Buying your first home can feel overwhelming, especially when applying for a mortgage and covering the upfront costs. If you’re looking for a home in North Carolina, there’s an upside: The North Carolina Housing Finance Agency can assist you with your down payment, and provide you with an affordable loan and other ways to save, if you qualify.

North Carolina first-time homebuyer loan programs

The North Carolina Housing Finance Agency (NCHFA) operates three programs to meet various needs of potential homeowners: the NC Home Advantage Mortgage, the NC 1st Home Advantage Down Payment and the NC Home Advantage Tax Credit.

NCHFA NC Home Advantage Mortgage

NCHFA’s NC Home Advantage Mortgage is available to both first-time homebuyers and those who already own a home, or “move-up” buyers. A first-time homebuyer is considered someone who hasn’t owned a home in the last three years.

The program offers a fixed-rate mortgage — either a conventional, FHA, VA or USDA loan — and up to 5 percent of assistance toward the down payment (3 percent for a conventional loan). This assistance is packaged as a no-interest second mortgage that doesn’t need to be repaid unless you sell your home or pay off or refinance your first mortgage within the first 15 years of your loan term.

Here are the requirements to qualify:

  • Your annual income is not over $126,000.
  • Your credit score is 640 or higher.
  • Your debt-to-income (DTI) ratio is no more than 43 percent.
  • You’re buying either a single-family home, townhome, condo, duplex (FHA loan only) or new manufactured home (FHA, VA or USDA loans only, with a minimum credit score of 660).

North Carolina down payment assistance

NCHFA NC 1st Home Advantage Down Payment

NCHFA also offers $8,000 in down payment assistance specifically to first-time homebuyers, veterans and those buying in special targeted markets through the NC 1st Home Advantage Down Payment program. This assistance comes in the form of a zero-percent second mortgage completely forgiven after 15 years. To be eligible, you must be obtaining an NC Home Advantage Mortgage and meet the requirements for that program.

Other North Carolina homebuyer assistance programs

NC Home Advantage Tax Credit

First-time homebuyers and veterans can combine an NC Home Advantage Mortgage with the NC Home Advantage Tax Credit, the state’s mortgage credit certificate (MCC) program.

An MCC allows you to claim a federal tax credit, equal to either 30 percent of your mortgage interest if you’re buying an existing home or 50 percent if you’re buying new-construction. At either rate, the credit is capped at $2,000 per year, but can be used each year so long as you live in your home.

Note that if the MCC is used in combination with the NC Home Advantage Mortgage, only certain types of properties qualify.

Other first-time homebuyer loan programs

Although NCHFA can help you navigate your first home purchase, you don’t have to go through the state’s housing finance authority to find an affordable first-time homebuyer loan. Many mortgage lenders offer low- or no-down payment mortgages, including FHA, VA and USDA loans, that can help you get into your first home sooner. Explore your options with Bankrate’s guide to first-time homebuyer loans and programs.

Get started

If you’re interested in one of the North Carolina Housing Finance Agency’s programs, visit the organization’s website for program information and guides on what you need to know before you purchase your first home. You can also use the website to find a mortgage lender within your area, as well as search specifically for Spanish-speaking lenders.

Whichever mortgage ends up being the best fit for you, it pays to compare lenders and offers to get the best mortgage rate for your credit and financial situation. You can view current North Carolina mortgage rates through Bankrate.

First-time homebuyer programs in nearby states

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