Most of the folks we talk to want to know what the mortgage down payment requirements are in 2013 because they are either trying to preserve cash… or they are hoping to avoid PMI.
Fortunately, there are several options that offer little cash out of pocket, most of them are Government backed mortgages – and there are various requirements and limits to each program.
The one thing that is consistent with all of these programs (trying to save you some time here) is that you can’t actually BORROW all of the money for the down payment and closing costs to buy a home in NC. I mean, if the program doesn’t charge anything for a down payment – that’s perfectly okay … but you can’t go out and take $10,000 out on a credit card the month before you buy a house. That’s not allowed.
We ask for a three month history on the money you have in the bank, and if you DID borrow the $10,000 – we’d have a problem. This is not just OUR bank – these are pretty much the RULES for buying a house. The same thing applies for the Earnest Money Check – we actually have to prove that the money was YOURS and in the bank, or it was a GIFT that you’re not required to pay back. Remember too that there are ways to basically have a no closing cost mortgage scenario with any of these programs.
NCHFA Down Payment Assistance For Home Buyers
We are one of a handful of Banks in NC that is able to offer Grants for Down Payment. Through the NCHFA we can help, qualified buyers obtain a grant that equals 3% (or up to $8000) that can be used towards the mortgage down payment. This 2013 First Time Home Buyer Program “perk” is available for NC home buyers who do not currently own a primary residence. You do NOT have to be a First Time Home Buyer in NC to qualify for the down payment assistance from the state.
To qualify, the borrower (s) must have an income of less than $85,000. The N.C. Home Advantage Mortgage™ does require that all borrowers have at least two credit scores above 640 – but if you qualify for the program, you will not be charged an annual payment, or interest on this grant. After you’ve lived in the home for ten years, the loan for the grant is “forgiven” (the balance goes down) twenty percent each year. It is fully “forgiven” after you’ve lived in the house for 15 years.
We can use the NCHFA Down Payment Assistance with FHA Home Loan, VA Home loans and USDA Home Loans. The money can go towards the Down Payment and /OR to pay closing costs that the First Time Home Buyer is charged. Remember that the Seller is allowed to pay for most of the closing costs associated with getting a mortgage. Normally – you should budget some cash that you’ll need for the Earnest Money, appraisal and credit report, and a home inspection.
Down Payment For FHA Home Loans NC
FHA Home Loans in NC have maximum loan amounts that vary per NC County. The maximum loan amount in Raleigh is $295,000 for a single family home, in Durham it’s $334,650. In Charlotte, the 2013 maximum loan limit is $303,750 for a single family home and in Greensboro, the limit is $271,050. Wilmington NC’s FHA Home Loan 2013 limit is $303,750 for a single family home.
There are no “limits” as to where you can live in the county – although Condominiums can be more difficult to qualify for a FHA Home Loan in NC. No matter what style of house you buy – the NC minimum FHA Home Loan down payment in 2013 is 3.5%.
Assuming they qualify, borrowers can use the NCHFA program (above) to cover most of this down payment for a home in NC, or you can get a gift from “The Bank of Mom and Dad.” Wedding Registers that document money received as part of the weddings are also acceptable ways to show the down payment.
Down Payment for USDA Home Loans NC
This will be short and sweet – because USDA Home Loans in NC do not have any down payment requirements. The home must be located within the USDA Eligibility Area, and those USDA Eligibility maps in NC are scheduled to change this fall unless Congress makes a change.
Besides purchasing a home located within the “USDA Home Loan Footprint” the household income can not exceed the county limit. So with USDA Loans, there’s not a maximum loan amount – there’s just a maximum INCOME for the household. The Seller is allowed to pay for closing costs, and you are also able to receive gifts for closing costs, or you can take funds from savings.
The NCHFA Grant program described above is not usually the best option for folks looking for help with their USDA Loan Closing Costs -because the program carries a higher interest rate.
Down Payment For VA Loans in NC
Veteran’s who qualify for their home loan benefits know that there are no down payment requirements to purchase a home with a VA Loan under $417,000. If you’ve already used your eligibility, and have partial VA Loan benefits / eligibility remaining, there’s a formula for calculating what your down payment might be. If you are purchasing a home that requires a VA loan above $417,000 in NC, there’s also a formula for calculating the down payment – it is OFTEN much less than making a traditional down payment on a Conventional Loan.
Sellers are allowed to pay closing costs for the Veteran’s and we often help with that negotiated process – we love to help! VA Home Loans are not just for First Time Home Buyers, however if this is your first home, we might be able to use the NCHFA MCC Tax Credit to help qualify Veteran’s for their home.
There are no income limits, or limits on where the property can be located, what style of home you can have with a VA Loan in North Carolina. We can make VA Home Loans in any county of North Carolina with NO Down Payment for loans under $417,000.
Down Payment for Conventional Loans in NC
Most Conventional loans require a minimum down payment of 5%. There are no longer any “reserve” requirements, meaning that after closing, we are no longer required to show several months of payments left as reserve funds – if you do not own another home with a mortgage on it. If you do -well, then we have to verify reserve funds.
The good news is that Fannie Mae guidelines (and PMI Companies) make it possible for us to now accept gifts for the down payment, as long as the home you are buying is a single family residence. If you are getting a Freddie Mac loan, the borrower needs at least 5% of their own money for the down payment, unless someone is getting enough to make a 20% down payment.
There’s a process for documenting Gift Funds, and it’s the same for ALL mortgage Programs.
Second Homes, meaning you have a home in Raleigh and want a “vacation” home at the beach, have a minimum down payment requirement of 10%. For Investment property – homes you are buying specifically to rent out, require an Investment of at least 20% (it depends on the program type and credit scores – so more down payment might be required for Conventional loans on Investment Property).
If you have more questions about Mortgage Down Payment Requirements in 2013, you can certainly leave us a comment below – or call Steve and Eleanor Thorne at 919 649 5058. We know that this is an important step – and we want to help you buy your Dream Home! You can also find us on Facebook and Google Plus… and Pinterest, and Twitter – we’re EVERYWHERE 🙂