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Mortgages in North Carolina
Since its creation in 1973, the North Carolina Housing Finance Agency (NCHFA) has financed more than 293,000 affordable homes and apartments, totaling $25 billion. If you meet the agency’s requirements, you could soon count yourself as one of those happy homeowners.
To qualify for its programs, you’ll have to be a legal resident of the United States buying a home in North Carolina. The agency also sets income and sales price limits and asks you to work with one of its participating lenders.
The NCHFA has a variety of in-house resources to help demystify the process of buying a home and will direct first-time buyers to housing couseling to help them prepare for the responsibilities of homeownership.
In addition to its own down payment loans and grants, NCHFA provides funding to local governments and nonprofit organizations to support low-to moderate-income individuals. If you meet the income and sales price limits, you may be eligible for more help from one of NCHFA’s community partners.
More: Get a free credit score and credit monitoring from Credit Sesame.
NC 1st Home Advantage Down Payment
First-time homebuyers and military veterans can access up to $8,000 in down payment and closing cost assistance. This loan is set up as a 0% interest second mortgage and is forgiven within 15 years.
Using this down payment assistance, you may be eligible for up to 100% financing on FHA, USDA, VA and conventional loans.
To qualify, you’ll either have to be a first-time buyer, be a military veteran or buy a home within a targeted census tract. You’ll also have to meet the income and sales price limits, have a minimum credit score of 640 and plan to occupy the home as your principal residence within 60 days of closing.
NC Home Advantage Mortgage
This mortgage program offers eligible homebuyers — not just first timers — down payment assistance of up to 5% of their total loan, along with competitive interest rates and up to 100% financing on FHA, USDA and VA loans.
It also offers 3% down payment assistance on conventional loans that have a 97% loan-to-value (LTV) ratio.
To qualify for this program, you must be purchasing a home in North Carolina that you intend to occupy as your principal residence within 60 days of closing. You’ll also need to have a credit score of 640 or higher, and your annual income cannot exceed $92,000.
You can use this program to purchase a single-family home, townhouse, condominium or duplex. You’ll face a higher credit score requirement (660) if you want to buy a new manufactured home.
Community Partners Loan Pool
The Community Partners Loan Pool provides qualified homebuyers with down payment assistance up to 20% of the sales price (but no more than $30,000) when combined with an NC Home Advantage Mortgage. In combination with a USDA loan, homebuyers can receive up to 10% of the purchase price.
This program is set up as a 0% interest, deferred second mortgage with the same terms as the first mortgage. There are no monthly payments; you’ll just have to repay it when you sell, refinance or the first loan is paid off.
To qualify for this program, your household income cannot exceed 80% of the median income where you live. You must also provide proof that you have a sufficient, stable income to be able to afford and maintain your home, without too much debt to interfere. You’ll need a minimum credit score of 640 and you’ll have to attend an approved homebuyer education course as well as at least two hours of housing counseling.
To get started, reach out to one of the community partners to set up a homeownership readiness plan. Be sure to give them sufficient time (at least 60 days) to review your file and determine whether you qualify for assistance.
More: Use these savings accounts to build up your down payment.
Self-Help Loan Pool
The Self-Help Loan Pool (SHLP) program offers up to $35,000 in financing for homebuyers who want to purchase a home built or rehabilitated by one of the program’s members, typically a local Habitat for Humanity affiliate.
Combined with NCHFA funds, the SHLP member provides financing through an affordable 0% amortizing loan. The term ranges from 20 to 33 years.
To qualify for this assistance, you must be a participant in a self-help housing program, meaning you must have contributed to the construction or rehab of the house you’re buying.
You also have to fall below 80% of your area’s median income and complete an approved homebuyer education course along with at least two hours of housing counseling. And the home may not exceed the sales price limit set for your region.
If you meet those qualifications, reach out to a SHLP member to get started.
NC Home Advantage Tax Credit
The NC Home Advantage Tax Credit offers first-time buyers and military veterans up to $2,000 off their federal taxes every year. Also known as a Mortgage Credit Certificate (MCC), this program offers you a dollar-for-dollar reduction equal to 30% to 50% of the interest you pay on your mortgage.
To receive the credit, you’ll have to apply and be approved by the NCHFA prior to closing on your home. It works alongside the NC Home Advantage Mortgage program, and the requirements are essentially the same. Your lender will apply for you at the same time as your loan.