2024 North Carolina First-Time Homebuyer Programs and Loans

North Carolina offers several programs to help first-time homebuyers achieve their dream of homeownership. These include upfront cash to help cover a down payment or your home’s purchase price, or a tax credit to help you save on mortgage interest each year.

First-time homebuyer programs in North Carolina

A great place to start if you’re a first-time homebuyer in North Carolina is the North Carolina Housing Finance Agency (NCHFA). This public agency offers several programs for first-time homebuyers in the state.

• NC Home Advantage Mortgage
• NC 1st Home Advantage Down Payment
• NC Home Advantage Tax Credit
• Community Partners Loan Pool (CPLP)
• Self-Help Loan Pool (SHLP)

As you learn about each program, here’s a list of homebuyer questions to consider asking a lender before you apply.

NC Home Advantage Mortgage

The NC Home Advantage Mortgage provides mortgages and down payment assistance to first-time homebuyers and homebuyers looking to move to a bigger house. You can get down payment assistance for up to 3% of the loan amount with repayment only required if you sell, refinance or transfer your home in less than 15 years. As long as you stay in your home until year 15, your down payment assistance will be completely forgiven.

Requirements

• Annual income of $140,000 or less
• Credit score of 640 or higher (660 or higher for new manufactured homes)
• The home will be your primary residence
• You will move in within 60 days of closing

NC 1st Home Advantage Down Payment

Another homebuyer program in North Carolina is the NC 1st Home Advantage Down Payment. This program provides down payment assistance to first-time homebuyers and military veterans. The program provides up to $15,000 in down payment assistance through a 0%, deferred second mortgage. Like the NC Home Advantage Mortgage, this assistance is forgiven at the end of year 15, if you still own the home.

Requirements

• Meet county income and sales price limits, available here
• Credit score of 640 or higher (660 or higher for new manufactured homes)
• The home must be your principal residence
• Move into the home within 60 days of purchase
• Have not owned a home in the past three years or are a military veteran
• Be a permanent legal resident of the U.S.

NC Home Advantage Tax Credit

The NC Home Advantage Tax Credit helps first-time homebuyers and veterans save up to $2,000 per year in federal taxes, if approved for a mortgage credit certificate (MCC) by the NCHFA. You receive this credit by claiming a tax credit for 30% of the interest you pay on your home if it’s an existing home or 50% of the interest for a new home, up to the $2,000 limit. You can still claim a mortgage interest deduction for the remaining interest you pay. As a first-time homebuyer, you may even be able to combine this tax credit with the NC Home Advantage Mortgage for even more assistance.

Requirements

• Meet county income and sales price limits, available here
• Be approved for an MCC before purchasing your home
• Have your loan reviewed by the NC Housing Finance Agency before closing
• Buy in a targeted census tract if not a first-time buyer or veteran
• Be a permanent legal resident of the U.S.

Community Partners Loan Pool (CPLP)

While not strictly a first-time homebuyer’s benefit, the CPLP offers assistance to all low- and moderate-income homebuyers in North Carolina. If your income is below 80% of the median income in your county, you may be eligible to receive up to 25% of your home’s sales price or $50,000, whichever is less. This comes as a 0% subordinate loan, but must be combined with the NC Home Advantage Mortgage or a USDA Section 502 Direct loan. Unlike the NC Home Advantage Mortgage, the CPLP loan is not forgiven, although you don’t need to repay it for up to 30 years as long as you remain in the home during that time.

Requirements

• Income below 80% of your county’s median income
• Credit score of 640 or higher, although exceptions may be available
• Sales price below county limits, available here
• Have an NC Home Advantage Mortgage or USDA Section 502 Direct loan
• Complete eight hours of homebuyer education and pre-purchase counseling from a HUD-approved provider

Self-Help Loan Pool (SHLP)

SHLP provides 0%, shared-mortgage financing to eligible low- and moderate-income buyers who are purchasing a Habitat for Humanity home. As with CPLP, you can receive up to $50,000 for up to 30 years if you purchase a home outside of a HUD Community Development Block Grant (CDBG) entitlement city or up to $35,000 if you’re purchasing within a CDBG entitlement city. You must help with the home’s construction or rehabilitation and meet certain underwriting requirements to qualify. SHLP also requires buyers to complete home buyer education and counseling with an HUD-approved housing counselor.

Requirements

• Income at or below 80% of your county’s median income
• Complete six hours of homebuyer education as well as two hours of one-on-one pre-purchase counseling provided by a HUD-approved housing counselor
• Must occupy the home as your primary residence for five to 15 years, depending on the amount of funding
• Commit at least 15% of your pre-tax monthly income toward housing expenses

North Carolina first-time homebuyer qualifications

The qualifications for first-time homebuyer programs in North Carolina vary, but most require at least a 640 credit score, which is well below the state average of 709, according to Experian. You may also need to meet certain income and sales price limits. Depending on the program you choose, here are the steps to apply:
Step 1: Choose the right programNorth Carolina offers several homebuyer programs, some of which can be combined for maximal savings. The first step to applying for a program is determining the right one for you. Review the requirements before choosing a program to make sure you qualify, then read through the terms carefully to ensure it’s a good match.

Step 2: Ask for helpIf you have any questions about the programs or application process, don’t hesitate to reach out to an HUD-approved housing counselor. These government-trained experts can offer independent guidance at any step of the process, from choosing a program to the application process and what to expect next.

Step 3: Find an approved lenderNot all banks or lenders offer these homebuyer programs. The NCHFA maintains a list of participating lenders. If you’re applying for the CPLP, you’ll need to work with a community partner lender. It’s best to speak with multiple lenders to help you determine the best one for your needs.

