How to Buy a House in South Carolina: 6 Steps

Buying a house represents a significant financial decision that can impact long-term financial stability. In South Carolina, the average home value is $300,746, lower than the national average of $362,481. This makes the Palmetto State a potentially more affordable option for prospective homeowners.

Understanding down payment assistance programs, mortgage types and state-specific regulations can facilitate a smoother path to homeownership in the Palmetto State. MoneyGeek has compiled essential pointers to help you navigate the homebuying process in South Carolina, including saving for a down payment, selecting the ideal location and finding the best financing option for your needs and credit history.

According to the U.S. Census Bureau, the homeowner vacancy rate in South Carolina for the second quarter of 2024 was 1.0%. The homeowner vacancy rate measures the proportion of homes that are vacant and available for sale and helps gauge the balance between housing supply and demand.

The stable homeowner vacancy rate is 2%, which allows homebuyers some choice and flexibility in where to live. With South Carolina's rate at 1.0%, the market shows high housing demand for limited inventory. For homebuyers in the state, this means facing a competitive market with limited options.

A strong financial profile enhances your chances of getting approved when applying for a mortgage to buy a house in South Carolina.

Your credit score influences the mortgage loans and interest rates you qualify for. A high score means a high chance of securing a favorable rate. In South Carolina, the average credit score was 699 in the third quarter of 2023, according to Experian.

Buying a house is still possible if you have bad credit (between 300 and 579 on the FICO scale), but getting approved for a mortgage may be more challenging. Check the table below to see which mortgage type is ideal based on the minimum credit score requirements.

Source: Experian

Your debt-to-income ratio (DTI) is a key metric that lenders use to evaluate how much mortgage debt you can manage based on your monthly income. In the third quarter of 2023, the average mortgage debt in South Carolina was $198,844, according to Experian. This figure highlights the additional financial responsibility that comes with owning a home.

DTI calculations for monthly debt payments typically cover mortgage payments, credit cards, student loans and auto loans. Use our debt-to-income ratio calculator below to determine your front-end DTI, which focuses on housing expenses, and your back-end DTI, which includes all monthly debts and total monthly debt payments.

Buying a house is a significant decision, but getting one beyond your financial means can lead to stress. To avoid this pitfall, consider the 28% rule — you should not spend more than 28% of your monthly income on your mortgage payment. This guideline can help ensure your home purchase remains within a comfortable budget.

According to the U.S. Bureau of Labor Statistics, the median annual income in South Carolina was $42,220 in April 2024, or a gross monthly income of $3,518 before taxes. Applying the 28% rule, you should aim for a monthly mortgage payment of no more than $985.

Use our mortgage calculator below to get a ballpark figure of your monthly mortgage payment in South Carolina.

A down payment is the initial amount you pay upfront when purchasing a house, which is typically a percentage of the home's total price. The standard down payment is 20%, which can be a hurdle for many homebuyers. In South Carolina, the average home value is $300,746, making a 20% down payment of approximately $60,149. For homes priced above the average value, the down payment would be about $61,000.

Fortunately, saving up for a 20% down payment is not a requirement. Many mortgage types allow you to put down less money. For instance, VA loans require no down payment, while FHA loans require just 3.5%.

If you put down less than 20%, your lender may require you to take out private mortgage insurance. You can use our PMI calculator to estimate your monthly private mortgage insurance premium based on your credit score and down payment.

South Carolina offers several down payment assistance programs to make homeownership more accessible. They reduce the financial burden by providing the necessary funds to cover initial costs. The South Carolina State Housing Finance and Development Authority offers various options to assist in this regard.

Consider several factors when finding the right home location in South Carolina. Start by evaluating the average house price in different areas to ensure it aligns with your budget. Proximity to family, friends and your workplace or school is essential, as this can significantly impact your daily commute and quality of life. Access to public transportation, parks, restaurants and shopping centers can also enhance your living experience.

The cost of living can influence your decision when choosing a new home. According to the Missouri Economic Research and Information Center (MERIC), South Carolina's cost of living index for the first quarter of 2024 was 97.6, below the national average of 100. Consider these expenses when evaluating a location:

• Food
• Health care
• Clothing
• Utilities
• Education
• Transportation
• Entertainment

Use the table below to know some cities in South Carolina and their average home values based on recent data. You can also use our cost of living calculator to help you estimate how much you'll need to pay for all the essentials in different locations.

Source: Zillow

Working with a real estate agent can speed up your house hunt in South Carolina. They offer valuable advice and help manage the paperwork. They have access to an expanded list of property options and can recommend other service providers, like title companies and inspectors, to facilitate your home purchase.

When finding a real estate agent, do your due diligence and interview agents with experience in the neighborhoods you're interested in. Consider the following tips:

• Find someone compatible with your needs and personality
• Verify the agent's credentials, training and licensure
• Ensure they have in-depth knowledge of the area
• Shop around for agents and compare their rates

You can also use the license holder search tool from the South Carolina Real Estate Commission to find or verify real estate agents in South Carolina.

