The NC Home Advantage Mortgage provides an $8,000 down payment assistance program to help first-time buyers and military veterans achieve homeownership. Although there are other NC down payment assistance programs, this DPA option provides advantages in some instances. Let’s dig into the details.
The NC 1st Home Advantage Down Payment provides funds that assist not only in down payment but also with closing costs. The NC Housing Finance Agency manages this program. Although, the NCHFA does not work directly with the borrower on these loans. Instead, approved lenders (like OVM Financial) offer this and other NCHFA products to prospective borrowers.
NC Down Payment Assistance Advantages
This product was made to cover a large need for NC buyers and has many key advantages.
- New or existing homes
- All 100 NC counties qualify
- Allows up to a $290,000 purchase price
- No payment & zero interest
- DPA forgiven after 15 years **
**The down payment assistance balance is forgiven 20% per year during years 11-15. After 15 years, the total DPA is forgiven.
$8,000 Down Payment Assistance Requirements
- Household income limits (vary by county & family size)
- Maximum 43% debt ratio
- First-time buyer or qualifying military veterans only
- May not be combined with MCC or other NCHFA DPA product
- 640 minimum credit score
- Must have 2 or 3 qualifying credit scores
How Does the $8,000 Down Payment Assistance Work?
There must be a first mortgage to use the $8,000 in DPA funds. The first mortgage products we offer in conjunction with the DPA are FHA and VA loans. Let’s explain how DPA works with each loan product.
Using FHA with NC DPA
FHA loans require a 3.5% down payment based on a home’s sales price. FHA is a flexible home loan product that provides an avenue for buyers to own a home affordably. So, when using an FHA loan for a home purchase, the 3.5% down payment and closing costs must be covered. Buyers have the option of paying both of these at closing through their funds, gift funds, seller paid costs, or in this case, down payment assistance. A buyer may use the $8,000 to cover closing costs or downpayment. The best part is that buyers can borrow these funds without making payments or accruing interest.
Depending on the home price and the costs, $8,000 may not cover everything. Therefore, buyer funds, gifts, or seller contributions could cover the difference. Often, it is possible to combine the DPA with seller concessions to create an actual “no money out of pocket” purchase closing! With FHA flexibility plus this down payment source, it provides an option for NC buyers to consider.
Using VA with NC DPA
In many cases, a VA home loan is a no down payment option for service members, veterans, or qualified surviving spouses. Then, with seller paid closing costs, a VA loan typically works out for bringing no money to closing. Check out an informative article, “How military buyers and veterans can include closing costs in their purchase,“ but what happens when the seller won’t or can’t pay for closing costs? How about an $8,000 down payment assistance loan? $8,000 will typically cover closing costs, the first year of insurance, and escrow set up for a purchase, although the DPA is only available to military veterans (non-active duty).
Whether using DPA funds or not, a VA loan may be the best loan in America. Check with an OVM Financial loan officer to determine your qualification.
Low To No Down Payment Options
As we mentioned above, VA loans provide 100% financing, and FHA offers a low 3.5% down payment. Additionally, there are other excellent home loan products.
USDA Guaranteed Loans are a no money down option that is flexible on credit, liberal income limits, and very affordable terms. USDA loans have the lowest funding fee and mortgage insurance (called an annual fee) of all government loans.
Contrary to many beliefs, conventional loans also offer as low as a 3% down payment. Conventional loans provide flexible options for buyers. A primary benefit is how conventional loans treat student loans with income-based repayment terms.
Finally, we have renovation loans that combine a home purchase with home improvements. Renovation loans allow buyers to customize a home with options for low down payment too.