I remember nervously walking into the bank for a meeting to discuss if I would qualify for a mortgage. Newly married and with little savings, homeownership seemed out of reach. I sat down at the lender’s desk and answered questions as he punched numbers into his computer. He excitedly told me, with my credit score and income, I would certainly qualify for a home loan, and all I would need is a minimum of $10,000 in savings plus closing costs. I didn’t have $10,000 in savings, and so I assumed I’d be renting for quite a bit longer.
What I didn’t know at the time is there are loan programs available for people in that very situation, a first-time homebuyer or move-up buyer, with a decent credit score and income, but lacking the savings for a downpayment and/or closing costs. Thankfully, a few months later a realtor provided me information about down-payment assistance programs. I qualified and was able to buy my first home shortly after.
In North Carolina these programs are available through the NC Home Advantage Mortgage Program and with other lenders like Chase Bank’s Affordable Lending Program. For the purpose of this article, I will focus on the NC Home Advantage Mortgage Programs that I have had personal experience with. Please note this article was written August 2020. The following programs are subject to change. Please review the most updated information at: https://www.nchfa.com/home-buyers/buy-home. Below, you’ll find a lot of information and links – if it feels overwhelming, I’m with you – I was overwhelmed when I first started going through these programs. So feel free, to just reach out to me and we can chat about how these programs work and may apply to your specific situation – firstname.lastname@example.org.
Downpayment Assistance & Lower Mortgage Payments with CPLP
Community Partners Loan Pool (CPLP) members offer 0 percent interest, deferred, second mortgages for up to 20 percent of the sales price, not to exceed $30,000 (effective May 1, 2018), when used in conjunction with our NC Home Advantage Mortgage™ or up to 10 percent when combined with a USDA Section 502 loan. CPLP may be combined with other second mortgage and down payment assistance programs, including the NC 1st Home Advantage Down Payment. Eligible borrowers must meet household income limits and sales price limits.
Down Payment Assistance – 5% of Loan Amount for First-Time & Move-Up Buyers
The NC Home Advantage Mortgage™ offers stable, fixed-rate, 30-year mortgages with down payment assistance of up to 5% of the loan amount. This affordable mortgage product is available for first-time and move-up buyers who earn up to $89,500 statewide. Down payment assistance is forgiven at a rate of 20% per year starting at the end of year 11 and considered fully forgiven at the end of 15 years.
$8,000 in Down Payment Assistance for First-Time Buyers & Military Veterans
To help first-time buyers and military veterans in North Carolina purchase homes they can afford, the NC 1st Home Advantage Down Payment provides $8,000 in down payment assistance. First-time buyers are buyers who have not owned a home in the past three years. The NC 1st Home Advantage Down Payment is also a forgivable loan that is fully forgiven after year 15. To qualify, you must be eligible for the NC Home Advantage Mortgage™.
$2,000 Per Year Tax Credit on Federal Taxes
First-time home buyers and military veterans are also eligible for the NC Home Advantage Tax Credit, a Mortgage Credit Certificate administered by the NC Housing Finance Agency that can save buyers up to $2,000 per year on federal taxes when approved before closing on the home with a purchase price less than $275,000 By reducing a buyer’s taxable income for the life of the loan, the NC Home Advantage Tax Credit frees up more money for buyers to put toward their mortgage.
Moving to the Raleigh area from Kentucky we experienced a pretty sizable increase in the cost of living. Even though we would be able to use the equity from our first home, it was going to be a struggle to afford the monthly mortgage payments on a home in the Raleigh area. Then I learned about the CPLP program. We met the requirements for credit score and income and were able to get a second mortgage for a percentage (at that time it was 20%) of the home price at 0% interest that we would not have to pay back until the end of our first mortgage. This made our monthly payments about 20% less. Through the CPLP program, we were able to once again afford homeownership as move-up buyers.
There can be many stipulations for these programs regarding income, credit score and even the type of house you can buy (10 years old or less). If you would like to learn more about this program and my personal experience, I would be happy to share. I can also connect you with a lender who can help you determine if you would qualify.