Home Buyers

- What we offer

- Am I eligible?

- Income and sales price limits

- Not a first-time home buyer?

- Participating lenders

Preferred Loan Officers

- How do I begin?

- Preferred Real Estate Professionals

- Navigating the loan process

- What if I sell my house?

- Buying a foreclosed property?

- 2009 home buyer tax credit

- Real Estate Owned properties for sale

- Tips for home buyers

- Housing counseling resources

- Avoiding predatory lending

- What happens after closing?

Homeowners

Renters

Special Needs

Resources

Calculators
Mortgage Calculator
How Much Can I Afford

Housing Locators
Affordable Apartments
Housing Resources

Income Limits
FirstHome Mortgage
$8,000 Downpayment Assistance
$4,000 Downpayment Assistance
MCC

Downloadable Brochures
Let's Make Home Happen

Save Up To $2,000 a Year on Your Income Taxes

You May Qualify for $14,900 in Downpayment Assistance

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What We Offer First-Time Home Buyers

If your income has kept you out of the housing market, the North Carolina Housing Finance Agency may be able to help you.

If you are a first-time home buyer, you may be eligible for

• a competitive interest rate mortgage
• downpayment assistance up to $8,000.

If you qualify, you may be eligible for a Mortgage Credit Certificate (MCC). This federal tax credit can lower your income-tax liability, dollar-for-dollar, leaving you more money to use toward your mortgage.

To order brochures describing our programs, use the "Order program brochures" at the bottom of the column to the left.

Our first-time home buyer assistance is available statewide through nearly 700 participating lenders and their branches. To learn more, use the links below:

FirstHome Mortgage
Downpayment assistance up to $8,000
Downpayment assistance up to $4,000
Second Mortgage up to $25,000
Mortgage Credit Certificate (MCC)

FirstHome Mortgage

What are the terms?

We offer 30-year, fixed-rate FHA, VA, USDA, and conventional mortgages at interest rates that are below or competitive with market rates to first-time home buyers. FHA loans are insured by the Federal Housing Administration; VA loans are guaranteed by the Department of Veterans Affairs for eligible veterans; USDA loans are guaranteed by the U.S. Department of Agriculture for rural areas; and conventional loans are insured by a private mortgage insurance (pmi) company. This insurance is paid to the lender if the buyer defaults on the loan. Loans are available through participating lenders.

Down payments are usually 0% to 3.5% of the sales price. VA and USDA loans offer 100% financing to qualified buyers while conventional loans may be eligible up to 97% financing.

The mortgages are available statewide through nearly 700 North Carolina banks and their branches. Your lender may refer to the FirstHome Mortgage as an “MRB loan” because the Agency sells Mortgage Revenue Bonds to fund the mortgages.

To qualify,

• You must be a first-time home buyer or not have owned a home and occupied it as your principal residence in the past three years. Current homeowners may qualify if they buy homes in targeted areas.
• You must plan to buy a home in North Carolina and occupy it within 60 days of closing.
• Your annual household income must not exceed the allowed limits.
• The home’s sale price must not exceed maximum allowed limits. The allowable sales price varies depending on local housing costs and whether you buy a new or existing home.
• You must be able to prove legal residency. United States citizenship is not required for eligibility. The N.C. Housing Finance Agency will offer loans to eligible persons who are U.S. citizens or non-citizens who have lawful permanent residency in the United States. Non-citizens who cannot demonstrate legal residency are not eligible for Agency mortgages.

How does it work?

A 1% decrease in your interest rate could increase your purchasing power by approximately $15,000.

Here’s how it works:

Suppose your annual income is $44,000 and your car payment and other debts total $400 a month. You would have approximately $1,100 for your monthly house payment. Depending on where you live, your property taxes and hazard insurance will cost about $275, leaving you with $825 to pay the principal and interest on your mortgage.

The chart below shows what your purchasing power would be based on different interest rates.

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Downpayment assistance up to $8,000

Home buyers who need help with the down payment and closing costs may qualify for interest-free, deferred second mortgages up to $8,000. You pay $1,000 from your own funds, and the loan pays up to $8,000 of the balance.

Payment on the principal isn't due until 30 years from the date of the loan. Payment is due earlier if you sell, transfer, or refinance your home; if your loan goes into default; or if the home ceases to be your principal residence.

