Public Employee Homeownership Grant (PEG) Program: FAQs for Homebuyers
Who is qualified to apply for the program?
You are eligible to apply for the PEG program if you meet all of the following qualifiers:
I’m qualified to apply! What are the terms of the loan?
- You are a full or part-time employee of Loudoun County government, Courts and Constitutional Officers, or Loudoun County Public Schools (LCPS) for a minimum of 12 months. (Temporary, seasonal or probationary employees are ineligible).
- You are either a first time homebuyer or you currently own property outside Loudoun County which will be sold prior to settlement. This would also include undeveloped land and inherited real estate, whether or not you actually occupied the property as your primary residence.
- You have a Gross Annual Household Income between $32,600 and $76,050.
- You have not been a resident of Loudoun County in the last 12 months. (First-time homebuyers are exempt from this requirement). Proof of residency will be required.
- You are able to contribute at least $1,000 of your own money towards down payment/closing costs
The loan is secured by a second lien on the home for a 5-year term at 0.00%. The maximum loan amount is $10,000. As long as you maintain employment with Loudoun County or Loudoun County Public Schools (LCPS), keep the home as your primary residence and do not sell your home for a period of 5 years, the entire loan balance will be forgiven.
Should you decide to sell the home prior to the 5-year residency requirement being met, the remaining unforgiven loan balance must be paid in full through the loan proceeds.
If you discontinue employment with Loudoun County or LCPS, the remaining unforgiven amount will be converted to a loan at an interest rate of 3.00%. Monthly payments will be required until the balance has been paid in full.
Is this actually a grant or a loan?
The funds are a forgivable loan. Your loan balance will be forgiven at 20%, or $2,000 each year for five years as long as you comply with the terms and conditions of the program. You will receive a 1099-form annually from the county for the forgiven amount as it is considered taxable income.
I am also participating in the Affordable Dwelling Unit (ADU) Purchase program. Can I use the PEG program in conjunction with my home purchase?
Yes. Many ADU buyers take advantage of one of the county’s down payment/closing cost assistance programs.
I need more than the maximum $10,000 to cover all of my closing costs and down payment. I think I qualify for the DPCC program as well. Can I use both programs?
No. Even if borrowers are eligible for both down payment assistance programs, only one may be used.
The checklist says that everyone over the age of 18 must submit proof of income. My spouse/child is not currently employed. What documentation will you need from them?
Occupants over 18 who do not receive income must submit a notarized statement certifying that they do not receive income from employment or any other source. You may request a Zero Income Certification form from the county if you prefer.
Full-time students may submit proof of enrollment such as a class schedule to fulfill this requirement.
I’ve submitted my complete application and all supporting documents. How long will it take before I know if I’m approved?
You will typically hear from the county within 3 to 5 business days after you have submitted the full application. This timeframe may be extended if you are missing documentation from your application packet. The entire application process from start to finish will typically take at least 45 to 60 days. If you are able to provide all required documentation with your application submission, this will help minimize delays.
What do you need from me to keep the application process moving as quickly as possible?
First you will need to submit your application online along with all the required supporting documents. You can use the checklist in the application packet to help you gather the documents you will need.
Depending on your own unique situation, we may ask you to submit other documentation which may not be specifically listed on the checklist. Your prompt response will help us to process your application as quickly as possible.
There are some additional documents which will require your signature if your application is approved. Once we reach that point in the process, you should watch your email and/or check voicemail daily so you are quickly notified when we attempt to reach you.
Are there any other conditions for my acceptance of the loan?
Buyers must pay a $200 service fee at closing. This fee cannot be financed. You may pay with a check, money order, or cashier’s check made payable to County of Loudoun. You may leave the check with the title company and they will send it to us with your closing package. (Please note: Non-payment of this fee will cause your settlement to be delayed).
You are required to submit a Certificate of Completion of the Virginia Housing Development Authority (VHDA) Homebuyer Education class prior to settlement. The class is offered statewide, but you may also take it online at no cost to you. Find out more or register at www.vhda.com
You will also need to attend the county’s HomeCents
post-settlement seminar within 6 months of closing and submit your certificate to the Housing Finance Specialist. This seminar provides valuable information that will help you transition into homeownership. You will receive a large packet at no cost to you with lots of great resources to assist you along the way. You may also take this prior to settlement if you wish. Find out more and register here
My PEG application was approved! What happens now?
We will be working with your lender and the title company to prepare for your settlement. We will also be contacting you to obtain signatures on a few more important forms so that we can request the check for settlement. Check your email and voicemail regularly during this time in case we need your assistance.
I read in the guidelines that there is a service fee of $200 required for the program. How do I get payment to the county?
You may pay with a check, money order, or cashier’s check made payable to County of Loudoun. Just leave the check with the title company and they will be sure to send it to us with your closing package. Please note that this fee cannot be financed. Non-payment of this fee will cause your settlement to be delayed.
How soon can we go to settlement after approval?
Provided all required documentation has been received from the applicant, lender and the title company, settlement can occur after about 15 business days. (A minimum of 10 business days is required in order to receive a check in time for settlement). This timeframe may be extended if we are waiting for documentation or information from your lender or the title company. Be sure to let us know if your settlement date changes so that we can be prepared in time.
My lender said that I could possibly get my earnest money deposit back at closing. Is this allowed?
No. Buyers may not receive any cash out at closing. The approved loan amount will be reduced in order to avoid cash out.
I am purchasing a condo with mandatory country club membership and fees. May I use PEG funds to finance these expenses?
No. Costs related to country club memberships are not a permitted use of county funds and must be paid with borrower’s funds. Details of limits to common closing costs are in the Program Information document in the application packet. All fees are subject to Loan Committee final approval.
What if I want to refinance in the future to get a lower rate?
Refinances will be considered if there is no cash out in the transaction. All subordination requests are subject to Loan Committee approval. The county will not approve subordinations for Home Equity loans or a Home Equity Line of Credit (HELOC). In these cases (or in the case of default), the remaining balance must be paid in full.
What if I decide to sell my home or I end my employment?
Should you decide to sell your home prior to the 5-year residency requirement being met, the remaining unforgiven loan balance must be paid through the loan proceeds at your settlement.
If you move out of the home or if you are no longer employed with the institution which qualified you for participation in the program, the remaining unforgiven amount will be converted to a loan at an interest rate of 3.00%. Monthly payments will be required until the balance has been paid in full.