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North Carolina Housing Finance Agency

What We Offer Home Buyers

If your income or the need for down payment assistance has kept you out of the housing market, the North Carolina Housing Finance Agency may be able to help you.

If you are buying a new or existing home in North Carolina, you may be eligible for

a competitive interest rate mortgage
forgivable down payment assistance up to 3% of the first mortgage loan amount.
If you are a first-time home buyer, you may also be eligible for a Mortgage Credit Certificate (MCC). This federal tax credit can lower your federal income tax liability, dollar-for-dollar, up to $2,000 per year for every year you live in your home, leaving you more money to use toward your mortgage. Separate income limits apply. If you qualify, you can combine the N.C. Home Advantage Mortgage™ with an MCC to save even more.

Our home buyer assistance is available from our participating lenders, which include 700 branch offices across the state. Learn more about the programs below:

N.C. Home Advantage Mortgage™
Down payment assistance up to 3% of the first mortgage loan amount
Mortgage Credit Certificate (MCC)

N.C. Home Advantage Mortgage™
What are the terms?
We offer 30-year, fixed-rate FHA, VA and USDA mortgages at interest rates that are below or competitive with market rates to home buyers. FHA loans are insured by the Federal Housing Administration; VA loans are guaranteed by the Department of Veterans Affairs for eligible veterans; and USDA loans are guaranteed by the U.S. Department of Agriculture for rural areas. This insurance is paid to the lender if the buyer defaults on the loan. Loans are available through participating lenders.

Down payments required for FHA loans through the North Carolina Housing Finance Agency are 3.5%, and are usually 0% for USDA and VA loans for qualified buyers. The N.C. Home Advantage Mortgage™ can provide forgivable down payment assistance up to 3% of the first mortgage loan amount, regardless of whether you apply for an FHA, VA or USDA loan. The down payment assistance offered by N.C. Home Advantage Mortgage™ is forgiven at 20% per year after you remain in the home for 10 years with it being fully forgiven at 15 years.

The mortgages are available through participating lenders, which include nearly 700 branch offices across state.

To qualify,

You must buy a new or existing home. Re-financing an existing mortgage does not qualify.

You must buy a home in North Carolina and occupy it as your principal residence within 60 days of closing.

Your annual income cannot exceed $85,000.

You must apply for an FHA, USDA or VA loan through a Participating Lender.

You must be a legal resident of the United States.

Your credit score must be 640 or higher.

Down payment assistance up to 3% of the first mortgage loan amount

Home buyers who need help with the down payment and closing costs may qualify for interest-free, deferred, forgivable second mortgages up to 3% of the first mortgage loan amount.

If you qualify for down payment assistance, repayment is required only if you sell, refinance or transfer the home before year 15 of the loan. Even better, the down payment assistance is forgiven at 20% per year after you remain in the home for 10 years with it being fully forgiven at 15 years.

To qualify for the 3% down payment assistance, your income must be less than $85,000. You must also have a minimum credit score of 640.

Mortgage Credit Certificate (MCC)
What are the terms?

Would you like to reduce your federal income tax liability by up to $2,000 per year for every year that you live in your home? If you meet certain income and sales price limits and first-time home buyer guidelines, you 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.

If you qualify for an MCC, you will be able to claim 30% of the interest you pay on your mortgage – up to $2,000 for every year you live in your home – as a tax credit on your federal income taxes. For example, if your federal income tax liability is $3,000, and your MCC tax credit is $2,000, then your federal income tax liability will be reduced to $1,000 ($3,000 federal income tax liability minus $2,000 MCC tax credit).

MCCs can be combined with the N.C. Home Advantage Mortgage™ as well as any other qualifying lender mortgage program, including some adjustable rate mortgages. We encourage you to contact one of our participating lenders to find out if you are eligible, and if so, the lender can submit your reservation.

How does it work?

Suppose you qualify for an MCC and obtain a 30-year, 4% fixed-rate mortgage of $97,000. The first year’s interest payment is approximately $3,880. The MCC allows you to take a federal income tax credit of $1,164 ($3,880 x 30%) for that year.

If your federal income tax liability is $1,164 or more after you have taken all other credits and deductions, you receive the entire benefit of the MCC tax credit – $1,164. In figuring your taxes, you also claim a deduction for the remaining 70% of your mortgage interest.

If your federal income tax liability is less than $1,164 ($800, for example), your tax is reduced by only $800 that year. However, the remaining credit can be claimed on tax returns for the next three years, if 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 income tax liability would be reduced by $97 a month ($1,164 ÷ 12). The extra $97 increases your take-home pay and helps make your house payments affordable.