Saving up for a down payment and closing costs (especially in the face of increasing rent prices) can seem like an insurmountable task. Short of waiting for your Great Aunt Millie to pass and hoping there’s an inheritance with your name on it or getting lucky in the lottery, many potential first time home buyers feel this may be a dream deferred.
However, thanks to the U.S. Treasury Department’s Hardest Hit Fund, first time home buyers earning less than $67,000 (if you earn more, keep reading) can receive up to $15,000 towards the purchase a home in Mecklenburg and Cabarrus counties (this program is only limited to Mecklenburg, Cabarrus, Cumberland, Guilford and Johnston counties). Like with anything, there are a few stipulations that I will go over but I will also encourage you to speak with a NCHFA-approved lender to fully qualify.
First, there are income and credit requirements. Credit must be above 640. If you are single, the maximum you can earn to qualify for to receive the $15,000 down payment assistance is $67,000. If you are married, the maximum the household can earn is $67,000. If you have a household of 3 or more persons, the maximum the household can earn is $77,000. This could include anyone living at home over the age of 18 and earning an income. If you earn more than $67,000 but less than $87,500 regardless of household size, you may be eligible for the NCHFA’s NC Home Advantage Mortgage, which also allows for down payment assistance.
Next, the buyer will need to complete an in-person or online home buyer education course. Finding the time to complete this is critical and it can hold up the loan if left to the last minute to complete.
Finally, understand that down payment assistance programs are just that: assistance. The way that this program works is the amount borrowed for down payment assistance becomes a “silent” second mortgage. That is one where the mortgage sits behind the first mortgage but requires no monthly mortgage payment or accrues interest. Like many of these programs, the amount reduces after a period of time until either the home is sold or the owner has occupied the property long enough that the debt is forgiven. In the case of the $15,000 down payment program, the amount is forgiven 1/5th per year starting first year of home ownership.
- Year 1: $15,000
- Year 2: $12,000
- Year 3: $9,000
- Year 4: $6,000
- Year 5: $3,000
- Year 6: $0
If the homeowner needs to sell at any point in the first five years of ownership, the remaining balance of the silent second would be paid out of the Seller’s proceeds at closing.
This down payment assistance program is limited to the available funds remaining in the program and it is expected to run out at some point in 2017.Download the program brochure
So what about another option?
Like I mentioned earlier, there are other options available from the North Carolina Housing Finance Agency. For home buyers with higher household incomes (up to $87,000), the Home Advantage program offers down payment assistance offers 3% or 5%, isn’t limited to only 5 counties, and is a program that doesn’t run out of money.
Like the $15,000 down payment assistance program, the Home Advantage down payment assistance is a silent second mortgage that offers 20% forgiveness a year over 5 years. However, forgiveness doesn’t begin until after 10 years of homeownership. As a result, there’s a higher likelihood that this loan will be paid back through a home sale before any portion of the balance is forgiven.Download the Home Advantage brochure
Connect with a Lender
If you would like to get connected with a lender that offers either of the NCHFA programs, contact us using the form below.