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North Carolina’s First-Time Homebuyer 2022 Assistance Programs

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The prospect of owning your very own home in North Carolina can be simultaneously exciting and daunting.

Sure, it’s fun to scroll house listings and dream about what your life could be like in a given home. But if you’re a first-time homebuyer, sometimes reality rudely crashes in: You might wonder how you’ll land a mortgage or scrape together a down payment. And what about all those closing costs and fees that come with buying a house?

We’re here to help. And if you live in North Carolina, so is the North Carolina Housing Finance Agency. The NCHFA can answer all your homebuying questions plus help procure financial assistance so you can buy your first home in the Tar Heel State. Keep reading to learn more about eligibility and property requirements.

North Carolina Housing Finance Agency

The NCHFA is a self-supporting public agency that finances homebuyer assistance programs for North Carolinians. Even though the NCHFA has been around since 1973, many first-time homebuyers in North Carolina don’t realize it exists, says Suzanne Crawford Burton, an agent at Northside Realty in Raleigh, NC, who works with homebuyers using NCHFA programs.

So here’s a breakdown of the programs that help newbie homebuyers secure a loan and offer financial assistance for down payment and closing costs.

The North Carolina Home Advantage Mortgage

The North Carolina Home Advantage Mortgage provides qualified first-time homebuyers and current homeowners looking to move to a new home with a 30-year fixed-rate mortgage. The loans can be structured as FHA, VA, USDA, or conventional. However, the interest rate is slightly higher than the current rate, says NCHFA participating lender Kim Evers, vice president of sales at OVM Financial in Fayetteville, NC.

On the plus side, there is down payment help for up to 5% of the loan amount available in the form of a 0% deferred second mortgage. That means you don’t have to repay one cent for the down payment assistance unless you sell, refinance, or move out of the home in the first 15 years.

Homebuyer eligibility requirements

Here are the criteria buyers must meet to land a North Carolina Home Advantage Mortgage:

  • The buyer must be a legal resident of the United States.
  • The buyer’s annual income cannot exceed $99,000.
  • The buyer must have a credit score of 640 or higher.
  • The buyer’s debt-to-income ratio must not exceed 45%. (To calculate this ratio, divide the buyer’s ongoing monthly debt payments by monthly income.)
  • The buyer must meet the sales price limit of the loan type that is being sought, whether it’s an FHA, USDA, VA, or conventional loan with an NCHFA lender.
  • The buyer must complete a homebuyer education course.
  • The buyer will need to occupy the home as the primary residence within 60 days of closing.

In addition, homebuyers must purchase one of the eligible properties listed below:

  • Single-family homes
  • Townhouses
  • Condominiums
  • Duplexes (This property is eligible only for an FHA loan.)
  • New manufactured homes (For this type of home, the buyer must have a 660 credit score or higher and use an FHA, VA, or USDA mortgage.)

North Carolina 1st Home Advantage Down Payment

The North Carolina 1st Home Advantage Down Payment offers financial assistance through a 0% deferred second mortgage, meaning you pay nothing in monthly payments as long as you don’t sell, refinance, or transfer your home within the first 15 years of ownership.

To qualify, you must be a first-time homebuyer or a buyer who hasn’t owned a home and lived in it as the primary residence in the past three years. The program is also available to military veterans or someone buying a home in a targeted census tract. Here are the rest of the homebuyer requirements:

  • The buyer must meet the program’s income and sales price limits.
  • The buyer must purchase a home in North Carolina.
  • The buyer must participate in the NC Home Advantage Mortgage.
  • The buyer needs a credit score of 640 or higher.

Eligible properties include single-family homes, townhouses, condominiums, and new manufactured homes. (The buyer will need a 660 credit score or higher to buy a new manufactured home.)

Community homebuying programs

Another option for low- and moderate-income homebuyers: the Community Partners Loan Pool, a community homebuying program. (Moderate income is a salary below 80% of your county’s median income.) The NCHFA works with local governments and nonprofit organizations throughout the state to provide financial assistance for homeownership, home repair, and home rehabilitation.

Borrowers can receive up to 20% of a home’s sales price or a maximum loan of $30,000 in assistance, whichever is less. The funds are a zero-interest, subordinate loan, but the money must be combined with an NC Home Advantage Mortgage or a USDA 502 Direct loan.

“Note that the CPLP has strict property guidelines to ensure first-time homebuyers aren’t burdened with significant home repairs when they move in,” says Burton.

Many first-time homebuyers using the CPLP also take advantage of the Mortgage Credit Certificate, which saves them up to $2,000 a year in federal taxes, adds Burton. You must be approved for an MCC from the NCHFA before purchasing your home to score this extra perk.

When can I start house shopping?

If you’re ready to start looking at houses, it’s essential to get pre-approved for a home loan first. Evers recommends that homebuyers using the NCHFA programs get pre-approved at least 60 days before they’d like to close on a home for planning purposes.

“We usually have a 30-day turnaround time on these loans from application to closing,” says Evers. “And it’s the lender who submits to NCHFA on behalf of the borrower to obtain the down payment assistance.”

How to get started

Buying your first home can feel overwhelming at times. There are mortgage and real estate terms you might not understand, plus a lot of big decisions to make. So it’s essential to create a knowledgeable team to guide you through the homebuying process.

“The first-time homebuyer needs a lender who can successfully process loan applications,” says Burton. “They also need an agent who understands the North Carolina programs and how they work. So get started by looking for participating lenders. Get quotes from at least two, and compare notes. Once approved for a loan, you’re one step closer to becoming a first-time North Carolina homeowner.”

The post North Carolina’s First-Time Homebuyer 2022 Assistance Programs appeared first on Real Estate News & Insights | realtor.com®.

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