Down Payment Assistance for North Carolina Buyers
Down Payment Assistance Solutions
Lack of down payment is the biggest obstacle to home ownership in the U.S. So we strive to provide excellent mortgage products which help our buyers that have little to no down payment. USDA and VA loans offer 100% financing. But what if you don’t have funds for closing costs? What if 100% financing isn’t available to you? That’s where our Down Payment Assistance (DPA) program may help. It is offered through the NC Housing Finance Agency’s Home Advantage Mortgage. It promotes affordable home ownership to North Carolina residents. The DPA is a zero interest, no payment required loan that helps buyers overcome lack of down payment. In addition, the loan is fully forgiven after 15 years (forgiven 20% per year in years 11 – 15). Repayment of the DPA is due and payable only when the house is sold, refinanced, or the note is defaulted.
See the new maximum debt to income ratio requirement for all DPA and non-DPA programs further in this article!
How Down Payment Assistance Works
In order to receive a down payment assistance loan, it must be coupled with a first mortgage. The program offers funds in the amount of either 3% or 5% of the first mortgage amount. But, North Carolina Housing Finance Agency will not provide a standalone 2nd mortgage. The first mortgage may be a VA, USDA, FHA, or Conventional loan. The assistance is a second mortgage which helps cover down payment and/or closing costs. Multiply the 3% or 5% times the total first mortgage amount in order to calculate the DPA amount.
Example: Total 1st mortgage loan amount (including any funding fee) * .03 or .05 = DPA loan amount
$157,102 * .03 = $4713 DPA Amount
Requirements for Down Payment Assistance
Foremost, any buyer using this program must meet the specific mortgage guidelines of the first mortgage. Next, there are extra Home Advantage DPA rules. Contrary to belief, DPA is available to both first time or subsequent buyers. So it is not just a first time buyer program. Although, DPA is only available for purchasing a primary residence. Next, the borrower maximum income limit is $87,500 per year and the debt ratio may not exceed 43% (recently increased to help more buyers qualify). The first mortgage program determines the maximum loan amount. Finally, the minimum credit score is 640. There are no exceptions allowed.
Using USDA and Down Payment Assistance
Since USDA is a no money down purchase loan, the down payment assistance could help pay closing costs. The Home Advantage DPA allows buyers to borrow 3% or 5% of the first mortgage amount. This could be helpful in a case where the seller will not pay all costs or the property doesn’t appraise higher than the price.
Using Down Payment Assistance with FHA Loans
What if you need a no money down program but you are not a Veteran or the property isn’t USDA eligible? We see cases like this in larger cities which are not USDA eligible like Wilmington, Fayetteville, Charlotte, & Raleigh. So a great solution is to couple an FHA loan and down payment assistance. Buyers which do not have the normal 3.5% FHA down payment are able bridge the gap between the sales price and first mortgage. If using an FHA first mortgage, the DPA could be 3% or 5% of the first mortgage.
VA Loans and Down Payment Assistance
VA loans will finance 100% of the purchase price, but on occasion the seller won’t pay any or all of the closing costs. In this case, DPA funds can pay for the closing costs. The Home Advantage DPA product will lend 3 – 5% of the first mortgage when using VA loans.
Conventional loans Coupled with Down Payment Assistance
Conventional loans allow for buyers to finance up to 97% of the purchase price. Then the interest free DPA can almost cover the full down payment. Remember that the assistance is 3% of the first mortgage amount and not the purchase price.
Use an MCC Tax Credit with Down Payment Assistance
NC Housing also offers a great tax credit for buyers. Unlike the DPA product, this product is for first time buyers (check out exceptions to the first time buyer rule). This tax credit provides up to $2000 per year to qualifying buyers! When buyers choose the MCC tax credit, the MCC Income Limits are lower than the DPA limit.
Why work with Team Move and consider the Down Payment Assistance?
Team Move OVM Financial are purchase loan experts. In a time where many focus on refinancing, 90% of our business is purchase mortgages. Furthermore, Team Move loan officers are approved and certified with the NC Housing Finance Agency’s products. Team Move will expertly explain your options to see if this product is the right one for your goals and situation. So with this mortgage product, a home buyer can finance from about 100% of the price to even over the amount!
Team Move lends these products in and around areas such as Wilmington, Leland, Hampstead, Jacksonville, Whiteville, Shallotte, Southport, Elizabethtown, Lumberton, Fayetteville, Rockingham, Raleigh, Garner, Smithfield, Clayton, Goldsboro, Charlotte, Greensboro, Winston-Salem, Durham, Chapel Hill, Burgaw, Castle Hayne, Holden Beach, Supply, Ocean Isle Beach, Sunset Beach, Hubert, Tabor City, Carolina Beach, Kure Beach, Laurinburg, Topsail Beach, North Topsail Beach, Surf City, Sneads Ferry, Richlands, Wrightsville Beach, New Bern, Oak Island, Saint James, Wallace, as well as the rest of NC.
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