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2022 North Carolina First-Time Homebuyer Programs

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North Carolina’s first-time homebuyer programs provide down payment assistance and tax credits to qualified borrowers who meet income and credit score requirements. The assistance provided does come with restrictions, including minimum occupancy periods and payback requirements, but one or more of them could help make your dream of a first home in North Carolina possible.

North Carolina statewide and local first-time homebuyer programs

The North Carolina Housing Finance Agency (NCHFA) runs statewide programs that help make home buying affordable for first-time homebuyers. Here is a snapshot of these programs and how much assistance they offer.

Program nameAssistance amountAssistance typeWhere it’s available
NC Home Advantage MortgageUp to 5% of the loan amountFixed-rate mortgage w/DPALStatewide
NC 1st Home Advantage Down PaymentUp to $8,000Forgivable second mortgageStatewide
NC Home Advantage Tax CreditUp to $2,000 annuallyTax creditStatewide
Community Partners Loan Pool20% of the sales price, up to $30,000Deferred second mortgageStatewide

What to know about different types of down payment assistance

There are several types of down payment assistance programs for first-time homebuyers, and each can have its own rules. Here’s the types of assistance programs in North Carolina and how they work.

  • Forgivable second mortgage. You may not have to repay this type of assistance at all. Forgivable second mortgages often require that the homebuyers live in the home for a certain amount of time, such as 15 years, but after that time is up, you don’t have to repay the loan. If you refinance or sell your home beforehand, you will need to repay at least a portion of the loan.
  • Deferred second mortgage. Similar to a forgivable second mortgage, a deferred second mortgage allows borrowers to finance mortgage costs that they would otherwise have to pay out of pocket. However, homebuyers will have to repay the money once the primary mortgage is over — when they sell, refinance or pay off the home.
  • Tax credit. Mortgage tax credits allow you to reduce the amount of federal or state tax you pay based on how much mortgage interest you are charged each year. This increases your annual income, helping you to qualify for a mortgage and make the payments over the life of the loan.

How North Carolina first-time homebuyer programs work

Whatever first-time homebuyer program you have your eye on for your future home in North Carolina, here are the general steps you should take:

  1. Do some research. Check out the programs that exist, their requirements and see which one(s) is best for you. Talk to the organization if you have any questions about their particular eligibility limitations.
  2. Get educated. Many homebuyer assistance programs require that applicants attend a free homebuying class or counseling session as part of the application process.
  3. Land a preapproval. While many North Carolinian programs provide assistance, you will most likely need to get a preapproval for a primary mortgage.
  4. Know the payback requirements. Understand the requirements for a payback so you’ll know whether you’ll need to start making payments immediately or if you should aim to live in the home long enough to receive loan forgiveness.

North Carolina first-time homebuyer program requirements

In many cases, assistance programs can have stringent eligibility qualifications, such as minimum credit score and maximum debt-to-income ratio. The table below provides you with program requirements to help you determine which ones are the best fit:

Program name Credit score minimumDTI ratio maximumMaximum income limitHow long you have to live in home
NC Home Advantage Mortgage640Unspecified$99,000 annuallyUnspecified
NC 1st Home Advantage Down Payment640UnspecifiedVaries by county15 years
NC Home Advantage Tax CreditUnspecifiedUnspecifiedVaries by countyUnspecified
Community Partners Loan Pool64043%Less than 80% of the area median incomeN/A

THINGS YOU SHOULD KNOW

Many programs that provide down payment and closing costs assistance will compare your income to the local median income to determine if you’re eligible to receive funds. If you want to see the current median income by county in North Carolina, here is a lookup tool from the U.S. Department of Urban Development (HUD).

National first-time homebuyer programs

You could combine a national first time homebuyer assistance program with a North Carolinian one for a bigger leg up. Here are some national loan programs that both first-time buyers and repeat home buyers can use. Each has their own qualification requirements.

  • Conventional loans. Private lenders not backed by any government agency offer conventional loans, which typically cost less than other options but have more stringent requirements. Examples of conventional first time homebuyer loans include the Fannie Mae HomeReady® and Freddie Mac Home Possible® programs.
  • FHA loans. Mortgages insured by the Federal Housing Administration (FHA) empower homebuyers who have lower credit scores and higher debt ratios to still qualify for a mortgage. The caveat is that you’ll have to pay two types of FHA mortgage insurance.
  • VA loans. The U.S. Department of Veterans Affairs (VA) offers military borrowers 100% financing with no loan limits and doesn’t require mortgage insurance.
  • USDA loans. Homebuyers seeking to buy in a designated rural area can apply for a mortgage backed by the U.S. Department of Agriculture (USDA). No down payment is required, but income and geographical limits apply.

FAQs about North Carolina’s first-time homebuyer programs

Who qualifies as a first-time homebuyer in North Carolina?

The FHA defines a first-time homebuyer as someone who hasn’t owned or co-owed a permanent home in at least three years. Local programs may have even less strict definitions. You may still qualify for “first-time homebuyer assistance” even if you’re not truly purchasing your first home ever.

Can I qualify for down payment assistance in North Carolina?

If funds are available, North Carolina organizations offer down payment assistance based on whether you meet program requirements.

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

If you qualify for a VA or USDA loan, you may be able to finance 100% of the home’s purchase price and simply need enough cash to cover closing costs. Other financing options include conventional loans, which typically have a 3% down payment minimum, and FHA loans that require at least 3.5% down.

Home price trends in North Carolina’s major areas

North Carolina home prices rose in 2021 with a few areas on the coast and around Charlotte increasing by over 10%. Onslow County saw a gain of 23.7% year over year, with a median home price of $210,012. The average monthly mortgage payment went up by $176 to $805. Gaston County rose 22.4% year-over-year, to $217,739. This translated to a typical monthly mortgage bump of $177, to $835.

Wake County rose 23.4% to a median home price of $411,700. This translated to a mortgage payment of $1,570, up by $343 year-over-year. Bertie County, one of the more inexpensive areas, saw a rise of 19.3% year-over-year, with a median home price of $104,275. Mortgage payments rose by $76 to $400.

 

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