Year after year, North Carolina continues to rank high as a great place to live. So, it’s no surprise that more people are choosing to move to North Carolina. Annual studies like the U-Haul Top Growth States and the North American Moving Services Migration Report prove this point. Reasons for such high ranking include jobs, climate, thriving real estate markets, recreation, and quality of life. NC is the #5 top inbound state in the 2018 North American Moving Services Migration Report. With that said, many want to know how to finance the dream of owning and living in North Carolina.
Like the variety of places to live in NC, there are many home loan options to buy a piece of the Tarheel state. Some lending options are unique to the state such as NC down payment assistance (DPA) programs. That’s right; there’s not just one DPA program; North Carolina offers three down payment assistance options for first-time buyers. Even repeat home buyers have access to two of them! Also, most of the state has no down payment home loan options available. Now, let’s talk about making NC living a reality.
Living in North Carolina Made Easier
When we say “easier,” we are talking no down payment and affordability. Because of how spread out the state is plus the high number of military bases, USDA loans, and VA home loans are common choices. Whether a first time home buyer or buying again in North Carolina, USDA and VA features give buyers an opportunity to purchase with nothing out of pocket.
No Money Down USDA Loans in North Carolina
By reading our popular USDA articles, you will see that we call USDA Rural Development loans possibly the most valuable, yet underutilized loans available. Often, it flies under the radar, but once a buyer understands the benefits of a USDA loan, quickly one realizes such benefits like:
USDA Income Limits
There are a couple of main requirements when it comes to using a USDA guaranteed home loan. First, buyers and all occupants must meet USDA income limits. Luckily, a majority of North Carolina residents meet this household income limit. To learn if you meet the USDA income limit, check out our top ranked article, “2018 – 2019 USDA Income Limits Increase Helps More Buy With No Money Down.”
USDA Eligibility Map
The next requirement involves USDA property eligibility. Thus, living in North Carolina with a USDA loan requires that the property is in an eligible area on the USDA eligibility map. Notice the NC map below which shows that only the small orange-ish areas located around the most populated regions are ineligible (meaning most of North Carolina is considered USDA eligible). Want to see where to look for USDA eligible homes? Check out how we make the search easy at “USDA Eligibility Map Instructions for a No Money Down Purchase.”
Primary residence buyers should check into the affordable and flexible OVM Financial USDA home loan.
No Money Down VA Home Loans
NC boasts four major military footprints which play a huge role in protecting our country. Fort Bragg Army Base, Camp Lejeune Marine Corp Base, Seymour Johnson Air Force Base, and Base Support Unit Elizabeth City complete the list. While stationed in one of these bases, service members find that living in North Carolina is pretty awesome. For this reason and many others, a lot of Veterans call NC home. So, that means VA home loans are prevalent.
Besides the no down payment requirement, VA home loans provide unbelievable home buying solutions for North Carolina residents.
In addition to these, there are many other benefits. It is even possible to do any of the above while having two VA loans at once. Most do not know that.
Living in North Carolina Using Down Payment Assistance
We just discussed some unbelievable ways to finance a home in the state of NC, but what is available to buyers in highly populated areas like Charlotte, Raleigh, and Wilmington?
In the Niche.com 2018 Best Places to Live in North Carolina article, 17 of the top 20 cities surround Charlotte and Raleigh alone! That is a huge buyer need! How about buyers living in Fayetteville who are not VA eligible? A majority of buyers in the Fayetteville market use VA loans, but there are plenty of non-military buyers looking for affordable home loans. Then, there are others who fall out of USDA eligibility because of higher income. That is where NC Down Payment Assistance offered through the NC Housing Finance Agency comes to the rescue.
Most associate down payment assistance as strictly a first-time home buyer product. Sometimes that is the case, but here’s where living in North Carolina wins again! There are three NC down payment assistance programs.
Available NC Down Payment Assistance Programs
- NC 1st Home Advantage DPA – $8,000 DPA
- NC Home Advantage – 3% of first mortgage DPA
- NC Home Advantage – 5% of first mortgage DPA
In the past, NC even offered a $15,000 down payment assistance product for 5 NC counties. Although, as of this article date, this product is not available. Comparing these options reveals reasons to choose each.
Which NC Down Payment Assistance Program is Right for You?
As mentioned, there are three choices which provide funds to pay for a buyer down payment and/or closing costs. Bringing money to closing or not depends on the purchase price, first mortgage type, and DPA program choice. Referencing the chart below, one sees that there are cases to use one over the other. For instance, a non-Veteran, repeat buyer would need to use either the 3% or 5% DPA.
The $8,000 DPA provides the highest amount of assistance for buyers, but some circumstances require the other products.
By the way, the 3 or 5% DPA is figured by multiplying the percentage times the total first mortgage loan amount. It is not multiplied by the purchase price. Most commonly, FHA is the buyer choice for the first mortgage which combines with a DPA program.
All of the DPA options require no interest or payment. Additionally, after 15 years, the DPA funds are fully forgiven. They are each forgiven 20% per year during years 11 – 15. It is important to realize a couple of key points: To use these NC Housing Finance Agency programs, buyers must go through a mortgage lender/bank and not NCHFA directly.
Also, to use the DPA the same lender must provide both the first mortgage and second mortgage DPA. If a buyer desires to use DPA, and their current lender does not offer these beneficial products, then the buyer would need to use the NCHFA approved lender for both the first mortgage and DPA. They are underwritten simultaneously.
NC Down Payment Assistance Programs Comparison
| Feature | $8,000 DPA | 3% DPA | 5% DPA |
| First Time Buyers | Yes | Yes | Yes |
| Repeat Buyers | Only Vets | Yes | Yes |
| Income Limit | Household Income (see link) | Borrower Qualifying Income Only | Borrower Qualifying Income Only |
| Sales Price Limit | None | $260,000 | $260,000 |
| Max Debt Ratio | 43% | 43% | 43% |
| MCC Eligible | NO | Yes | Yes |
| Use for Down Pmt & Costs? | Yes | Yes | Yes |
So, are you living in North Carolina already and want to buy? Maybe you’re relocating to North Carolina and looking for a home? These wonderful home loan programs along with many others could make buying a home a reality. Contact an OVM Financial loan officer now to determine the best option for you!
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