First-Time Homebuyer Programs in North Carolina

fact checked icon

Updated: December 9, 2024

Advertising & Editorial Disclosure

The down payment on a new home often represents the biggest hurdle for first-time homebuyers. In North Carolina, where the average home value is $329,341, you'd need a down payment of $65,868 to avoid buying private mortgage insurance.

First-time homebuyer programs in North Carolina help make homeownership more accessible. Some mortgages let you make a smaller down payment, but they often have income limits and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

North Carolina First-Time Homebuyer Programs

North Carolina provides grants and loans to assist first-time homebuyers with down payments and closing costs. We compiled first-time homebuyer programs offered by the North Carolina Housing Finance Agency to help you find the best option for your needs and situation.

NC Home Advantage Mortgage

The NC Home Advantage Mortgage program provides affordable, fixed-rate mortgages to first-time and move-up homebuyers in North Carolina. It offers down payment assistance of up to 3% of the loan amount, which is forgivable after 15 years if specific conditions are met. The mortgage works with FHA, USDA, VA and conventional loans. It can also be combined with a mortgage credit certificate for tax savings.

tax icon
ELIGIBILITY REQUIREMENTS

To qualify for NC Home Advantage Mortgage, you must meet these eligibility requirements:

  • Purchase a home in North Carolina
  • Occupy the home as the primary residence within 60 days of closing
  • Meet the annual income limit of $140,000
  • Have a minimum credit score of 640
  • Apply for FHA, USDA, VA or conventional loans through a participating lender

NC 1st Home Advantage Down Payment

The NC 1st Home Advantage Down Payment program provides up to $15,000 in down payment assistance for eligible first-time homebuyers and military veterans in North Carolina. This assistance is a 0% interest, deferred second mortgage, forgiven over 15 years, with 20% forgiven annually after the 11th year. It must be used alongside an NC Home Advantage Mortgage and can be applied to various property types, including single-family homes, townhouses, condos and new manufactured homes.

house icon
ELIGIBILITY REQUIREMENTS

To qualify for the NC 1st Home Advantage Down Payment program, you must meet these eligibility requirements:

  • Be a first-time homebuyer, military veteran or someone purchasing in a targeted census tract
  • Buy a home in North Carolina
  • Meet income and sales price limits
  • Occupy the home as the primary residence within 60 days of closing
  • Have a credit score of 640 or higher

NC Home Advantage Tax Credit

The NC Home Advantage Tax Credit provides eligible first-time homebuyers and military veterans with a mortgage credit certificate (MCC) to save up to $2,000 annually on federal taxes. The credit covers 30% of mortgage interest for existing homes and 50% for newly built homes, with a $2,000 cap per year. This benefit continues as long as the homeowner resides in the house. The program can be used alongside other North Carolina home financing options to improve affordability.

house2 icon
ELIGIBILITY REQUIREMENTS

To qualify for the NC Home Advantage Tax Credit, you must meet these eligibility requirements:

  • Be a first-time homebuyer, military veteran or someone purchasing in a targeted census tract
  • Buy a home in North Carolina
  • Apply for the MCC before purchasing the home
  • Occupy the home as the primary residence within 60 days of closing
  • Meet income and sales price limits

North Carolina First-Time Homebuyer Programs by City

In addition to North Carolina's statewide first-time homebuyer programs, city-specific programs help residents achieve homeownership in their chosen cities. The table below highlights some of the cities in North Carolina with a program for first-time homebuyers.

City
First-Time Homebuyer Program

Charlotte

The House Charlotte program offers up to $80,000 in deferred and forgivable loans for eligible borrowers purchasing their primary residence within city limits. The funds can be used for the down payment, closing costs or interest-rate buy-downs.

To qualify, you must meet the purchase price limit of $315,000 for new construction and $300,000 for existing properties.

Durham

Durham's Down Payment Assistance (DPA) Program offers up to $80,000 for down payment and closing costs through a 15-year forgivable loan with a 0% interest rate.

To qualify, applicants must not have owned a home in the past three years and must have an income up to 80% of the area median income (AMI).

Greensboro

Greensboro's Homebuyer Assistance Program provides up to $15,000 in financial assistance for qualified low-income and moderate-income homebuyers.

Additional bonuses include $5,000 for households with incomes up to 80% of the AMI and $10,000 for public service heroes with incomes between 80% and 120% AMI, provided the home is in a designated reinvestment or redevelopment area.

Jacksonville

Jacksonville's Homeownership Down Payment Assistance Program offers a zero-interest, deferred-payment loan to qualified families earning below 80% of the AMI. Repayment is due only at the end of the first mortgage term, upon resale, or if the property is converted to a rental unit.

To qualify, applicants must have a net worth below $15,000 and purchase a newly constructed single-family home, condo, townhouse or FHA-approved modular home that meets Jacksonville's minimum housing code standards.

Raleigh

Raleigh's Homebuyer Assistance Program provides zero-interest, deferred-payment loans up to $45,000 for down payment, closing costs or gap funding. Repayment is due when the house is sold, or the owner no longer uses it as their primary residence.

To qualify, applicants must earn up to 80% of the AMI and meet the maximum purchase price limit of $384,750.

Zero-Down-Payment Loan Programs in North Carolina

North Carolina offers zero-down-payment loan programs that don't require a down payment when purchasing a home. USDA and VA loans are government-backed loans with this benefit.

