For many buyers, the monthly mortgage payment is not the part that stops them.
It is the money needed before they ever receive the keys.
There may be a down payment, closing costs, prepaid homeowners insurance, property taxes, inspections, an appraisal, and moving expenses. Even someone who can comfortably manage a mortgage payment may not have thousands of dollars available at one time.
That is where down payment assistance may help.
But before you build your plans around it, you need to understand what the assistance actually is, who may qualify, and what could happen if you sell or refinance the home later.
Down payment assistance is not one single program
“Down payment assistance” is a broad term for programs that may help eligible buyers cover part of the money needed to purchase a home.
Depending on the program, the assistance may be structured as:
- A grant that does not have to be repaid
- A loan that requires monthly payments
- A deferred loan with no monthly payment
- A forgivable loan that is gradually forgiven when certain conditions are met
- A second mortgage that becomes repayable when the home is sold, refinanced or no longer used as the buyer’s primary residence
That distinction matters.
A program may allow you to bring less money to closing without necessarily giving you free money. Before accepting assistance, you should know whether it creates a second lien against the property and how long you must remain in the home for the assistance to be forgiven.
North Carolina offers assistance to more than first-time buyers
One common misconception is that every down payment assistance program is limited to first-time homebuyers.
North Carolina’s statewide NC Home Advantage Mortgage may provide qualified first-time and repeat buyers with assistance equal to as much as 3% of the mortgage loan amount.
According to the North Carolina Housing Finance Agency, a buyer may be eligible if they:
- Purchase a home in North Carolina
- Occupy it as their principal residence within 60 days of closing
- Have qualifying annual income that does not exceed the current program limit
- Have a credit score of at least 640
- Use an eligible FHA, VA, USDA, or conventional mortgage through a participating lender
- Meet the applicable loan and property requirements
- Are a legal resident of the United States
Manufactured-home buyers may be subject to a higher minimum credit score. Current program limits and requirements should always be confirmed before applying. Review the current NC Home Advantage Mortgage requirements.
The assistance is provided as a zero-interest deferred second mortgage. There is no monthly payment on that second mortgage, but the repayment rules still matter.
Under the current program, forgiveness begins after the buyer has remained in the home for 10 years. Twenty percent is forgiven each year at the end of years 11 through 15. The assistance is completely forgiven at the end of year 15.
If the home is sold, transferred, or refinanced before the assistance is fully forgiven, the remaining balance may have to be repaid.
Some first-time buyers and veterans may qualify for $15,000
The NC 1st Home Advantage Down Payment currently provides $15,000 in assistance to eligible first-time buyers and military veterans who qualify for an NC Home Advantage Mortgage.
For this program, a first-time buyer is generally someone who has not owned and occupied a principal residence during the previous three years. Buyers purchasing in certain targeted census tracts may also qualify even if they do not meet the usual first-time-buyer definition.
Eligibility includes income and sales-price limits, a minimum credit score, and primary-residence requirements. The assistance is also structured as a zero-interest deferred second mortgage, with forgiveness occurring at 20% per year at the end of years 11 through 15. Review the current $15,000 assistance requirements.
This is the type of assistance Shennen used when she purchased her home.
For her, $15,000 made a meaningful difference. But it did not remove the rest of the process. She still had to work on her credit, document her self-employment income, find an eligible property, resolve appraisal-related repairs, and remain committed through a 91-day transaction.
The assistance helped close a financial gap. Preparation helped her reach the closing table.
Buyers with lower incomes may have another option
The Community Partners Loan Pool, commonly called CPLP, offers additional help to qualifying low- and moderate-income buyers.
CPLP may provide as much as 25% of the home’s sales price, up to $50,000, when combined with an NC Home Advantage Mortgage. Assistance may also be available for up to 10% of the purchase price when paired with a USDA Section 502 Direct Loan.
This is a zero-interest deferred second mortgage with no monthly payment. Unlike the NC Home Advantage assistance described above, CPLP is not automatically forgiven. It is generally repaid when the home is sold or at the end of the loan term.
