By Tracy Watson – Go Watson Realty

Fuquay Varina/Holly Springs/Raleigh


Types of Loans

Conventional LoanFirst-time homebuyers can get a conventional home loan with as little as 3% down if the mortgage meets requirements set by Fannie Mae and Freddie Mac. And if you put at least 20% down, you won’t have to pay mortgage insurance. Most lenders require a minimum credit score of 620 to qualify for a conventional mortgage, but a score around 740 earns you the best interest rates.

FHAThis is the go-to program for many first-time homebuyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

VA Loan – Guaranteed by the U.S. Department of Veterans Affairs, these mortgages are available to military members, veterans and surviving spouses. If you qualify, you’ll see benefits such as no minimum credit score and no down payment or mortgage insurance, but you’ll likely have to pay a VA funding fee.

USDA LoanA USDA home loan is a zero-down-payment mortgage for eligible rural and suburban homebuyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.  (note that all homes/areas qualify so if using this loan let your realtor know)



NC Housing Finance

  • Available for credit scores as low as 640
  • Get up to 5% down payment assistance on an FHA, VA or USDA loan, and up to 3% down payment assistance on a conventional loan
  • Choose among conventional, FHA, VA or USDA mortgages from private lenders recommended by the NCHFA
  • Depending on the loan type, buy a house, townhouse, condominium, duplex or new manufactured home
  • There is no sales price limit on the home for the loan program


  • Must meet limits on income
  • Overall debt-to-income ratio has to be 43% or less
  • Home buyer education may be required
  • Mortgage insurance will be required when a down payment is less than 20%


Mortgage Credit Certificate (MCC)


The NCHFA issues mortgage credit certificates to eligible first-time homebuyers, veterans and buyers in targeted areas. Qualified mortgage borrowers can get a credit to offset their federal income tax bills, up to $2,000 each year they own the home. Lenders can inform borrowers about the income and sales price limits; the mortgage credit webpage lists census tracts that qualify.

NC Home Advantage Mortgage


All loans under the program are 30-year fixed-rate mortgages. The minimum credit score to buy a manufactured home is 660; it’s 640 for other types of homes. Low- to moderate-income home buyers can get down payment assistance with the NC Home Advantage Mortgage. It’s available to qualified buyers who meet income guidelines, whether they are first-timers or repeat buyers. The amount of down payment assistance depends on the loan type. Borrowers can get up to 5% assistance on FHA, VA and USDA loans. They can get up to 3% assistance on conventional mortgages. Down payment assistance, which is a 0% interest loan with no monthly payments, can be used to pay for closing costs, prepaid items (like property tax and homeowners insurance) and, of course, the down payment. Depending on how long the borrower lives in the house, she may not have to pay some or all of the down payment assistance loan. After 11 years — and each year after — 20% of the down payment assistance is forgiven. That means after 15 years, the down payment assistance won’t have to be repaid, even if the borrower sells the house or refinances the mortgage.


Self Help Loan Pool

Through the Self-Help Loan Pool, low-income borrowers can get 0% interest rate mortgages to buy homes from Habitat for Humanity or other self-help homeownership organizations. The assistance comes in the form of a grant of up to $35,000 that the organization combines with its own financing to offer a mortgage that has to be paid off in 20 to 33 years. Some of the money comes from federal funds, and the number of loans is limited. Borrowers have to meet income and home price limits, which vary by county. They must take a homeownership education course and commit to keeping the house as their principal residence for at least five to 15 years, depending on the amount of assistance the homeownership organization got for that loan. Otherwise, the borrower will have to pay back the assistance. And the borrower must already participate in a self-help housing program — for example, helping in the construction or rehab of the house. Mortgages using the Self-Help Loan Pool are available to first-time and repeat home buyers.