Becoming a homebuyer for the first time is the American dream. Reaching that goal requires determination and good planning, to develop good credit and save money for your down payment and closing costs. Fortunately, there are many loan programs designed to help first-time homebuyers. Some of these programs are specific to North Carolina, while others are available nationwide.
All homebuyers can benefit with guidance from an experienced Mortgage Banker. We always recommend that you reach out to one of our Mortgage Bankers to help select the best loan option for you and your family.
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First-time Homebuyer Programs Specific for North Carolina
The NCHFA (North Carolina Housing Finance Agency) has several programs that offer down payment assistance to first-time homebuyers in North Carolina. Their goal is to make homebuying more affordable and attainable.
NC Home Advantage Mortgage
The NC Home Advantage Mortgage is available to both first-time and move-up homebuyers. Under this program, qualified homebuyers are provided with stable, fixed-rate mortgages and also with down payment assistance of up to 5% of the loan amount. The best part of this program is that the repayment of all of their down payment options is only required if the homebuyer sells, refinances, or transfers the home within 15 years of the purchase. Otherwise, the down payment assistance that you receive is forgiven at 20% per year at the end of years 11 through 15, and then fully forgiven at the end of year 15.
NC First Home Advantage Down Payment
Homebuyers that qualify for the NC Home Advantage Mortgage and are also either first-time homebuyers or military veterans, may also qualify for the NC First Home Advantage Down Payment. Under this program, the homebuyer receives up to $8,000 in down payment assistance. This down payment assistance is also a 0%, deferred second mortgage, which is is forgiven at 20% per year at the end of years 11 through 15, and then fully forgiven at the end of year 15, unless the homebuyer sells, refinances, or transfers the home within 15 years of the purchase.
Community Partners Loan Pool
Under this state-funded program, qualified homebuyers may receive the following down payment assistance: up to 20% of the sales price, up to a maximum of $30,000, when combined with the NC Home Advantage Mortgage program, or up to 10% of the purchase price when combined with a USDA’s Section 502 loan. This program is structured as a 0% interest, deferred second mortgage. It has no monthly payments and it is generally repaid once the home is sold or at the end of the loan term.
Self Help Loan Pool
The Self-Help Loan Pool provides low-income borrowers with up to $35,000 in mortgage financing to buy a home from self-help homeownership organizations, such as Habitat for Humanity. When combined with NCHFA funds, this program provides a single, affordable mortgage that is generally structured as a 0%, amortizing loan.
Mortgage Credit Certificate
The Mortgage Credit Certificate can represent savings of up to $2,000 per year in federal income tax liabilities. The savings is for every year that the homeowner occupies the property as a primary residence. This program has to be applied alongside a 30-year fixed-rate mortgage, such as FHA, USDA, VA, or conventional loan.
National First-time Homebuyer Programs
Within a conventional home loan, first-time homebuyers that meet the requirements of Fannie Mae and Freddie Mac can qualify for a down payment as low as 3%. However, if you choose to have a down payment of at least 20% you will not have to pay mortgage insurance.
The USDA loan is issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program with the goal of making rural suburban housing more affordable. It has been growing in popularity as it offers a zero down payment for eligible rural and suburban properties. The homebuyers also have to meet the income limitations that vary by area.
The Federal Housing Administration is a great option for first-time homebuyers with low credit scores. It allows down payments as low as 3.5% for those homebuyers with credit scores of at least 580, and it will provide loans for homebuyers with credit scores as low as 500, however, at this level, it will required a down payment of at least 10%.
The VA loan is guaranteed by the U.S. Department of Veterans Affairs. The program is available not only to military members and veterans, but also to surviving spouses. It provides benefits such as no minimum credit score, no down payment, and no mortgage insurance. However, a VA funding fee is often required.
Interested in one of these programs? Reach out to one of our Mortgage Bankers, we will help you choose the best option for you and your family and answer any questions you may have!