The homebuying journey involves securing the best mortgage you can afford. In South Carolina, options include conventional, jumbo, FHA, VA and USDA loans. You can choose terms ranging from 10 to 30 years and decide between a fixed-rate mortgage or an adjustable-rate mortgage (ARM). Selecting the right financing option not only increases your approval chances but also helps save money over time.

Interest rates on a mortgage can change daily due to various factors, including the type of mortgage, the lender and the economy. While the interest rate is the cost you pay each year to borrow money in percentage, the annual percentage rate (APR) includes other fees or costs associated with the loan. This means APR provides a more comprehensive picture of the true cost of borrowing.

As of October 2024, the APR for a 30-year fixed conforming loan in South Carolina is 6.10%, while the APR for a 30-year fixed-rate FHA loan is 6.26%. Check the table below to see the current mortgage rates in South Carolina by mortgage type.

Getting pre-approved for a mortgage in South Carolina is a strategic move for homebuyers. It demonstrates to sellers that you are a serious buyer with the financial backing to purchase a home. Lenders typically issue a mortgage pre-approval letter, which serves as a formal statement of your borrowing capacity. This letter is usually valid for 60 to 90 days, giving you a window to shop for homes with confidence.

To obtain a mortgage pre-approval, you need to submit several documents, including:

• Proof of income, such as pay stubs or tax returns
• Employment verification
• Credit history report
• Identification, such as a driver's license or passport

Understanding the difference between mortgage pre-approval and prequalification is essential. Pre-approval involves a detailed review of your finances, providing a more accurate picture of your borrowing power. In contrast, prequalification is a preliminary assessment based on self-reported information, offering a general idea of what you might be able to borrow.

Home inspections are highly recommended in the homebuying process in South Carolina as they help identify potential issues that may not be immediately visible. Inspectors typically examine structural components, electrical systems, plumbing, roofing and HVAC systems. The inspection report provides detailed information on the condition of these components and highlights any safety hazards. This information can be crucial for making an informed decision about purchasing a property.

For instance, an inspection might reveal significant issues such as a faulty foundation or outdated electrical systems. These findings can affect the home's appraisal, potentially lowering its market value. In such cases, buyers may decide to rescind their offer or renegotiate the terms based on the inspection results. Understanding these possibilities can help buyers navigate the homebuying process with greater confidence.

South Carolina regulates home inspections under the South Carolina Residential Builders Commission. Licensed home inspectors must comply with state standards, which include evaluating structural elements, systems and components of the home. They also need to maintain a bond or liability insurance, offering financial protection for themselves and their clients.

If you're looking for a home inspector in South Carolina, ensure they are licensed. Check what other clients have said by reviewing online feedback and asking for references. You can also use the South Carolina Residential Builders Commission's license search tool to find or verify licensed home inspectors.

Home appraisals provide an unbiased estimate of a property's value, which is crucial for buyers and lenders. According to the 2023 Appraisal Survey from the National Association of Realtors (NAR), the median appraisal cost was $500.

A home appraisal differs from a home inspection. An appraisal assesses the property's market value, while an inspection evaluates the condition of the home's structure and systems. Lenders require appraisals to ensure the property's value supports the loan amount. Both inspections and appraisals protect the interests of the buyer and the lender.

Closing is the final step in buying a house in South Carolina, marking the transfer of ownership and the moment you receive the keys to your new home. Your lender must provide a closing disclosure document three days before the official closing. This document outlines your loan terms, projected monthly payments and closing costs. Plan a final walk-through of the property with your real estate agent before the closing day to ensure it remains in the expected condition.

During closing day, you will review and complete various essential paperwork. Below is a list of documents you need to sign:

• Final loan application: This document confirms all the details of your mortgage loan, including interest rates and terms. It ensures that you and the lender agree on the financial aspects of your home purchase.
• Deed transfer: The deed transfer officially transfers ownership of the property from the seller to you, which is crucial in establishing your legal rights to the property.
• Promissory mortgage note: This note is your formal promise to repay the mortgage loan under the agreed terms. It includes the loan amount, interest rate and repayment schedule.
• Homeowners insurance: [Homeowners insurance in South Carolina](https://www.moneygeek.com/insurance/homeowners/best-homeowners-insurance-south-carolina) protects your new home from potential risks and damages. It covers various perils such as fire, theft and natural disasters, providing peace of mind as you settle into your new residence.

Understanding closing costs is crucial when purchasing a home. In South Carolina, the average closing cost is $2,473, according to NAR, encompassing fees, including:

• Appraisal fee: This fee covers the cost of having a professional appraiser determine the value of the property.
• Title search and insurance fee: This fee ensures that the title to the property is clear and free from liens or other issues.
• Escrow deposit: An escrow deposit covers property taxes and insurance premiums for the first few months.
• Prepaid costs: These are upfront payments for items like homeowners insurance and property taxes.
• Other closing costs: This category includes various additional fees, such as attorney fees, recording fees and more.

If you are a first-time homebuyer, learning about the different first-time homebuyer programs in South Carolina can help you achieve homeownership faster. These programs often offer benefits like financial assistance, which can make buying your first home easy.

Buying a house in South Carolina represents a financial commitment that spans years. We answered some frequently asked questions about purchasing a home in the state to kickstart your homebuyer journey.