First Time Home Buyer Loans in NC

By
Mortgage and Lending with Equity Resources

 

The First Time Home Buyer Loans NC are specifically designed for first time home buyers who want to buy a house with little to no money out of your bank account!

 

Because one of the biggest things holding Millennials back, is CASH, having first time home buyer loans NC offer down payment mortgage grants.  Most folks simply don’t realize that there are programs out there to help you buy a house with a Mortgage Grant and a First Time Homebuyer Tax Credit.

There are currently four different Down Payment Assistance Mortgage Grants available for First Time Home Buyer Loans NC.  These programs are referred to as DAPs, but in reality, the Mortgage Grants can be used for closing costs, down payment, or to reduce your PMI.  The money can pretty much be used for anything, except Repairs.

 

The Interest rates for these programs are set by the NC State Housing Authority.  NOT all Lenders in NC work with the First Time Home Buyer Loans NC, it’s one of the things our Team specializes in.

The mortgage rates for the Mortgage Grants and First Time Home Buyer Loans NC are slightly higher than the mortgage rates on programs where you come up with your own down payment… sometimes it’s about 1% of interest higher than the “going” mortgage rate for other programs.

 

Calling around to Lenders who are offering the program will NOT get you a better rate, because the mortgage company doesn’t set the rate.

 

3% Down Payment Mortgage Grant Conventional Loan

First Time Home Buyer Loans NC are typically considered to be just Government Backed Mortgage Programs, like FHA, VA Loans and USDA Home Loans.  However, We commonly find that folks with Pretty Good Credit Scores will benefit from the Conventional Mortgage Grant.  Especially because the PMI rates with the NCHFA are lower than typical PMI rat

  • We typically use this down payment assistance with the Conventional 3% Down Mortgage Program.  Many people don’t realize that you don’t have to put even 5% down to qualify for a Conventional Loan, the program only requires a 3% investment.
  • The 3% Down Payment Assistance Program is FULLY forgivable!
  • You can use this First Time Home Buyer Program for a new or existing home in NC
  • There’s no requirement that you live in the state for a certain period of time before you qualify for the First Time Home Buyer Program
  • With this 3% program, there’s actually no first-time home buyer restriction (move up buyers are eligible too)!
  • No Monthly Payments or Interest Accrue on the Down Payment Grant.
  • $87,500 statewide income limit.  This is especially important.  Unlike USDA Home Loans, the Conventional  3% down payment Grant Qualification is only looking at the income that we use to qualify you for the mortgage.  So if we are not using Bonus, or Overtime income to qualify you – and your income is under $87,500, then we are Golden.  We also do not have to count a spouses income, if that income will put you over the limit…
  • You CAN combine the 3% Conventional Mortgage with a Gift from a Family Member.
  • Grant is based upon the Loan Amount – meaning if you are buying a $100,000 and your down payment is 3%, or $3000 – then the amount of the Grant is $3000.
  • Middle Credit score Requirement of 640.  ALTHOUGH getting PMI on the 3% Down Payment is lower if you have higher credit scores.  Typically a 680 credit score is going to get you MUCH better PMI Rates.
  • 60 day locks (you can extend the lock, but there is a small charge)
  • You CAN use this with the First Time Homebuyer Tax Credits Program to qualify for a slightly larger home.
  • No sales price limitation unless you are using the Mortgage Tax Credit, then the maximum sales price is $250,000

 

**A Quick Note**

We refer to these programs as “mortgage grants” because there are no payments to be made, there is no interest charge, and there’s no expectation that you will have to repay ANY of the money you receive for down payment, unless you move out of the property or refinance prior to the dates assigned by your specific down payment assistance program.

These Programs are currently branded by the NC Housing Finance Agency as NC Home Advantage Products.

The literal term for this down payment assistance program is a “forgivable loan.” Under the terms of the program that best suits you, a portion of this down payment assistance will be forgiven on a schedule that we will share with you when you make loan application. These funds are available to us through NC Housing Finance Agency (NCHFA) and are available through other lenders in the state as well. The interest rates for these programs, however, will not vary from lender to lender as that is set by NC Housing.

 

3% Mortgage Grant Government Loan Program

The Biggest Difference in the 3% Conventional Mortgage Grant and the 3% Down Payment Assistance Program that works with Government Loans is how the Grant is calculated.  For the Conventional Loan, you are really getting a 100% loan.

USDA Home Loans and VA Loans are eligible for the program too.  Both of these loans are already 100% Mortgage loans.  This means you can use these First Time Home Buyer Programs to pay down the USDA PMI, or the VA Closing Costs (for instance) to make home ownership cheaper.

With a FHA Mortgage Loan, the down payment is actually 3.5%.  So, with a Sales Price of $100,000 the down payment is $3,500 and the FHA “Base Loan” is $96,500.

FHA Loans also have an upfront charge for FHA PMI, at a rate for most loans of 1.75%.  On a loan amount of $96,500 the upfront FHA PMI would be $1,688.  That premium is typically added to the loan (cause most folks don’t have cash to pay it), so your FHA Mortgage on that $100,000 sales price is $98,188.

The Government version of the 3% Mortgage Grant is then based upon the Loan amount of $98,188.  Which means you would receive $2,945… which is less than the $3,500 that FHA is looking for as a Down Payment.

