Mortgage rules in Virginia: closing practice, homestead, recording tax, licensing and default
Virginia taxes every deed of trust at recording, lets buyers choose between an attorney and a licensed settlement agent, and protects only a small homestead that must be claimed by recorded deed. What follows is the state layer — the rules that sit on top of TILA, RESPA and the federal servicing regime when the property is in Virginia.
| Closing practice | Mixed practice (attorney, title or escrow by region) |
|---|---|
| Community property | No — common-law (separate property) state |
| Mortgage recording tax | Virginia taxes the deed of trust: the state recordation tax under Code § 58.1-803 is 25 cents for every $100 of the secured debt, and cities and counties may add a local recordation tax of up to one-third of the state amount (§ 58.1-3800), bringing the combined charge to roughly 33 cents per $100, paid by the borrower at recording. |
| Transfer tax (deed) | Virginia’s recordation tax on the deed and mortgage is $0.25 per $100 (0.25%) each, paid by the buyer, plus a grantor tax of $0.50 per $500 (0.1%, more in Northern Virginia and Hampton Roads for regional transportation) paid by the seller. |
| Usury ceiling | Virginia imposes no usury cap on loans secured by a first deed of trust on real estate or on business loans above $5,000 when the rate is agreed in writing, so hard money lending is rate-unrestricted in practice; the 12% general cap applies only outside those exemptions. |
| Foreclosure | Non-judicial · 2 to 4 months to sale · deficiency: allowed |
How a Virginia closing is conducted
Virginia closings are conducted either by attorneys or by licensed non-attorney settlement agents, a choice the Consumer Real Estate Settlement Protection Act (Code of Virginia § 55.1-1000 and following, formerly CRESPA) gives to the buyer, who must be told in writing that they may select their own settlement agent. Settlement agents register with the Virginia State Bar or the Bureau of Insurance depending on their category. Funding is wet, and settlement fees typically run from a few hundred dollars to around a thousand.
Who has to sign: community property and homestead joinder
Virginia is a common-law property state, so a spouse who does not sign the note or the deed of trust has no ownership claim to a home titled to the other spouse. Spouses usually take title as tenants by the entirety, which shields the home from the individual creditors of either spouse, and lenders require both spouses to sign the deed of trust whenever both are on title. Only the borrower’s debts enter the Virginia loan’s debt-to-income calculation.
Virginia’s homestead exemption in Code § 34-4 is modest: $5,000 of any property plus, since 2020, an additional $25,000 in real or personal property used as the principal residence, with small add-ons for dependents and for owners 65 and older; it must be claimed by recording a homestead deed (§ 34-6) before the sale or in bankruptcy, a procedural step many homeowners miss. Deeds of trust, taxes and mechanics’ liens are unaffected. For property tax there is no statewide homestead exemption, but localities may grant relief to elderly and disabled owners under § 58.1-3210, and totally disabled veterans are fully exempt under the Constitution.
The cost of recording a mortgage in Virginia
Virginia taxes the deed of trust: the state recordation tax under Code § 58.1-803 is 25 cents for every $100 of the secured debt, and cities and counties may add a local recordation tax of up to one-third of the state amount (§ 58.1-3800), bringing the combined charge to roughly 33 cents per $100, paid by the borrower at recording. A refinance with the same lender is taxed only on new money under § 58.1-803(D). The grantor’s tax on the deed (§ 58.1-802) and the regional congestion relief fee in Northern Virginia are the seller’s transfer taxes, separate from the loan.
Virginia’s recordation tax on the deed and mortgage is $0.25 per $100 (0.25%) each, paid by the buyer, plus a grantor tax of $0.50 per $500 (0.1%, more in Northern Virginia and Hampton Roads for regional transportation) paid by the seller.
Can a Virginia lender charge a prepayment penalty?
Virginia caps rather than bans prepayment penalties: Code § 6.2-423 limits the penalty a lender may charge on first-mortgage loans secured by a one-to-four family home, generally to a small percentage of the balance prepaid, and the subordinate-mortgage chapter (§ 6.2-407 and following) restricts charges on junior liens. Federal qualified-mortgage limits apply on top. Ask the Bureau of Financial Institutions to confirm the cap for the loan size involved rather than relying on the note alone.
