(Steven Senne/Associated Press)

Being unable to come up with a hefty down payment is often a major hurdle for first-time home buyers, particularly young people who are grappling with massive student loan debt.

The issue has become a critical concern for members of the real estate community, who have noticed a steady decline in the number of first-time and young home buyers in the market.

To address the issue, Virginia is establishing a program to make it easier for families to set aside the funds over time to cover the down payment and closing costs for first-time home purchases. The First-time Homebuyer Savings Plans program, which goes into effect Tuesday, allows future owners to earmark up to $50,000 in cash, investments or insurance policies — exempt from state taxes — to buy their first home.

The program, somewhat similar in concept to college-saving plans, also allows parents and grandparents to designate savings or investments for a child’s future purchase of a home. Money or investments in the plan can grow to no more than $150,000, sponsors of the program say.

Part of the purpose of the legislation is to establish “the mental discipline to save and invest,” said Chip Dicks, legislative counsel for the Virginia Association of Realtors, which requested the legislation. “What this [does is to] put money aside and let it grow without taxing the growth on the money.”

Dicks said the legislation is similar to a program in Montana. However, he said, the Virginia plan attempts to simplify the process. The Virginia plan does not require participants to open special accounts at financial institutions as Montana does, but allows them to designate existing accounts and investments for the home buyer saving program merely by filling out a form every year when they file their state income taxes.

Anyone who attempts to use the designated accounts for purposes other than the purchase of a first home, Dicks said, would be subject to back taxes and penalties.

Dicks said the association plans to promote the program to financial institutions and home buyers over the next few months.

The plan is obviously a long-term solution that likely wouldn’t help people who are in the market now.

Also a parent or grandparent would have no way of knowing whether the child they’re saving for would actually be interested in buying a home in Virginia, as opposed to another state, down the road.

“This program will not address everyone’s situation depending upon whether the beneficiary is intending to buy a home in Virginia or some other state,” Dicks said. “But this program is an excellent way of providing savings for beneficiaries who do intend to buy a home in Virginia.”

For more information on the legislation, click here.