The program currently requires:
- Household income at or below 80% of the area median income for the county
- A minimum credit score of 640
- Sufficient stable income
- Debt and housing ratios within program limits
- Approved homebuyer education
- At least two hours of individual housing counseling
- A qualifying home that meets program condition requirements
Existing homes must pass both a licensed home inspection and an applicable housing-code or housing-quality inspection. Significant deficiencies may have to be repaired before the buyer can receive assistance.
Buyers must apply through a participating CPLP organization, and the process generally requires more than 60 days. The North Carolina Housing Finance Agency recommends contacting a participating organization before signing a purchase contract. Learn more about the Community Partners Loan Pool.
The city where you buy may offer additional assistance
North Carolina’s statewide programs are not the only options available.
Some cities operate their own homebuyer assistance programs using local and federal housing funds. This means two buyers with similar finances could have different options simply because they are purchasing in different cities.
The exact property address matters. A home may need to be located inside city limits or within a designated redevelopment area. Programs may also have their own income limits, purchase-price limits, lender requirements, and property-condition standards.
Here are several current examples:
Greensboro
The City of Greensboro’s Housing Connect GSO Homebuyer Assistance Program serves eligible first-time buyers purchasing within Greensboro city limits.
Current options include:
- Up to $25,000 for qualifying households earning no more than 80% of the area median income, with a possible $5,000 additional amount for homes in designated reinvestment or redevelopment areas
- Up to $20,000 through the #100Homes option for qualifying households earning above 80% but below 120% of the area median income, with a possible $5,000 location-based bonus
- A Public Service Heroes option for certain public employees, active-duty military members and veterans, with up to $20,000 in assistance and a possible $10,000 location-based bonus
Program terms depend on the buyer, income, and property location. Applications are handled through approved lenders. Review Greensboro’s current homebuyer assistance options.
High Point
High Point offers a citywide program for qualifying buyers earning no more than 80% of the area median income.
The program currently provides up to $7,500 for down payment, closing costs and prepaid expenses. Buyers must contribute at least $500 of their own funds, purchase within High Point city limits, and use a participating lender.
The assistance is structured as a five-year, zero-interest loan that is forgiven at 20% per year. Review High Point’s City-Wide Homebuyer Assistance Program.
Durham
The City of Durham currently offers eligible low- and moderate-income buyers as much as $80,000 toward purchasing a primary residence within Durham city limits.
Applicants generally must earn no more than 80% of the area median income, must not have owned a home during the previous three years, and must apply through a city-approved lender. Assistance is offered on a first-come, first-served basis while funding remains available. Review Durham’s Down Payment Assistance Program.
Raleigh
Raleigh offers zero-interest, deferred loans that may help eligible buyers cover a down payment, closing costs or a financing gap.
No monthly payments are required while the buyer continues to meet the program conditions. Repayment is generally deferred until the property is sold or is no longer used as the owner’s primary residence.
Raleigh also notes that some buyers may be able to combine—or “layer”—local assistance with programs offered through the North Carolina Housing Finance Agency. The lender must confirm whether the specific programs can be used together. Review Raleigh’s homebuyer assistance programs.
Charlotte
The HouseCharlotte program offers deferred and forgivable loan options to eligible first-time buyers purchasing within Charlotte.
The amount available depends on the buyer’s income, property location and applicable program option. Qualified buyers may receive assistance toward the down payment, closing costs and, in some cases, an interest-rate buydown. Certain options and matching funds may provide total assistance of as much as $80,000. Review Charlotte’s homeownership assistance options.
These examples do not represent every local program in North Carolina. Other cities, counties, and nonprofit organizations may offer assistance, and funding can open, close, or change during the year.
That is why “Do I qualify for down payment assistance?” is not specific enough.
A better question is:
Which programs are available for me, with my income and financing, at the address where I plan to buy?
Ask that question before beginning the home search. It may affect your lender, price range, timeline, and which properties you can realistically purchase.