High-cost and predatory lending limits
Virginia relies on the federal HOEPA thresholds for high-cost loans and on the prohibited-practices section of its Mortgage Lender and Broker Act (Code § 6.2-1614) for conduct rules: lenders and brokers may not flip a loan without a tangible benefit, charge undisclosed fees, or, since 2008, make a loan without assessing the borrower’s ability to repay. The Virginia Consumer Protection Act gives private remedies for misrepresentation, and the State Corporation Commission handles complaints.
Virginia imposes no usury cap on loans secured by a first deed of trust on real estate or on business loans above $5,000 when the rate is agreed in writing, so hard money lending is rate-unrestricted in practice; the 12% general cap applies only outside those exemptions.
Licensing: the Virginia regime
The Bureau of Financial Institutions of the Virginia State Corporation Commission licenses mortgage lenders and brokers under the Mortgage Lender and Broker Act (Code § 6.2-1600 and following) and mortgage loan originators under § 6.2-1700 and following, processing all applications through the NMLS. Exemptions cover banks, credit unions, business-purpose loans and a limited number of seller-financed sales. A license check is a quick search on NMLS Consumer Access or the SCC’s own lookup.
What Virginia adds to the federal disclosures
Virginia requires the CRESPA settlement-agent choice disclosure at application and, for foreclosure, the trustee must give the owner written notice of the sale under Code § 55.1-321; lawmakers lengthened that notice for owner-occupied homes in 2021 and added a requirement to point the borrower to housing counseling, so check the current period rather than assuming the old fourteen days. Virginia adds no rescission right to the federal three days, but its recordation tax, paid on the deed of trust at closing, is a cost TRID’s standard forms will show as a state charge.
What happens after a default in Virginia
Virginia uses a non-judicial process and a typical uncontested case reaches a sale in 2 to 4 months. Virginia provides no statutory right of redemption after a trustee’s sale. A Virginia lender may sue the borrower for the deficiency remaining after a trustee’s sale. The full timeline, redemption and mediation rules are on foreclosure in Virginia; the investor view — usury, licensing exemptions, recovery speed — on hard money in Virginia.
Frequently asked questions
Do I need a lawyer to close a mortgage in Virginia?
Virginia closings are conducted either by attorneys or by licensed non-attorney settlement agents, a choice the Consumer Real Estate Settlement Protection Act (Code of Virginia § 55.1-1000 and following, formerly CRESPA) gives to the buyer, who must be told in writing that they may select their own settlement agent. Lenders generally follow the prevailing practice of the county; a borrower who wants legal review can add it at their own expense.
Does Virginia allow prepayment penalties on home loans?
Virginia caps rather than bans prepayment penalties: Code § 6.2-423 limits the penalty a lender may charge on first-mortgage loans secured by a one-to-four family home, generally to a small percentage of the balance prepaid, and the subordinate-mortgage chapter (§ 6.2-407 and following) restricts charges on junior liens. Under the federal ATR/QM rule, prepayment penalties are banned on most loans and tightly capped on the few fixed-rate qualified mortgages that may carry them.
What does Virginia charge to record a mortgage?
Virginia taxes the deed of trust: the state recordation tax under Code § 58.1-803 is 25 cents for every $100 of the secured debt, and cities and counties may add a local recordation tax of up to one-third of the state amount (§ 58.1-3800), bringing the combined charge to roughly 33 cents per $100, paid by the borrower at recording. Virginia’s recordation tax on the deed and mortgage is $0.25 per $100 (0.25%) each, paid by the buyer, plus a grantor tax of $0.50 per $500 (0.1%, more in Northern Virginia and Hampton Roads for regional transportation) paid by the seller.
Who licenses mortgage lenders in Virginia?
The Bureau of Financial Institutions of the Virginia State Corporation Commission licenses mortgage lenders and brokers under the Mortgage Lender and Broker Act (Code § 6.2-1600 and following) and mortgage loan originators under § 6.2-1700 and following, processing all applications through the NMLS. The originator’s NMLS number appears on the loan documents and can be looked up on NMLS Consumer Access, which shows licensing history and public actions.
Federal layer: TILA / Reg Z · RESPA · TRID disclosures · ECOA · Fair Housing Act · all federal regulations. Buying here: first-time buyer programs in Virginia.