What first-time home buyers around Charlotte need to know, according to Realtors
In a competitive housing market, buying a home in Charlotte this year will not be easy. But there are some things to keep in mind when looking for a house.
For first-time homebuyers, the record-high share of income required to buy a median-priced house is expected to go down thanks to a decrease in mortgage rates, a recent Realtor.com report stated. Mortgage rates for 30-year mortgages are expected to be in the 6% range, which is lower than the 7.4% year-end range for 2023.
In the new year, the typical monthly cost for financing your home will be less than $2,200 — a slight decrease from $2,240 from last year, Realtor.com said.
The Charlotte Observer spoke with Canopy, an association of local real estate officials, about some of the other things first-time buyers should know or expect for financial assistance.
How much will a down payment cost?
The typical down payment on a single-family home reached a record high of $30,400 nationally in the third quarter of last year. In 2022, it was $27,300 according to data from Realtor.com.
In Charlotte the down payment in November on a median-priced home of $401,000 was $32,080, or 8%, the typical rate for first-time buyers, according to National Association of Realtors. In Mecklenburg County, where the median home sales price was $421,250, the typical down payment came out to $33,700.
What assistance is available?
Many loan and grant options are available for first-time homebuyers to help with a down payment, the National Association of Realtors reported.
Some of these options include government-backed programs. Others come from organizations such as the National Homebuyers Fund, a nonprofit that provides financial assistance to homebuyers, and the North Carolina Housing Finance Agency, which offers financing for new home buyers.
Conventional loans are financed by a private market lender with down payments as low as 3%. Credit scores and debt-to-income ratio are also considered for the final rate being offered as part of financing according to the North Carolina Association of Realtors.
Federal programs available for loans
More options for potential first-time home buyers with low or no down payment are available through federal government loans.
The Federal Housing Administration’s single-family mortgage program insures qualified loans made by private lending institutions with down payments below 4%. A minimum credit score is not required and the program is more flexible with debt and income ratios. Individual lenders may have their own requirements.
The fees may also be higher compared to conventional loans, and there is a limit on the loan amount.
Veterans may apply through the Department of Veterans Affairs Home Loan Guarantee Program, which provides zero down-payment financing to applicants and spouses. Credit scores and other financial income and debt are not requirements, but lenders again may have their own requirements.
The U.S. Department of Agriculture Rural Housing Service offers people in rural areas and small towns zero down-payment mortgage financing with several programs.
One of those programs is for a guaranteed loan, which is insured by the department and funded by private lenders. Another is for direct loans for low income borrowers through a direct payment from the housing service and without funds from private lenders.
