5 Mortgage Programs First-Time Home Buyers Should Consider

When you’re house hunting in North Carolina for the first time, you may be tempted to focus on floor plans and kitchen upgrades. But before you get too far in your property hunt, it’s important to get your financing in place.

You may be surprised to learn that there are many different types of mortgage programs you may qualify for. Here are five different programs to help you discover the best one for your situation.

FHA Loans

FHA loans are popular because they require lower down payments (as little as 3.5 percent) and offer more flexible credit requirements. The reason for this is that these loans are backed by the Federal Housing Administration. While the minimum credit score is 580, individual mortgage lenders can create stricter criteria. So it’s important to check with your lender of choice to ensure you meet their requirements.

You can potentially find lower mortgage rates with an FHA loan. Note, however, that if you put down less than 20 percent of the loan amount for your down payment, you’ll have to pay mortgage insurance as part of your closing costs and your monthly payment. Talk to your lender to get an idea of the full cost of the loan to determine your ideal price range.

5 Mortgage Programs For First-Time Home Buyers

USDA Loans

If you don’t mind living slightly farther away from a city center, a USDA loan could be right for you. Focusing on properties in designated rural areas, USDA mortgage plans require a $0 down payment. And don’t think that you’ll be living in the middle of nowhere. It can actually be easier than you think to find a qualifying home, even close to large metropolitan areas like Raleigh or Greensboro.

There are a few requirements you’ll need to meet, including an income limit. For example, if you’re house hunting in Asheville, the income limit for a four-person family is $78,200. In Charlotte, that number goes up to $81,300. Your lender can help you figure out the exact requirements for your area and if you qualify.

VA Loans

This is another mortgage program that’s backed by the federal government, and it’s aimed at U.S. veterans and active duty military members. You can qualify for low mortgage rates and pay no closing costs.

Like an FHA loan, there are lower credit requirements, but these may vary among different mortgage lenders. Whether you’re a retired veteran or currently stationed at Fort Bragg searching for your first home in Fayetteville, there are plenty of opportunities to benefit from a VA loan throughout North Carolina. Just work with an experienced VA lender — they’ll help you take care of the necessary paperwork.

Good Neighbor Next Door

This HUD-sponsored mortgage program targets home buyers working in the field of public service, including teachers, law enforcement officers, firefighters, and emergency medical technicians. The idea is to help these individuals live affordably in revitalization areas. You can save 50 percent on the purchase price of a home in one of these areas.

If you’re in a qualifying public service career, find a real estate agent who can help figure out eligible areas in your part of North Carolina. Then connect with your mortgage lender to iron out the loan details.

FHA 203k Loans

Think you’re the next Chip and Joanna Gaines? You can purchase your own fixer upper with an FHA 203k improvement loan. This allows you to pay for both the home and renovations with the same loan. It can be a lot cheaper and easier to qualify for this 203k than to get a separate home improvement loan.

A 203k loan is especially useful if the home of your dreams isn’t livable yet. Other loan types might not allow for major problems, particularly if they’re structural. A fixer upper loan offers a lot more flexibility.

Ready to purchase your first home in North Carolina? Have questions about mortgage programs? Talk to one of our experienced loan officers at Mecklenburg Mortgage. We can walk you through all of your options to help you find your dream home.