It is fairly well publicized that "first time home buyers" (i.e. haven't owned a home in 3 years) are eligible to receive up to an $8,000 tax credit for purchases before November 30. What you may not be aware of is that if you are a first time home buyer in one of twenty three counties in North Carolina, you may be eligible to receive an additional $14,900 in down payment assistance.
A flaw with the $8,000 first time home buyer tax credit currently is that you cannot use any portion of the $8,000 for a downpayment. On a $200,000 home purchased using the minimum downpayment for FHA (3.5%), a buyer would have to invest $7,000 of their own money to receive $8,000 back. A program through the North Carolina Finance Agency will enable first time homebuyers to take advantage of a zero percent interest free loan to cover the downpayment and closing costs; alleviating the need for a substantial downpayment.
Qualifications
To qualify, the buyer must purchase a foreclosed (bank owned) single family, townhome or condominium built after 1978, below $210,000, in one of the twenty three available counties:
- Alamance
- Brunswick
- Buncombe
- Cabarrus
- Catawba
- Cumberland
- Dare
- Davidson
- Durham
- Edgecombe
- Forsyth
- Gaston
- Guilford
- Iredell
- Johnston
- Mecklenburg (Charlotte)
- New Hanover
- Pitt
- Randolph
- Rowan
- Union
- Vance
- Wake
Second, the buyer must meet certain income restrictions, which vary by household size and by county. For Mecklenburg, Union, Cabarrus, and Gaston, that limit is $55,850 for a household of one. Iredell's limit is $50,300 for a household of one. As the household size increases, so does the ceiling on the income limit. While a single person household may be capped at $55,850 for the counties around Charlotte, a household of four has a limit of $75,000.
Next, the buyer must obtain eight hours of HUD-approved home buyer counseling. Information on course locations and times may be obtained by your lender or by contacting the NCHFA. In addition, the buyer must utilize the NCHFA's FirstHome Mortgage and must contribute $1,000 of their own funds. Finally, the home's purchase price must be, at most, 99% of the current appraised value.
As long as you keep current on your payments and own the home for at least five years, the $14,900 downpayment assistance loan will never need to be repaid. For every year of on-time mortgage payments, the loan will be forgiven 20% per year for five years. At the end of five years, the debt is eliminated completely.
For more information, contact the NCHFA or your preferred mortgage lender.
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