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Special Programs for First Time Home Buyers in Charlotte

Updated: May 8

(Jordan and Emily Keesee with their son in 2020 outside their first home as First Time Homebuyers)

Homeownership is something about which many people dream.  But having the financial means to do so can be daunting for some - especially first-time buyers. However, there are a number of programs available for first time homebuyers to assist them with the purchase of a home. In Charlotte, there are a number of resources available to assist prospective homebuyers in navigating the purchase of their first home. From down payment assistance, to homebuyer counseling, to educational workshops, these programs aim to make the dream of homeownership a reality for more people. In this blog post, we will highlight some of the key Federal and state programs available to first-time homebuyers in Charlotte.

1. Federal Housing Administration (FHA) Loans

FHA loans are a great option for first-time homebuyers in Charlotte. These loans offer flexible qualification requirements, including lower credit score thresholds and smaller down payment options. With an FHA loan, buyers can purchase a home with as little as a 3.5% downpayment which makes homeownership more accessible to those who cannot save the 10-20% normally needed for a conventional loan. To be eligible for the 3.5% down payment, a borrower must have a credit score of at least 580 (out of a possible score of 850).  Borrowers with a 500-579 credit score are eligible for a loan with a 10% down payment. Homebuyers who have had to file bankruptcy in the past, or have had other financial issues, can still qualify. Some or all of your closing costs can be financed into the loan, and this program is available in Charlotte for purchases up to $498,257. While these loans do come with a slightly higher interest rate than conventional loans, they make up for that with the low down payment requirement. 


2. North Carolina Housing Financing Agency (NCHFA)

The NCHFA also has programs to assist first time homebuyers and military veterans in Charlotte. The first is NC 1st Home Advantage Down Payment program which offers up to $15,000 and down payment assistance. It is set up as a secondary deferred mortgage at a 0% interest rate which is forgiven each year in years 11 - 15, so that by the end of the 15th year, all of the mortgage has been forgiven. The second is the NC Home Advantage Tax Credit for first-time homebuyers and military veterans. It provides them with a Mortgage Credit Certificate which can save them up to $2,000 a year in federal taxes based upon eligibility guidelines. This tax credit is available for the purchase of homes up to $480,000. Here's how it works: if you obtain a loan for 432,000, you would be making a down payment of $48,000. You could obtain $15,000 of that through the down payment assistance program. If your mortgage is at a current interest rate of 6.7%, you would pay $28,803 of interest in the first year of the loan. With the tax credit program, you would save $2,000 in federal taxes, and you could claim a mortgage interest deduction for the remaining $26,803 on your income tax return.  Please consult a tax advisor for more  information based upon your specific tax situation. The third initiative is the NC Home Advantage Mortgage that is available for both first-time and move-up home buyers. This program provides eligible buyers with fixed-rate mortgages and down payment assistance up to 3% of the loan amount. 

3. Good Neighbor Next Door

The Good Neighbor Next Door program is administered by the FHA. It is a special loan program for teachers, firefighters, law enforcement officers, and emergency medical technicians. It can be used for the purchase of a single family home in a revitalization area as defined by the program guidelines. If an eligible buyer is willing to commit to living in the home for a minimum of 36 months, FHA will discount the price of an eligible home by 50%. Homes that have been foreclosed on by HUD are also eligible for this program. In the current market in Charlotte and many other parts of the country, there are not many of these homes available. However, an experienced, competent real estate agent can help you find any that may be for sale in the Charlotte area. 

4. USDA Rural Development Loans

For buyers looking to purchase a home in rural areas of North Carolina, the USDA Rural Development program offers loans with no down payment at an interest rate below market rates. The USDA developed this program to promote homeownership in rural communities.  They are designed for individuals and families with low to moderate incomes. Eligible properties must be in certain locations and not exceed a maximum size. For a buyer who meets the eligibility requirements, these loans can be a great way to purchase a home with a low down payment at a lower than market interest rate. The Rural Development Program loans cannot be used in North Carolina's metropolitan areas; however a buyer who is willing to purchase outside of the Charlotte metro could possibly do so based upon their eligibility for the program.

Many first time homebuyers feel that saving a down payment for the purchase of their first home can be a daunting task. With many of today's young people having significant amounts of student debt, it can feel even more difficult. But in our experience, many of these aspiring homeowners are not aware of the many homebuyer assistance programs that we have outlined above.  When someone first has a desire to become a homeowner, our recommendation is to contact an experienced loan officer who can walk you through what programs for which you may be eligible. Two specific people who have been extremely helpful for a number of our clients are Jessica Babinski and Ali Dubois, and they have received rave reviews from many clients. They both have a lot of experience with these programs which we have outlined above, and they can be extremely helpful in helping you determine if any of these programs may work for you.  

Next, we strongly recommend that you find an experienced and competent real estate agent. This is not the time to hire a friend simply because you like them. It is critical to develop a relationship with someone who is in the real estate business full time and has a track record of successfully helping their clients. They should be able to demonstrate their clients' satisfaction either by previous Google reviews or reviews left on another online platform. You can check out what our clients have had to say about Fagan Realty Group on our Google Business Profile.  We would be honored if you would like us to help you with the purchase of your home.

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