North Carolina First-Time Home Buyer: 2021 Programs and Grants

Peter Warden
The Mortgage Reports editor

What to know about buying a house in North Carolina

Buying your first home is a nerve-wracking experience wherever you’re purchasing. But the good news is, you don’t have to go it alone.

North Carolina first-time home buyers have plenty of advice and educational support readily available. And The Old North State is home to various programs that might provide financial help with your down payment and (sometimes) closing costs. Here’s how to get started.

Verify your home buying eligibility in North Carolina. Start here (Dec 8th, 2021)

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North Carolina home buyer overview

According to Zillow, the typical home price in North Carolina was $248,950 in June 2021. That was 15.4% higher than at the same time a year earlier.

North Carolina Home Buyer Overview
Average Home Sale Price in NC $248,950
Minimum Down Payment in NC (3%) $7,470
20% Down Payment in NC $49,790
Average Credit Score in NC1 703
Maximum NC Home Buyer Grant2 Up to 5% of the loan amount (NCHFA, below)

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

Verify your home buying eligibility in North Carolina. Start here (Dec 8th, 2021)

First-time home buyer loans in North Carolina

If you’re a first-time home buyer in North Carolina with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first-time buyers have saved enough for 20 percent down. But the good news is, you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment loan programs:

  • Conventional 97 — From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
  • FHA loan — Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move home, or pay off your loan
  • VA loan — Only for military veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
  • USDA loan — For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
  • North Carolina Housing Finance Agency — May include competitive interest rates and down payment assistance. More information below

Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

These programs even let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage loan, your lender can help you find the right match based on your finances and home buying goals.

Find the best first-time home buyer loan for you (Dec 8th, 2021)

NC first-time home buyer programs

The North Carolina Housing Finance Agency (NCHFA) encourages first-time home buyers in the state to use a housing counselor approved by the US Department of Housing and Urban Development (HUD). And it stresses that “Many mortgage programs require their buyers to obtain pre-purchase counseling from a HUD-approved housing counselor.”

Yes, there’s a modest cost to this homebuyer education. But the advantages of having an independent expert hold your hand through the process can be considerable.

And, to help you get started, the agency provides a free download of a Pocket Guide to Home Ownership in English and Spanish.

NC first-time home buyer grants

The North Carolina Housing Finance Agency also provides generous down payment assistance loans to eligible first-time buyers across the state.

For example:

The NCHFA doesn’t spell out the terms for its mortgage product.

However, it does explain that its down payment assistance program is a zero-interest loan with no monthly payments that is completely forgiven after you’ve owned and lived in the home for 15 years.

  • If you sell or move within the first 10 years, you’ll have to repay the full loan amount
  • 20 percent of the loan amount is forgiven at the end of each of year in years 11 through 15
  • Ater that, you’ll owe nothing

To be eligible for home buyer assistance, your household income can’t exceed $99,000 per year. And you need a credit score of 640 or higher. There are other conditions too, which you’ll find on the NCHFA website.

Meanwhile, some first-time buyers may get an NC Home Advantage Tax Credit.

With this, you get a Mortgage Credit Certificate (MCC) that could save you up to $2,000 each year on your federal taxes. But MCCs are only available with an NC Home Advantage Mortgage, not an NC 1st Home Advantage Down Payment.

Verify your home buying eligibility in North Carolina. Start here (Dec 8th, 2021)

Buying a home in North Carolina’s major cities

As is often the case, home prices are high in big prosperous cities. And that’s certainly true for Charlotte and Raleigh. But Greensboro prices tend to be lower than the state average. And they’re rising more slowly.

Charlotte first-time home buyers

The median purchase price for homes in Charlotte was $359,900 in June 2021, according to the National Association of Realtors. That was up 10.7% year-over-year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $10,800 for 3% down payment
  • $71,980 for 20% down payment

If you’re a first-time buyer wanting a home in Charlotte, check out the HouseCharlotte Program. That’s a City of Charlotte initiative, administered by a private-sector company.

It has five different programs for people with low and median incomes. These take the form of zero-interest loans with no monthly payments. These are all forgivable after a set period: five, 10, or 15 years. Visit the website for eligibility information and more details.

Raleigh first-time home buyers

In June 2021, the median sales price of homes in Raleigh was $354,900, according to the National Association of Realtors. That was up 14.5% year-over-year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $10,650 for 3% down payment
  • $70,980 for 20% down payment

The City of Raleigh requires you to attend a homeownership class and get a certificate before you can enter its down payment assistance program.

Once you have that, it says, “Our Homebuyer Program offers low-interest loans up to $20,000 to help with down payment and closing costs or a gap in financing. The principal balance is reduced on a set schedule and is forgiven if the owner continues to live in the residence for 20 years. Please note that conditions may apply.”

Greensboro first-time home buyers

In June 2021, the median list price of homes in Greensboro was $228,000, according to the National Association of Realtors. That was up 1.6% year-over-year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $6,840 for 3% down payment
  • $45,600 for 20% down payment

The City of Greensboro’s Housing Connect homebuyer down payment and closing cost assistance program can provide up to $10,000 to eligible first-time buyers.

This takes the form of a zero-interest loan, with no monthly payments, that is forgiven after just five years of your retaining ownership of the home and remaining in residence. And you can borrow on the same terms up to $15,000 in total down payment assistance if you buy in one of the city’s redevelopment areas.

Various eligibility and conditions apply and you can find them on the website. But these are less strict than many others, especially when it comes to income limits.

Where to find home buying help in North Carolina

All the organizations we’ve listed above should provide advice freely to any first-time home buyer in the state of North Carolina or their local area.

Your real estate agent and loan officer can also help when it comes to locating down payment assistance and choosing a loan progrsm.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a few lists for statewide, regional, and local resources:

State and regional first-time home buyer programs in NC

Local first-time home buyer programs in NC

GREENSBORO
The Greensboro Housing Coalition
More than just a mortgage program Will help you to realize the dream of homeownership
Call today to reserve your space!
(336) 691-9521

ROCKY MOUNT
South Eastern North Carolina Community Development Corporation
1006 Aycock Street
Rocky Mount, NC 27803
Contact: Larry Russell
(252) 977-3141

What are today’s mortgage rates in North Carolina?

You can see today’s live mortgage rates in North Carolina here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

Verify your new rate (Dec 8th, 2021)

1 Source: Experian.com 2021 study of 2020 data

2Based on a review of the state’s available DPA grants at the time this was written