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What to know about buying a house in North Carolina
Buying your first home can be complicated no matter where you’re purchasing. But the good news is that as a North Carolina first-time home buyer, you don’t have to do it alone.
In fact, you 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.
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North Carolina first-time home buyer overview
The median home price in North Carolina was $344,500 in December 2022. That was 4.9% higher than the same time a year earlier, according to Redfin.
Even though housing prices are more affordable in North Carolina than nationwide, becoming a homeowner can still be a challenge. Fortunately, North Carolina first-time home buyers have access to plenty of assistance in the form of education, special mortgages, and down payment assistance.
North Carolina home buyer stats
| Average Home Sale Price in NC1 | $344,500 |
| Minimum Down Payment in NC (3%) | $10,335 |
| 20% Down Payment in NC | $68,900 |
| Average Credit Score in NC2 | 707 |
| Maximum NC Home Buyer Grant3 | 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.
First-time home buyer loans in North Carolina
If you’re a North Carolina first-time home buyer with a 20% down payment, you can get a conventional loan with a competitive interest rate. And you never have to pay for private mortgage insurance (PMI).
Of course, few first-time buyers have saved enough for 20% down. But the good news is that 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 the low-down-payment loan programs listed below.
Low-down-payment mortgage 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, sell your home, or pay off your loan
- VA loan: Only for military veterans and active-duty service members. A zero down payment is required. The minimum credit score varies by lender but is 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. A zero down payment is 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
Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.
In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.
If you’re unsure which program to choose for your first mortgage, your lender or real estate agent can help you find the right match based on your finances and home buying goals.
North Carolina 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). Its website 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 home buyer education. But the advantages of having an independent expert hold your hand through the process can be considerable. To help you get started, the agency provides a free download of its Pocket Guide to Home Ownership in English and Spanish.
NC Home Advantage Mortgage
The NC Home Advantage Mortgage program offers both North Carolina first-time home buyers and “move-up” buyers a 30-year fixed-rate mortgage. The agency considers those who haven’t owned a home in the past three years to be a first-time buyer and anyone who already owns to be a “move-up” buyer.
Regardless, qualifying buyers can choose between a conventional loan FHA loan, VA loan, or USDA loan through the program’s participating lenders. Depending on the loan type, buyers can purchase a single-family home, duplex, townhouse, or a new manufactured home.
The NC Home Advantage Mortgage also comes with optional down payment assistance of up to 3% of the loan amount. What’s more, North Carolina first-time home buyers can also stack additional NCHFA home buying assistance on top of this help. More on this in the next section.
NCHFA home buying assistance program requirements
While home buyer education is required in some cases, first-time buyers should always adhere to these guidelines.
- Minimum credit score of 640 required
- Buyer income and purchase price must be within program limits
- Debt-to-income ratio must be less than 43%
Lastly, be mindful that you’ll also need to meet any sales price limits established by your chosen loan type.
North Carolina 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.
NC 1st Home Advantage Down Payment
NC 1st Home Advantage Down Payment is available to first-time home buyers or military veterans who are purchasing in a targeted census tract. Unlike the Home Advantage Mortgage, move-up buyers are not eligible for this program.
But for those who qualify, this NCHFA down payment assistance program can provide up to $8,000 toward your home purchase. Assistance comes in the form of a zero-interest deferred second mortgage that is completely forgiven after you’ve owned and lived in the home for 15 years.
- If you sell, refinance or move within the first 10 years, you’ll have to repay the full loan amount
- 20% of the loan amount is forgiven at the end of each year in years 11 through 15
- After that, your down payment assistance mortgage will be fully paid off
To be eligible for its home buyer assistance program, you must not exceed household income limits. You’ll also need a credit score of 640 or higher. There are other conditions too, which you’ll find on the NCHFA website.
NC Home Advantage Tax Credit
With the NC Home Advantage Tax Credit, first-time buyers 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.
Buying a home in North Carolina’s major cities
As is often the case, home prices are high in big, prosperous cities. That’s certainly true for Charlotte and Raleigh. But Greensboro prices tend to be lower than the state average, but they’re rising quickly.
Charlotte first-time home buyers
The median purchase price for homes in Charlotte was $405,000 in November 2022. That was up 8% year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
- $12,150 for 3% down payment
- $81,000 for 20% down payment
If you’re a first-time buyer wanting a single-family home in Charlotte, check out the House Charlotte 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 deferred second mortgages 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
The median sales price of homes in Raleigh was $434,900 in November 2022. That was up 8.7% year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
- $13,047 for 3% down payment
- $86,980 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 offers a deferred second mortgage of up to $30,000 to help with down payment and closing costs or a gap in financing. That loan amount jumps to $450,000 if you’re purchasing a home in a targeted geographic area.
Keep in mind that the maximum sale price limit is $370,000 for a single-family home at the time of this writing. So if the home you’re interested in costs more than that, then one of the statewide NCHFA programs may be better suited for you.
Furthermore, the website doesn’t provide details about the loan’s forgiveness schedule. So reach out to 919-996-4330 for more information.
Greensboro first-time home buyers
The median list price of homes in Greensboro was $279,000 in November 2022. That was up 16.9% year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
- $8,370 for 3% down payment
- $55,800 for 20% down payment
The City of Greensboro’s Housing Connect Homebuyer Assistance Program can provide up to $15,000 to eligible first-time buyers.
This takes the form of a zero-interest deferred second mortgage, that is forgiven after 10 years of your retaining ownership of the home and remaining in residence. And you can borrow on the same terms up to $20,000 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 North Carolina first-time home buyer. Your real estate agent and loan officer can also help when it comes to locating down payment assistance and choosing a loan program.
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 which you can see here.
State and regional first-time home buyer programs in NC
Local North Carolina first-time home buyer programs
Greensboro, NC
The Greensboro Housing Coalition
(336) 691-9521
Rocky Mount, NC
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 cansee today’s live mortgage rates in North Carolina here.
When you’re ready to start the home buying process, experiment with a mortgage calculator to see how down payment and interest rates will affect your mortgage payment. Then make sure you get personalized rate quotes from at least three to five mortgage lenders.
Don’t just look at advertised rates online. Actually apply for preapproval and compare the interest rates and fees you’re offered. Because that’s the only way to know you’re getting the best deal possible on your new home loan.
1Source: REDFIN Housing Market Overview
2Source: Experian.com FICO Score data as of 2021
3Based on a review of the state’s available DPA grants at the time this was written
