North Carolina First-Time Home Buyer Programs of 2023

Phil Metzger
By Phil Metzger 
Updated
Edited by Mary Makarushka

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Good news for first-time home buyers and repeat buyers in North Carolina: The state offers a loan program that comes with down payment assistance.

The North Carolina Housing Finance Agency (NCHFA) has a program called NC Home Advantage Mortgage, which combines affordable, fixed-rate loans with down payment assistance. Even better: Borrowers may not have to pay back the down payment help if they own the home long enough.

NCHFA highlights and eligibility requirements

If you live in North Carolina, NCHFA programs offer unique benefits that could help you buy a house sooner.

Highlights

  • Available for credit scores as low as 640.

  • Get up to 3% down payment assistance.

  • Choose among conventional, FHA, VA or USDA mortgages from NCHFA participating lenders.

  • Depending on loan type, buy a house, townhouse, condominium, duplex or new manufactured home.

  • Sales price limits depend on loan type.

  • Mortgage insurance will be required when a down payment is less than 20%.

Eligibility

  • Must not exceed income limits.

  • Home buyer education may be required.

  • Must plan to use the home as primary residence.

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NCHFA first-time home buyer loan programs

NC Home Advantage Mortgage

Best for:

Cash assistance without repayment for borrowers with credit issues

What you need to know:

All loans under the program are 30-year fixed-rate mortgages. The minimum credit score to buy a new manufactured home is 660; it’s 640 for other types of homes. Low- to moderate-income home buyers can get down payment assistance with the NC Home Advantage Mortgage. It’s available to qualified buyers who meet income guidelines, whether they are first-timers or repeat buyers.

Borrowers can get assistance up to 3% of the loan amount on conventional loans and government-backed FHA, VA and USDA loans. This down payment assistance, which is a 0% interest loan with no monthly payments, may be used to pay for closing costs, prepaid items (like property tax and homeowners insurance) or, of course, the down payment.

After 11 years — and each year after — 20% of the down payment assistance is forgiven. That means after 15 years, the down payment assistance won’t have to be repaid, even if the borrower sells the house or refinances the mortgage.

NC 1st Home Advantage Down Payment

Best for:

Cash assistance without repayment for first-time buyers and veterans

What you need to know:

First-time home buyers and military veterans who qualify for an NC Home Advantage Mortgage may be eligible for $8,000 in down payment assistance under the NC 1st Home Advantage Down Payment program. As with the NC Home Advantage Mortgage, the down payment assistance is a 0% interest loan with no monthly payments, and 20% is forgiven each year in years 11 through 15 of the loan. After 15 years, the assistance loan will be forgiven.

Community Partners Loan Pool

Best for:

Buying yourself time to repay cash assistance

What you need to know:

Through this state-funded program, local governments and member nonprofit housing agencies offer down payment assistance to prospective home buyers. Assistance is provided in the form of a 0% second mortgage for up to 25% of the sales price, up to a maximum of $50,000, when combined with the NC Home Advantage Mortgage. Buyers can get a down payment assistance loan up to 10% of the sales price when combined with a USDA Section 502 Direct Loan. The assistance is deferred, meaning there are no monthly payments and the loan is repaid when the home is sold or at the end of the loan term.

Assistance through the Community Partners Loan Pool can be combined with other down payment assistance programs, including the NC 1st Home Advantage Down Payment.

Self-Help Loan Pool

Best for:

Assistance for low-income borrowers who help with home rehab

What you need to know:

Through the Self-Help Loan Pool, low-income borrowers can get 0% interest rate mortgages to buy homes from Habitat for Humanity or other self-help homeownership organizations. The assistance comes in the form of a grant of up to $50,000 that the organization combines with its own financing to offer a mortgage that has to be paid off in 20 to 30 years. The loan fund is limited. Buyers apply through the self-help housing organization.

Borrowers have to meet income and home price limits, which vary by county. They must take a homeownership education course and must already participate in a self-help housing program — for example, helping in the construction or rehab of the house.

Mortgages using the Self-Help Loan Pool are available to first-time and repeat home buyers.

NC Home Advantage Tax Credit

Best for:

Paying less in taxes

What you need to know:

The NCHFA issues mortgage credit certificates to eligible first-time home buyers, veterans and buyers in targeted areas. Qualified mortgage borrowers can get a credit to offset their federal income tax bills, up to $2,000 each year they live in the home. Lenders can inform borrowers about the income and sales price limits; the mortgage credit webpage lists census tracts that qualify. The tax credit can be used with the NC Home Advantage Mortgage.

Visit the NCHFA’s information page for the NC Home Advantage Mortgage. This page has a link to a lender lookup tool and a way to find a real estate agent who has worked with program participants.

If you're interested in the Community Partners Loan Pool, visit NCHFA's community partners page and select "Community Partners Loan Pool" without selecting a county (leave that pull-down "-Any-"). You'll see a list of partners and the counties they serve. If you’re interested in the Self-Help Loan Pool, visit the community partners page and select your county and the “Self-Help Loan Pool” program to see what’s available.

First-time home buyer programs near North Carolina

National first-time home buyer programs

Conventional mortgage

Best for:

Low down payments, limited mortgage insurance premiums

What you need to know:

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.

VA loans

Best for:

Military, low down payments

What you need to know:

The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.

FHA loans

Best for:

Low credit score, low down payments

What you need to know:

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

USDA loans

Best for:

Low down payments, rural home buyers

What you need to know:

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.

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