First Time Home Buyer Programs in NC

The First Time Home Buyer Programs in NC make it possible to buy a house with little to no money out of your pocket. For first time home buyers in NC, that’s great news, because one of the biggest things holding Millennial’s back, is CASH.  Most folks simply don’t realize that there are programs out there to help you buy a house with a Mortgage DPAs and a Mortgage tax credit.

There are currently three different Down Payment Assistance Mortgage Programss available for First Time Home Buyers in NC.  These programs are referred to as DAP’s, or Down Payment Assistance programs.

Consumers sometimes refer to them as Grants, because Millennial’s are familiar with the concept, because of Student Loans and Pell Grants.  These programs are Forgivable Loans, they are NOT like Student Loan Grants

The true and proper way to view these First Time Home Buyer Programs in NC is to see them as forgivable loans. These forgivable loans do not have interest accruing, do not have monthly payments, and will literally “disappear” once you’v lived in the home long enough.  If you move, prior to the Grace Period, the expectation is that you will have enough appreciation in the property to cover the payback.

In reality, the Mortgage Down Payment Assistance Programs are not just available to help with the down payment – and can be used for closing costs, down payment, or to reduce your PMI.  The money can pretty much be used for anything, except Repairs.

The Interest rates for these programs are set by the State.  NOT all Lenders in NC work with the First Time Home Buyer Programs in NC, it’s one of the things we specialize in.

The mortgage rates for the “Mortgage DPAs” are slightly higher than the mortgage rates on programs where you come up with your own down payment… sometimes it’s about 1% of interest higher than the “going” mortgage rate for other programs.  Calling around to Lenders who are offering the program will NOT get you a better rate, because the mortgage company doesn’t set the rate.

3% Down Payment Assistance Mortgage on a Conventional Loan

• We typically use this down payment assistance with the Conventional 3% Down Mortgage Program.  Many people don’t realize that you don’t have to put even 5% down to qualify for a Conventional Loan, the program only requires a 3% investment.
• The 3% Down Payment Assistance Program is FULLY forgivable!
• You can use this First Time Home Buyer Program for a new or existing home in NC
• There’s no requirement that you live in the state for a certain period of time before you qualify for the First Time Home Buyer Program
• With this 3% program, there’s actually no first-time home buyer restriction (move up buyers are eligible too)!
• No Monthly Payments, No Interest Accrued on the DPA.
• $126,000 statewide income limit.  This is especially important.  Unlike USDA Home Loans, the 3% down payment / closing cost DPA Qualification is only looking at the income that we use to qualify you for the mortgage.  So if we are not using Bonus, or Overtime income to qualify you – and your income is under $126,000, then we are Golden.  We also do not have to count a spouses income, if that income will put you over the limit…
• You CAN combine the 3% Conventional Mortgage with a Gift from a Family Member.
• The DPA is based upon the Loan Amount – meaning if you are buying a $100,000 home, and your down payment is 3%, or $3000 – then the then the DPA Program is based by calculating 3% of $97,000.  So of the $3000 you need for your down payment – we are covering $2910
• Middle Credit score Requirement of 640.  ALTHOUGH getting PMI on the 3% Down Payment is lower if you have higher credit scores.  Typically a 680 credit score is going to get you MUCH better PMI Rates.
• 60 day locks (you can extend the lock, but there is a small charge)
• You CAN use this with the Mortgage Tax Credits Program to qualify for a slightly larger home.
• No sales price limitation unless you are using the Mortgage Tax Credit, then the maximum sales price is $385,000

3% Mortgage DPA with a Government Loan Program

The Biggest Difference in the 3% Conventional Mortgage DPA and the 3% Down Payment Assistance Program that works with Government Loans is how the money is calculated.  For the Conventional Loan, you are really getting pretty close to a 100% loan.

USDA Home Loans and VA Loans are eligible for the program too.  Both of these loans are already 100% Mortgage loans.  This means you can use these First Time Home Buyer Programs to pay down the USDA PMI, or the VA Closing Costs (for instance) to make home ownership cheaper.

With a FHA Mortgage Loan, the down payment requirement for the program is actually 3.5%.  So, with a Sales Price of $100,000 the down payment is $3,500 and the FHA “Base Loan” is $96,500.

FHA Loans also have an upfront charge for FHA PMI, at a rate for most loans of 1.75%.  On a loan amount of $96,500 the upfront FHA PMI would be $1,680.  That premium is typically added to the loan (cause most folks don’t have cash to pay it), so your FHA Mortgage on that $100,000 sales price is $98,180.

The Government version of the 3% Mortgage DPA is then based upon the Loan amount of $98,180.  Which means you would receive $2,945… which is less than the $3,500 that FHA is looking for as a Down Payment, and you would be responsible for the difference.

READ:  This program is going to mean that you will need (in our example of a $100,000 sales price) a little more money of your own to buy this house.  These funds are allowed to come in the form of a gift from your family.

• This first time home buyer program is FULLY forgivable!
• You can use this First Time Home Buyer Program for a new or existing home in NC
• There’s no requirement that you live in the state for a certain period of time before you qualify for the First Time Home Buyer Program… although these are owner occupied loans, so you have to live in NC once you buy the house.
• With this 3% program, there’s actually no first-time home buyer restriction (move up buyers are eligible too)!
• No Monthly Payments, No Interest Accrued on the DPA.
• $126,000 statewide income limit.  This is especially important.  Unlike USDA Home Loans, the 3% down payment / closing cost Qualification is only looking at the income that we use to qualify you for the mortgage.  So if we are not using Bonus, or Overtime income to qualify you – and your income is under $96,000, then we are Golden.  We also do not have to count a spouses income, if that income will put you over the limit.
• Middle Credit score Requirement of 640.
• 60 day locks (you can extend the lock, but there is a small charge)
• You CAN use this with the Mortgage Tax Credits Program to qualify for a slightly larger home.
• No sales price limitation unless you are using the Mortgage Tax Credit, then the maximum sales price is $385,000

Here’s information on the OTHER First Time Home Buyer Programs NC that are available, including the $15,000 mortgage DPA in all NC Counties.

First Time Home Buyers must also complete a short home buyer education course, either in person or online.

This is PART of the mortgage.  So when you are applying for a mortgage, you are applying WITH THE SAME LENDER for the First Time Time Home Buyer Loans NC – DPA program.   You don’t go to one lender for the Down Payment Assistance, and another one for the mortgage.

Not all Lenders in NC offer each of the First Time Home Buyer Loans NC.  So CALL US! (shameless plug).  We focus our mortgage business on ways to help First Time Homebuyers move into their dream home!

Those who decide to use the New First Time Home Buyer Program will have access to $15,000 to use for down payment and closing costs (similar to the 5% down payment assistance).  This program is a FIRM $15,000 that must be used, in other words if you only need $6000 for your down payment and closing costs, this is not the program for you.

The income limit for the First Time Home Buyer Programs in NC varies based upon the number of household members and the county in which you buy a house.  You can NOT use this program in conjunction with the First Time Home Buyer Tax Credit (MCC).

Remember, you can also use 3% and 5%  Mortgage DPA and the USDA Home Loans with the Mortgage Tax Credit Program to purchase a home in NC!

More Information on  First Time Home Buyer Programs NC please call Steve and Eleanor Thorne, 919 694 5058 we do TONS Of Mortgage DPA loans and USDA home loans in NC.