Assistance does not replace mortgage approval
Qualifying for down payment assistance and qualifying for a mortgage are related, but they are not the same decision.
You must still qualify for the primary home loan. The lender will review your credit, income, employment or self-employment history, debts, assets and ability to manage the complete monthly payment.
The property must also qualify.
A buyer could meet the income and credit requirements for an assistance program but choose a home that does not meet the program’s price, condition or occupancy rules. That is why the lender and real estate professional should know from the beginning that the purchase will involve down payment assistance.
This is not something you want to discover after falling in love with a house.
You may still need money of your own
Assistance can reduce the amount you need at closing, but it does not always eliminate every upfront expense.
Depending on the transaction, buyers may still need money for:
- Earnest money
- Due diligence fees in North Carolina
- Home inspections
- The appraisal
- Closing costs not covered by the assistance
- Prepaid taxes and insurance
- Moving expenses
- Immediate repairs or household purchases
- Emergency savings after closing
The amount required will depend on the loan, assistance program, property, and negotiated terms.
The goal should not simply be to reach closing with the smallest possible amount. You also need to consider what your finances will look like the day after closing.
Owning a home without any savings left for an unexpected repair can create a new kind of financial pressure.
Compare the complete financing package
Assistance can be valuable, but the largest assistance amount is not automatically the best financing option.
The interest rate associated with an assistance program may differ from the rate available without assistance. A program may also place a second lien on the home or limit your ability to sell or refinance without repayment.
Ask the lender to show you both options when possible:
- The mortgage with down payment assistance
- The mortgage without assistance
Compare:
- The interest rate
- The monthly principal and interest payment
- Mortgage insurance
- Estimated cash needed at closing
- The second-mortgage amount
- Forgiveness or repayment terms
- What happens if you refinance
- What happens if you sell before the required period ends
- The total cost of each option over the time you expect to own the home
Assistance should solve a real problem without creating a financing structure you do not understand.
Start before you begin looking at houses
The best time to ask about assistance is before the home search begins.
Start by speaking with a participating lender or housing counselor who can evaluate the program alongside your complete financial picture.
Ask:
- Which programs are available where I plan to buy?
- Do I meet the income and credit requirements?
- Is the program limited to first-time buyers?
- What mortgage products can be combined with it?
- Is the money a grant, deferred loan, or forgivable second mortgage?
- Will I have a monthly payment on the assistance?
- How long must I occupy the home?
- What triggers repayment?
- Does the property have to meet additional condition standards?
- How much money will I still need?
- Will using the program affect my mortgage rate or monthly payment?
Getting these answers early gives you a more realistic budget and helps prevent delays after you are under contract.
What if you live outside North Carolina?
Down payment assistance is not limited to North Carolina.
Many states, counties, cities, housing finance agencies and nonprofit organizations offer their own homebuyer programs. Requirements and funding vary by location, and some programs may only be available while funds remain.
The Consumer Financial Protection Bureau recommends contacting a HUD-approved housing counseling agency to find programs in your area. Buyers can also call the HOPE Hotline at 888-995-HOPE (4673) for housing guidance. Find a HUD-approved housing counselor.
You do not have to know the name of the program before asking for help.
Not sure where to begin?
If you are buying in North Carolina, Westchester Realty can help you identify the questions to ask, connect with participating professionals, and determine whether assistance should be part of your homebuying strategy.
If you live in another state, contact us and tell us where you plan to purchase. We can help point you toward the housing finance agency, HUD-approved counselor, or official program resources serving your area.
Contact Westchester Realty and start the conversation.
Down payment assistance may make homeownership more accessible, but the amount of assistance is only one part of the decision. The right program should fit the mortgage, the property, and the life you are preparing to build after closing.
Program availability, funding, income limits, credit requirements, interest rates, property standards and repayment terms may change. Eligibility is determined by the applicable program administrator and participating lender. This article is for educational purposes and is not financial, legal, tax, or lending advice.
