First Time Home Buyer Programs

Posted by Ryan Fitzgerald on Friday, January 8th, 2016 at 4:41am.

First Time Home Buyer Programs and Grants

Raleigh, NC First Time Home Buyer Programs

Buying a house for the first time is a big decision, so you want to make sure you are ready. Being ready in 2016 doesn't mean you need a 20% downpayment, in fact, there are programs that will allow you to buy a house with 0% down if you qualify.

If you are a first time home buyer, there is a lot you'll want to learn about buying a home, BEFORE you start searching homes for sale. Our market, here in Raleigh, NC has seen a huge influx of millennial buyers!

There are many costs and fees you are probably not aware of when you buy a house. It's not typical for first time home buyers to have boatloads of money laying around they can use towards a down payment. There is a lot of great mortgage information you can find online, and there's some not so good information.

You'll want to really study the differences between local and state assistance programs for first time home buyers. There are national first time home buyer programs available as well - many of these grants will cover closing costs or help you with financing. If you want to skip the reading, digging, and studying, feel free to contact us with questions for first time home buyer advice.

What First Time Home Buyers Need to Know

What are some First Time Home Buyer Programs?

National Programs

Mortgage Credit Certificate

This is a national program (not Raleigh, NC based although it can be combined with the NC Home Advantage Mortgage) that allows first time home buyers up to $2,000 in tax savings per year. You must meet specific criteria in terms of income and sales price limits. This is a federal tax credit that can lower your income-tax liability, dollar-for-dollar, giving you more money to use on your mortgage if you purchase an existing home or 50% of the interest on a new home. This is up to $2,000 for every year that you live in the home.

The mortgage credit certificate can be combined with most loans, and other lender programs for first time buyers, including some adjustable rate mortgages.

You can learn more about Mortgage Credit Certificates here.

The U.S. Department of Veterans Affairs (VA Loan)

The U.S. Deparment of Veteran Affairs offers VA Loans that require 0% down financing options for not only first time home buyers, but all buyers who are military veterans. This is a great program available exclusively to veterans, so it may not apply to you. If it does, it's a great first time home buying program that is not as strict as a 0% down USDA loan.

USDA Rural Development Program

The United States Department of Agriculture offers flexible plans for first time home buyers who are in a low to moderate income range (this is also available to non-first time buyers who qualify). Partnering with lenders across the country, the USDA is able to offer 100% financing on eligible homes.

First Time Home Buyers Raleigh NC

Are you eligible?

The qualifications of a USDA loan are typically a bit more strict than other loans. Qualifying can be a hard part of being approved for a USDA loan because housing costs are not allowed to exceed 29% and the total debt cannot exceed 41%. Repairs and improvements may be forced into the loan eligibility - something to be aware of.

State and LOCAL Programs

Whether you're in North Carolina or anywhere in the world, there is a good chance that there are programs, grants, and benefits to you as a first time home buyer. You may have to hunt down some of your state and local programs as they aren't always apparent.

N.C. Home Advantage Mortgage

In North Carolina we have a great program called the N.C. Home Advantage Mortgage.

This program is available with 30-year, fixed rate FHA, VA, USDA, and conventional mortgages. Are you a match? The N.C. Home Advantage Mortgage is great for buyers that are looking for safe, affordable financing, with competitive interest rates through participating lenders. More than 700 offices participate in this program across NC.

Do you Need Down Payment Help?

Savings for First Time Home Buyers in Raleigh, NC

Help with a down payment is part of what makes the N.C. Home Advantage Mortgage so great. There are many ways the program can help you whether it's with down payment assistance, closing costs, and even interest-free, deferred, forgivable second mortgages up to 5% of the first mortgage loan amount.

What's the best part?

Repayment on the loan of up to 5% second mortgages is required only if you sell, refinance or transfer the home before year 15 of the loan - the down payment assistance is forgiven at 20% per year after you live in the home for 10 years, and fully forgiven at 15 years.

Am I Eligible for the N.C. Home Advantage Mortgage?

You may be eligible for an N.C. Home Advantage Mortgage™ if:
  • you are buying a new or existing home
  • you are a first-time or move-up buyer
  • you buy a home in North Carolina and occupy it within 60 days of closing
  • your annual income does not exceed $87,500
  • you are applying for a FHA, USDA, VA or conventional loan through a Participating Lender and meet the sales price limits of the loan type
  • you are a legal resident of the United States, and
  • your credit score is 640 or higher.
What Properties Are Eligible?
  • New and previously owned single family homes
  • Townhouses
  • Condominiums
  • Duplexes*
  • Manufactured Homes (only new, never occupied, doublewide or greater manufactured homes on permanent foundations)*

*These property types are only available for FHA, VA and USDA loans, not conventional loans.

Find out if your LOCAL lender is a participant!

How Does My Credit Score Impact My Ability To Obtain A Mortgage?

Both your credit score and your credit report will impact your ability to qualify for a mortgage. The lower your score the higher your interest rate will be. Your credit score can be great, and you still may not be able to qualify for a house based on your credit report. You may have great score, and a report that shows something different.

You have many different credit scores coming from different credit organizations, and there are a lot of ways of collecting these scores online with websites like Credit Karma. Most mortgage lenders use FICO score. The top three credit reporting agencies are Equifax, Experian, and TransUnion.

Helpful Tricks to keep a good credit score:

  1. Track it online through websites like Credit Karma
  2. Don't over apply for lines of credit, only what you need
  3. Don’t use all of the credit that you have available and make sure you pay it off ASAP.
  4. Dispute all credit report errors
  5. Seek the advice of an expert if you're unsure how to raise your credit score

How do I Know Which Mortgage is Best for me?

Many people don't realize how affordable real estate is in Raleigh, NC, especially since the days of 20% down payments are long gone. If you're looking to find the best mortgage for your particular situation, we have an article that will help you understand the different mortgage options available to Raleigh and NC residents.

One thing you'll want to know going into a first time home purchase is what happens after your offer is accepted!


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Ryan Fitzgerald Raleigh RealtyHi there! I'm Ryan Fitzgerald, a REALTOR in Raleigh-Durham, NC and the owner of Raleigh Realty. Chances are you and I share a similar passion, Real Estate! I also have a passion for technology, sports, and people. Would love to hear from you. Drop me a note in the comments section below and feel free to share this article socially!

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