 

READ:  This program is going to mean that you will need (in our example of a $100,000 sales price) a little money of your own to buy this house.  In our example, you need $555.  This can be in the form of a gift, or funds on deposit.

  • First Time Home Buyer Loans have a 3% Down Payment grant that is FULLY forgivable!
  • You can use the First Time Home Buyer Loans for a new or existing home in NC
  • There’s no requirement that you live in the state for a certain period of time before you qualify for First Time Home Buyer Loans NC
  • With this 3% program, there’s actually no first-time home buyer restriction (move up buyers are eligible too)!
  • No Monthly Payments are required on the Down Payment Grants, and No Interest is accrued on the Grant.
  • $87,500 statewide income limit.  This is especially important.  Unlike USDA Home Loans, the 3% down payment / closing cost Grant Qualification is only looking at the income that we use to qualify you for the mortgage.  So if we are not using Bonus, or Overtime income to qualify you – and your income is under $87,500, then we are Golden.  We also do not have to count a spouses income, if that income will put you over the limit.
  • Middle Credit Score Requirements for the First Time Home Buyer Loans are 640.  This means that for all borrowers on the loan, we will need at least 2 of the 3 credit scores are over the 640 threshold.
  • 60 day locks (you can extend the lock, but there is a small charge)
  • You CAN use this with the First Time Homebuyer Tax Credits Program to qualify for a slightly larger home.
  • No sales price limitation unless you are using the Mortgage Tax Credit, then the maximum sales price is $250,000

 

5% Mortgage Grant Government Loan Program

In addition to the 3% First Time Home Buyer Loans NC available, there’s a program that offers 5% in mortgage Grants.

  • There are no payments required on the 5% down Payment Grant program and No interest Accrues on the Grant.
  • $87,500 statewide income limit.  This is especially important.  Unlike USDA Home Loans, the 3% down payment / closing cost Grant Qualification is only looking at the income that we use to qualify you for the mortgage.  So if we are not using Bonus, or Overtime income to qualify you – and your income is under $87,500, then we are Golden.  We also do not have to count a spouses income, if that income will put you over the limit
  • Middle Credit Score Requirements for the First Time Home Buyer Loans are 640.  This means that for all borrowers on the loan, we will need at least 2 of the 3 credit scores are over the 640 threshold.
  • You can’t get 4% or 3.5% – with this program you are getting a grant of 5%, and we have to apply that to down payment, PMI, closing costs, or reduce your loan amount by the dollars we have left.
  • The 5% grant does carry a slightly higher mortgage interest rate, and again, the rate is set statewide by the NC Housing Agency that oversees the program.
  • You can only use the 5% grant with FHA Mortgages, VA Loans and USDA Home Loans.  Each of these programs have their own form of PMI.

 

Limited Time Only $8,000 Mortgage Grants Available

The newest $8,000 Forgivable Mortgage Program (again, it’s forgivable but not really a Grant) program has no re-payment and no interest as long as you live in the home for the specified period of years.

Those who decide to use the New First Time Home Buyer Program will have access to $8000 to use for down payment and closing costs (similar to the 5% down payment assistance).  This program is a FIRM $8000 that must be used, in other words if you only need $6000 for your down payment and closing costs, this is not the program for you.  The income limit for this program varies based upon the number of household members and the county in which you buy a house.  The sales price limit for the state is $250,000.  You can NOT use this program in conjunction with the First Time Home Buyer Tax Credit (MCC).

 

The $8,000 down payment grant AND the current 3% and 5% down payment grant programs are available to anyone who has not owned a primary residence in the past 3 years.

 There are income caps for these First Time Home Buyer Loans (unlike the other Mortgage Grants we highlighted) and they are based upon the area you are buying in. With the new $15,000 grant, there’s also a sales price limit of $250,000.

 

The new Mortgage Grant Program is available in all NC counties.  Again, not all banks and mortgage companies offer this grant program (I wish I qualified for it! Seriously?  $8,000 free cash!!).  New Homes do  qualify for this grant program, and you need to buy a house that’s less than $250,000.

 Like the other Mortgage Grants available, you must use ALL of the money – so we can use it for down payment, closing costs, PMI or to reduce your mortgage loan.

 

First Time Home Buyers must also complete a short home buyer education course, either in person or online.

 

Here are the income limits for each of the counties:

Maximum Qualifying Income

County

Household Size

 

1-2 Persons

3+ Persons

Raleigh

$80,000

$87,500

Greensboro

$60,000

$69,000

Charlotte

$70,000

$81,000

Durham

$76,000

$87,000

Wilmington

$68,000

$78,000

 

This is PART of the mortgage.  So when you are applying for a mortgage, you are applying WITH THE SAME LENDER for the First Time Time Home Buyer Loans NC – grant program.   You don’t go to one lender for the grant and another one for the mortgage.

Not all Lenders in NC offer each of the First Time Home Buyer Loans NC.  So CALL US! (shameless plug).  We focus our mortgage business on ways to help First Time Homebuyers move into their dream home!

 

Please call Steve and Eleanor Thorne 919 649 5058 if you’d like for us to pre-qualify you to purchase with the new First Time Home Loans NC .  Again, you must apply for the Down Payment Assistance At THE TIME YOU APPLY for a mortgage.

 

Originally Posted at NCFHAExpert.com

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