First-time homebuyers are often overwhelmed by looking for homes for sale in Holly Springs, NC, the financial burden of owning a home, and the new expenses they suddenly have to keep track of, from monthly mortgage payments to property taxes, can be overwhelming.
It can be hard to be financially ready to buy a home, which is why there are several programs to help make buying a home more accessible to those who are new homeowners.
The sheer number of helping hands ready to give first-time homebuyers a boost can be overwhelming, too — but this guide will break down every program, grant, and loan for Holly Springs homebuyers.
Types of First-Time Homebuyer Programs
Down Payment Assistance(DPA)
Down payment assistance programs help a first-time homebuyer cover their down payment, usually 3-5% of their home price. Multiple entities, such as state housing finance agencies, cities, counties, nonprofits, and employers, offer assistance to first-time home buyers. These programs are often combined with mortgages specifically designed to help those who have never purchased a house before.
DPA loans come in a variety of forms: zero-interest forgiven and deferred-payment loans, as well as low-interest loans. After a predetermined period, forgiven loans don't need to be repaid as long as the borrower still resides in their home.
Low-interest and zero-interest deferred loans allow homeowners to spread the payment for closing costs and down payment out over an extended period of time.
Certain programs will provide money for a down payment without terms or conditions attached. Grants are often combined with low-interest mortgages as well.
Government Backed Loans
There are three popular government-backed loans for first-time homebuyers: FHA loans, VA loans, and USDA loans.
An FHA loan is backed by the federal government and issued through an approved bank or lender. With lower minimum down payments than many traditional loans, plus credit score requirements that are more forgiving in comparison, buyers can secure their dream house while also saving money in the process.
Created to assist those who have limited or moderate incomes in becoming homeowners, this type of loan has become extremely popular amongst first-time homebuyers, offering them a more affordable way to enter the realm of homeownership.
Veterans, service members, and surviving spouses have access to a government-backed mortgage option known as VA loans. Privately funded by lenders such as banks and mortgage companies rather than the Department of Veterans Affairs (VA), this loan provides veterans with an exceptional opportunity for homeownership. Some notable points about VA loans are that no down payment or mortgage insurance is required.
Lastly, a USDA home loan is an incredibly competitively priced mortgage designed to make buying a house more accessible and affordable for individuals with lower incomes who reside in selected rural areas. The US Department of Agriculture provides backing on these loans, much like the way it backs VA loans intended for eligible veterans and their families.
For first-time homeowners, state and local property taxes, interest on your mortgage, and mortgage insurance premiums are all deductible.
What is the difference between a tax deduction and a tax credit? Tax deductions reduce how much of your money is taxable, while tax credits directly reduce the tax you owe.
As a first-time homeowner in Holly Springs, you receive tax deductions and eligibility for tax credits. Look into the North Carolina Home Advantage Tax Credit. Eligible first-time homeowners can take advantage of the Mortgage Credit Certificate and save up to $2,000 every year on their federal taxes. This leaves more cash available to be put toward your mortgage payments- definitely an opportunity worth looking into.
If you're in the market for a loan, closing cost assistance is available from various sources. The U.S. Department of Housing and Urban Development (HUD) offers support through local and state housing commissions, but nonprofits and private mortgage lenders may also provide aid to those seeking help with their closing costs. Generally speaking, this type of assistance needs to be included as part of a down payment assistance program.
A first-time home buyer education course is invaluable in helping prepare buyers and can set them on the successful path of homeownership. Some lenders may even require prospective buyers to take this class.
Here's a general idea of what buyers learn: whether they're ready for a house, budgeting skills, how their credit measures up, the type and cost of homes one can afford, programs that aid with buying a house, plus details about mortgage and loan types.
This class is ideal for first-time homebuyers but also immensely beneficial if you're a former homeowner who has faced financial hardships.
Federal First-Time Homebuyer Programs
Government-backed home loans are a fantastic opportunity. They're insured by a private lender while still being backed by the federal government and have lower barriers to entry than conventional loans.
In order to get a government-backed loan, you must work with an endorsed bank or online lending service. For example, FHA loans, VA loans, and USDA loan programs offer excellent opportunities for those looking to purchase property - find out more about these popular loans above.
Good Neighbor Next Door
First responders and grade school teachers can help revitalize their communities while becoming homeowners through the HUD Good Neighbor Next Door Sales Program. This program rewards these public servants with a 50% discount from the list price of the home as long as they commit to living in it for 36 months as their primary residence.
State and Local Loans
The North Carolina Housing Finance Agency (NCHFA) offers a selection of programs
to serve the housing needs of those planning on purchasing a home. These include a down payment assistance program, mortgage assistance program, and tax credit program- all designed to provide assistance in your journey toward homeownership.
If you're a first-time homebuyer in Holly Springs, these opportunities to receive help in the homebuying process are invaluable.
Buy Your First Home Today
If you're moving to Holly Springs, contact Triangle to Coast Realty
to learn more about the financing options available to you. Karen Dupree Williams and her team of Holly Springs realtors will guide you through the process of buying your first Holly Springs home for sale.