limits. Once cleared, the Plus Second Mortgage slides into place at closing.

Benefits and Potential Drawbacks at a Glance

• No cash drain. Preserve your emergency fund for future repairs, not closing day.
• Zero interest accrual. The second lien’s balance never mushrooms.
• Flexible payoff timeline. Sell in five years or 25; the second lien simply waits.
• Layerable. Combine with grants or seller credits for a near-zero upfront cost.
• But remember: The second mortgage must be repaid upon sale or refinance, and combined loan-to-value ratios can influence refinancing options later.

Real-Life Snapshot: Maria & Jamal Cross the Threshold

Maria, an elementary-school teacher in Prince William County, and her partner Jamal, a cybersecurity analyst, had $8,000 in savings—just half of what they needed for a 3 % down payment and closing costs on a $360,000 townhome. Their lender introduced the Virginia Plus second mortgage program.

The second-lien Plus loan delivered $10,800 (3 % of purchase price) at 0 % interest. Combined with their personal savings and a $2,000 seller credit, the couple closed with $250 left in checking—enough for pizza boxes and paint rollers. Maria jokingly calls it “our interest-free roommate who never uses the shower.”

Can I Combine the Plus Second Mortgage with Other Assistance?

Absolutely. Virginia Housing explicitly allows “stacking,” provided total assistance doesn’t exceed actual costs. Popular pairings include:

• City and county grant programs. Richmond’s Maggie Walker Community Land Trust, for example, offers up to $10,000 in forgivable funds.
• Federal Home Loan Bank programs. Some participating lenders can layer $7,500 veteran grants atop the Plus duo loan.
• Employer-assisted housing. Universities and hospitals often provide $2,500–$5,000 incentives that can share the closing table.

Just keep an eagle eye on cumulative loan-to-value limits—most first mortgages cap combined LTV at 105 %. Your lender will do the math.

Application Roadmap: From Interest to Keys in Hand

1. Check the numbers. Use Virginia Housing’s online eligibility wizard to compare your income to county limits.
2. Complete homebuyer education. The free, self-paced course takes roughly six hours and arms you with budgeting skills.
3. Select an approved lender. Over 150 in-state loan officers carry the certification; interview at least two for rate quotes.
4. Gather documents. Recent pay stubs, W-2s, tax returns, bank statements, and ID.
5. Pre-approval and house hunt. Target homes that meet Virginia Housing’s purchase-price caps (which jump to $600,000 in Northern Virginia).
6. Contract and underwriting. The lender layers the Plus Second Mortgage atop your first loan, orders appraisal, and clears conditions.
7. Closing day. Sign two sets of notes and deeds of trust—and grab those keys.

Common Misconceptions, Debunked

“Won’t a second lien scare sellers?” In over 20,000 Virginia Housing closings since 2019, listing agents rarely blink. They’re paid the same day you close.

“Zero interest sounds too good to be true—how is it funded?” Bonds issued by Virginia Housing and recycled mortgage payments keep the program self-sustaining; no tax hike required.

“I’ll never be able to refinance.” Many lenders will subordinate the silent second, especially if you stay within conforming-loan guidelines.

FAQ

Ready to Turn the Key?

The secret sauce of the Plus Second Mortgage is simplicity: no interest, no monthly drag, just a silent partner that eases you past the cash-to-close mountain. If homeownership in the Commonwealth feels just out of reach, this program may shorten that leap to a single step.

Questions? Our team specializes in Virginia Housing products. Schedule a 15-minute strategy call and get a personalized savings roadmap before next weekend’s open house.