Step 4: Apply through your lenderAfter you choose a lender, you’ll need to apply for the program just as you would any other mortgage. This will include providing documentation to verify you meet the various requirements, such as W-2 or tax forms to verify your income. It’s essential to get preapproved for a mortgage even before you start house shopping to show sellers you’re a serious buyer.

Understanding North Carolina first-time homebuyer down payment assistance

Before choosing a first-time homebuyer program, you should make sure you understand the type of assistance it provides. Here are the most common types of assistance you can expect from a homebuyer program.

Deferred second mortgage

A deferred second mortgage is a home loan taken out while you have an existing, or first, mortgage. You still have to repay a deferred second mortgage at the end of the loan term or if you sell or refinance.

Forgivable second mortgage

As the name implies, forgivable second mortgages are second mortgages that are fully forgiven after a period of time provided certain criteria are met. However, if you move out, sell or refinance the property before the loan term is up, you may have to repay some or all of the money you received.

Grant

Grants are the cream of the crop in terms of assistance. Essentially, free money that you do not need to repay. These types of programs are great if you can find them.

Mortgage credit certificate

A mortgage credit certificate (MCC) lets you claim a tax deduction for the mortgage interest you pay, up to $2,000. This tax credit is subtracted from your federal income tax, which means lenders will see it as added income and may approve you for higher loan amounts.

Keep these things in mind about DPA programs

Most DPA programs have specific requirements you must meet to qualify, such as not exceeding a given income level or only purchasing in certain areas. The program terms will also vary in how long you have to repay the money — or if you need to repay it at all. Be sure to read the fine print before applying.

How much of a down payment do I need to buy a house in North Carolina?

The average down payment for first-time homebuyers in the state is $29,812, according to LendingTree’s latest study. By comparison, first-time homebuyers put down $35,095 on average in the state’s northern neighbor, Virginia. Conventional home loans offer down payments starting at 3%, FHA loans require as little as 3.5% down, and programs like USDA and VA home loans, require no down payment, only enough to cover the closing costs.

Can I qualify for down payment assistance in North Carolina?

To qualify for down payment assistance in North Carolina if you must meet the following requirements:

→ You meet the credit score and income limit requirements
→ You complete the homeowners education courses, if required
→ You’re purchasing a home in an eligible area
→ The home will be your primary residence
→ You qualify with a participating lender

How do I apply for North Carolina first-time homebuyer down payment assistance?

The first step to apply for first-time homebuyer down payment assistance is finding a participating lender. The lender can then walk you through the application process. Alternatively, you can get guidance from an HUD-approved housing counselor, who can discuss the steps for various programs.

 Here’s what you need to know about the process of applying for a home loan.

Other first-time homebuyer loan programs

Conventional loans

Conventional mortgages are the mortgages you likely think of first when considering a loan from a bank. These loans are not backed by government agencies like the FHA, which means they may have different qualification standards. Mortgage rates vary from lender to lender depending on how much you want to borrow and your creditworthiness. You can view current conventional mortgage rates here.

FHA loans

FHA loans are mortgages backed by the Federal Housing Administration (FHA). This reduces the risk to lenders and thus enables them to offer these loans to borrowers with lower credit scores and modest down payments, making FHA loans easier to be approved for than other loan programs. The rates are also in line with or lower than conventional loans. You can view current FHA loan rates here.

VA loans

VA loans are designed to help veterans and military service members get a home. These loans are backed by the U.S. Department of Veterans Affairs (VA) and are only available to qualifying current and former military and surviving spouses. VA loan rates can be lower than both FHA and conventional loans. You can view current VA loan rates here.

USDA loans

USDA loans are available to low- and moderate-income homebuyers. Backed by the U.S. Department of Agriculture (USDA), these loans come with easier qualification standards, including no credit score or down payment requirement, and a minimum 30-year repayment term. Rates will vary by lender.

What are the best first-time homebuyer loans?

The best first-time homebuyer loan for you will depend on your situation. The best way to determine which program is right for you is to speak with a HUD-approved housing counselor who can discuss the features and requirements of each option. To help you compare loan types, here is who the most common loan programs are most suited for.

Home price trends in North Carolina’s major areas

Nationally, home prices rose 6.5% between the end of 2022 and the end of 2023, with the South Atlantic region seeing an even higher increase than the national average at 7.27%. While the increase in North Carolina was above the national average at 6.98%, it was still below the average for the entire region, but this wasn’t the case for all areas in the state.

Home prices in the Charlotte-Concord-Gastonia metro area, the state’s most recognized banking and finance hub, rose 7.62% year-over-year. The Greensboro-High Point metro saw an even higher increase at 7.89%. In other areas, however, home prices rose much less. In the Raleigh-Cary metro, home to the state capital, home prices only rose by 4.99%. Homebuyers in the Winston-Salem metro had an even better experience as home prices rose only 3.61% in that area during the same time period.

Is there a first-time homebuyer tax credit in North Carolina?

Yes, there is a first-time homebuyer tax credit in North Carolina called the NC Home Advantage Tax Credit. This allows residents to receive a credit for 30% of the interest you pay on your home if it’s an existing home or 50% of the interest for a new home, up to the $2,000 each year. However, there is no longer a federal tax credit for first-time homebuyers.

What are the current mortgage rate trends in North Carolina?

Mortgage rates across the nation rose throughout most of 2023 before declining in the early part of 2024. In North Carolina, mortgage rates have remained relatively stable so far this year and remain close to the national average for a 30-year fixed mortgage.