The North Carolina Housing Finance Agency has been providing this downpayment assistance for years using federal HOME funds. Currently, some of the funding for it comes from the American Dream Downpayment Initiative (ADDI), signed into law in December 2003.

To qualify for the $8,000 downpayment assistance, your income and the home's sales price must fall within limits that are lower than those for a first mortgage without downpayment assistance.

Homes built before January 1, 1978 and homes that are tenant-occupied, are not eligible for NCHFA down payment assistance.

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Downpayment assistance up to $4,000

For home buyers who have higher incomes than the maximum limits required under our $8,000 down payment assistance program, we offer a $4,000 second mortgage at 0% interest, deferred for up to 30 years. You pay $1,000 from your own funds, and the loan pays up to $4,000 that can be used to help with the downpayment and closing costs. Certain credit score and housing ratio limitations do apply. Contact a participating lender or call an NCHFA underwriter at 1-800-393-0988 for specific details.

To qualify for the $4,000 downpayment assistance, your income can range from $56,000 statewide to $86,000 in larger metropolitan areas. Income limits for this downpayment assistance are the same as the income limits for FirstHome Mortgage.

Payment on the principal isn't due until 30 years from the date of the loan. Payment is due earlier if you sell, transfer, or refinance your home; if your loan goes into default; or if the home ceases to be your principal residence.

Homes built before January 1, 1978, and homes that are tenant-occupied are not eligible for NCHFA downpayment assistance.

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Second mortgage up to $25,000

You also may be able to qualify for assistance through selected nonprofit or government agencies that offer deferred second mortgage loans of up to $25,000 for the purchase of their newly constructed homes.

The funds are available to eligible home buyers who work through local agencies under the North Carolina Housing Finance Agency’s New Homes Loan Program. The second mortgage is targeted to home buyers with incomes below 80% of the area’s median income.

The maximum second mortgage amount is $25,000 per unit, or 20% of sales price, whichever is less. The minimum loan amount is $5,000 per unit. See a list of nonprofit and government agencies in your area that may offer the New Homes Loan Pool Program.

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Mortgage Credit Certificate (MCC)

What are the terms?

Home buyers who meet our qualifying income requirements, sales price, and first-time home buyer guidelines may be eligible for a Mortgage Credit Certificate (MCC). This federal tax credit was authorized by Congress to assist home buyers with moderate and low incomes.

While all homeowners can claim an itemized tax deduction for mortgage interest, you can go a step further with an MCC. An MCC reduces your tax liability, dollar-for-dollar, by a percentage of the mortgage interest you pay.

If you qualify for an MCC, you will be able to claim 20% of the interest you pay on your mortgage as a credit on your federal income taxes. You can save up to $2,000 per year on your federal taxes, money that can be put toward your mortgage payment.

The MCC can be combined with the new $8,000 federal tax credit if you are eligible until that credit expires in December 2009.

An MCC can be used with almost any type of mortgage, including adjustable rate mortgages. However, it cannot be used with the Agency’s FirstHome Mortgage.

Each lender sets the terms of the mortgage. This includes the interest rate, down payment, underwriting criteria, discount points, and closing costs. While we issue MCCs to qualified buyers, we do not act as a lender. MCCs are offered subject to availability of funds. Contact one of our participating lenders to initiate the process.

How does it work?

Suppose you qualify for an MCC and obtain a 30-year, 6.5% fixed-rate mortgage of $97,000. The first year’s interest payment is approximately $6,273. The MCC allows you to take a federal income tax credit of $1,255 ($6,273 x 20%) for that year.

If your federal income tax liability is $1,255 or more after you have taken all other credits and deductions, you receive the entire benefit of the MCC tax credit – $1,255. In figuring your taxes, you also claim a deduction for the remaining 80% of your mortgage interest.

If your federal income tax liability is less than $1,255 – $800, for example – your tax is reduced by only $800 that year. However, you can claim the remaining credit on tax returns for the next three years, if your tax liability increases.

You can receive an immediate benefit from your MCC tax credit by filing a revised W-4 (Employee’s Withholding Allowance Certificate) with your employer. In this example, your federal tax would be reduced by $105 a month ($1,255 ÷ 12). The extra $105 increases your take-home pay and helps make your house payments affordable.

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