USDA Loans

USDA loans make homeownership more accessible for those in eligible rural communities. The U.S. Department of Agriculture issues these loans through its Rural Development Guaranteed Housing Loan program.

USDA loans offer several benefits, including no down payment requirement, which reduces upfront costs. They also provide competitive interest rates and flexible credit guidelines, making them great for borrowers with less-than-perfect credit histories.

To qualify for a USDA loan, the property must be 2,000 square feet or below and located in a USDA-eligible rural area with a population of less than 35,000. Income limits vary by location. For instance, in Avery County, North Carolina, the income limit for a four-person, low-income household is $60,300; in Carteret County, North Carolina, it's $70,900.

VA Loans

VA loans from the US Department of Veterans Affairs assist veterans, active-duty service members and eligible surviving spouses in purchasing homes. These loans offer a range of benefits that make homeownership more accessible for those who have served the country.

VA loans come with several advantages, including a no-down payment option. They don't require private mortgage insurance (PMI), reducing monthly payments. VA loans also typically offer lower interest rates than private loans. As of December 2024, the APR for a 15-year fixed-rate VA loan in North Carolina is 6.11%, while a 30-year fixed-rate VA loan has an APR of 6.27%.

Eligibility depends on several factors, including service length or commitment, duty status and character of service. Applicants must also meet location-based income limits and have a valid certificate of eligibility (COE).

Low-Down-Payment Loan Programs in North Carolina

First-time homebuyers in North Carolina can access low-down-payment loan programs that allow them to finance their homes with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

    loans icon

    Conventional Loans

    Conventional loans aren't backed by the government. They come in two types: conforming, which adheres to Freddie Mac or Fannie Mae guidelines, and non-conforming, which exceeds these limits.

    Depending on the lender, you can get a mortgage with as little as a 3% down payment. However, a 20% or less down payment means you'll need to pay for private mortgage insurance (PMI). Eligibility requirements include a minimum credit score of 620 and a debt-to-income ratio of 43% or lower.

    homeMortgage icon

    FHA Loans

    FHA loans adhere to Federal Housing Administration policies. North Carolina's mortgage limit is $766,550 for single-family and $981,500 for two-family properties. Eligibility requirements include a minimum credit score of 500 and a 3.5% down payment. PMI is required if you put down less than 20%.

    paintingRoller icon

    FHA 203(k)

    FHA 203(k) loans combine renovation costs with the mortgage. You can secure this loan with a 3.5% down payment. Eligibility includes a credit score between 500 and 580 and a front-end debt-to-income ratio of 31% or less. This program isn't limited to first-time homebuyers, but you can't have two FHA loans simultaneously.

FHA vs. Conventional Loan: Which Is Right for You?

FHA and conventional loans are often compared, as they're the most common types of mortgages. FHA loans require at least a 3.5% down payment, while conventional loans can require as low as 3% for first-time homebuyers. Conventional loans typically have stricter credit score and debt-to-income ratio requirements, making FHA loans more accessible to borrowers with lower credit scores.

As of December 2024, the APR for a 15-year fixed-rate conforming loan in North Carolina is 5.88%. The APR for a 15-year fixed-rate FHA loan is 8.03%. APRs on FHA loans can be higher due to additional fees and costs associated with government-backed loans.

Use our FHA vs. conventional loan calculator below to compare both mortgage programs and determine the best option.

FHA vs. Conventional Loan Calculator

Compare FHA and conventional mortgage programs to better understand your loan opportunities in North Carolina.

Basic Details

Some basic details about the property and loan
$
$
%

Interest Rate

%
%
Calculation Results
Financial AnalysisFHAConventionalDifference
Monthly Payment (First Year)FHA$0Conventional$0Difference$0
Upfront Costs FHA$0Conventional$0Difference$0
Total 30-Year CostFHA$0Conventional$0Difference$0
Total 5-Year CostFHA$0Conventional$0Difference$0
Monthly Mortgage Insurance (First Year)FHA$0Conventional$0Difference$0
Down PaymentFHA$0Conventional$0Difference$0
Calculator results are rounded to the nearest whole dollar.
fairCredit icon
RECOMMENDED CREDIT SCORES FOR FIRST-TIME HOMEBUYERS

Qualifying for first-time homebuyer programs often involves meeting minimum credit score requirements, which vary by loan program. Conventional loans typically require a 620 credit score, while government-backed loans like FHA loans may need a minimum credit score of only 500.

North Carolina's average credit score was 709 in the third quarter of 2023, according to Experian. This suggests that many residents could qualify for conventional and FHA loans, as their average score exceeds the minimum requirements for these programs.

FAQ: First-Time Homebuyer Programs in North Carolina

We answered frequently asked questions about first-time homebuyer programs in North Carolina to help you find the best option and move closer to homeownership.

Does North Carolina have first-time homebuyer programs?

What qualifies me as a first-time homebuyer in North Carolina?

Can you buy a house in North Carolina with no down payment?

Who can help me with my down payment on a house in North Carolina?

Additional Resources for First-Time Homebuyers in North Carolina

Explore additional MoneyGeek resources for first-time homebuyers in North Carolina to help you with the homebuying process.

About Zachary Romeo, CBCA

Zachary Romeo, CBCA headshot

Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.

Read Full Bio »
sources
Insurance
Mortgage
Credit Cards
Loans
About MoneyGeekPressPrivacy PolicySitemap
Copyright © 2024 MoneyGeek.com. All Rights Reserved Terms of Use