FHA Loans in NC: What to Expect & How to Get Started

The FHA loan program was developed by the U.S. Federal Housing Administration, a program office of the U.S. Department of Housing and Urban Development (HUD), as a direct response to the Great Depression. Part of the National Housing Act, which was signed into law in 1934, the FHA loan program was designed to stabilize the housing industry and empower veterans, first time home buyers and lower-income Americans to borrow money and purchase property.

An FHA loan is a loan from a private lender regulated by the HUD. More flexible than conventional loans, FHA loans are popular in NC and elsewhere because they allow for down payments as low as 3.5% and are more forgiving toward buyers with poor credit. This makes FHA loans one of the most affordable options for home buyers, especially first time buyers, first-generation buyers, those working to repair their credit or those with outstanding debt, such as student loans.

Today, the HUD offers multiple FHA loan programs, including:

• The Single Family Housing Program, which applies to residential properties with a single housing unit
• The Multifamily Housing Program, which applies to residential properties with more than one housing unit
• The 203(k) Rehabilitation Mortgage Insurance Program, which is based on a property’s projected value after repair or renovation rather than the current value of the property

It’s important to note that the HUD imposes maximum lending limits for FHA loans. These limits, which are based on median housing prices, vary by state and county and are updated annually.

In 2025, Franklin County, Johnston County, and Wake County had the highest lending limit in the state of North Carolina, with a maximum of $530,150 for a single-unit home and $1,019,550 for a four-plex. All other counties in NC had a lending limit of $524,225 for a single-unit home and $1,008,300 for a four-plex.

NORTH CAROLINA 2025 FHA LENDING LIMITS

Whether you’re a current resident or are looking to move in from out of state, FHA loans in North Carolina offer numerous benefits to buyers, including:

• FHA loan recipients are eligible for down payments as low as 3.5% of the purchase price.
• FHA loans permit a higher debt-to-income (DTI) ratio than conventional loans. A limit of 43% is standard; however, some lenders may permit a DTI ratio of up to 50% for borrowers based on compensating factors such as savings and cash reserves, residual income and steady employment.
• FHA loans have less restrictive rules concerning monetary gifts, allowing buyers to cover 100% of their down payment and closing costs with gift funds.
• An FHA-approved buyer has the option to assume a seller’s FHA mortgage to secure lower interest rates.
• FHA recipients are eligible for additional financial hardship relief.

Pros & Cons of an FHA Loan in NC

While they are more accessible than conventional loans, FHA loans still come with eligibility requirements. To qualify for an FHA loan in NC, you must have:

• A valid Social Security Number (SSN)
• Lawful residency in the United States
• A steady income and proof of employment
• A minimum credit score of 580 (to qualify for 3.5% down)
• A clean credit history over the previous two years

In addition to this:

• You must have the property you wish to purchase appraised by an FHA-approved appraiser.
• The home must meet the HUD’s Minimum Property Standards (MPR).
• You must use the property as your primary residence; you cannot use an FHA loan for an investment property.
• You must agree to pay a mortgage insurance premium (MIP).

Applying for a mortgage, FHA or otherwise, can be a complex process, but it doesn’t need to be stressful. Here’s a step-by-step breakdown of what you can expect from the FHA loan application process, and what you can do to ensure best results.

1. Gather documents.

Before you do anything else, you’ll want to make sure you have all the necessary documentation, including your SSN, proof of legal residency or work eligibility, pay stubs, W-2 forms, tax returns and bank statements, to apply for an FHA loan in North Carolina.

2. Find a mortgage broker.

A mortgage broker will review your finances to determine which FHA-approved lenders are best suited for your unique situation. Your broker will then act as a liaison between you and lenders throughout the application process, helping you get pre-qualified, secure the best rates and select the lender that offers you the most favorable terms. Knowing you have a qualified, trustworthy mortgage broker on your side who has your best interests at heart can alleviate much of the stress of the application process.

3. Get pre-qualified.

Pre-qualification is the process by which a lender evaluates your financial situation and determines whether you qualify for an FHA loan (before you’ve even found a home).

During this step, the lender will review:

• Your tri-merge credit report, a comprehensive that combines your individual credit reports from Experian, Equifax and TransUnion
• Your DTI ratio
• Your existing assets, such as your savings account, 401(k) and/or stock dividends
• IRS W-2 forms and tax returns from the past two years
• Bank statements from the past three months
• Pay stubs from the past two months
• An employee verification letter

Although pre-qualification isn’t a mandatory part of the FHA loan application process, it is highly recommended, as it lets you know the maximum amount you can afford to borrow and enables you to discuss mortgage options with your broker. It also proves to both realtors and sellers that you’re a serious and motivated buyer in good financial standing. Note that pre-qualification does not guarantee you final approval for a loan, but it is a good indication that you’re likely to be approved.

Interested in getting pre-qualified? Download our free checklist to get started.

4. Find a property you love.

Now for the fun part! As exciting as house hunting can be, touring dozens of properties (or more) in search of the perfect one can be a little like searching for a needle in a haystack.

To set yourself up for success, start by drafting a list of everything you could possibly want in a home, and then narrow that down to just a list of must-haves. You might not get everything on your list but, if you find a property with the features you really need — plus a few you really want — you’ll be in a good spot.

Consider not only the property itself (square footage, total number of bedrooms and bathrooms, type of home, floor plan and so on), but also where it’s located, and whether the neighborhood suits your needs and lifestyle.

For example, if you’re a young professional who wants to live close to work and have access to culture and nightlife, a condo in a major city such as Raleigh could be a good fit for you. If you’re looking to start a family and want room to grow while still being close to amenities, a single family home in a smaller city, such as Winston-Salem, or in the suburbs — Cary, Apex and Morrisville are all popular options — might be the better choice.

Need help drafting your wish list? Here’s a starter list you can download for free.

5. Fill out the application form.

So, you’ve gotten pre-qualified and found a home that feels like a great fit — now it’s time to apply for a loan.

First, fill out a Uniform Residential Loan Application (also known as Fannie Mae Form), which asks for information about the type of home you’re applying for and the property address. You will also need to fill out an addendum to this form (HUD form 92900-A). These forms cover substantial information ranging from your employment history to recurring debts.

Note that some lenders might require you to pay a mortgage application fee at this stage, while others might roll that fee into your closing costs. A good mortgage broker will ensure you’re prepared for either possibility by confirming with each lender what their policy is.

6. Get a property appraisal.

To receive approval for an FHA loan, the property you intend to purchase must be appraised by an HUD-approved appraiser. This appraiser will evaluate the market value of the property by looking at comparable properties recently sold in the area. They’ll also conduct an in-depth property inspection to ensure the home meets the HUD’s MPR, such as that the home is safe, livable and up to code.

7. Receive underwriter approval.

The second-to-last step in the FHA loan application process is to receive underwriter approval. An underwriter works on behalf of a lender, reviewing all paperwork submitted to determine how likely you are to repay your debt based on factors such as your credit score, credit history, employment history, income stability and DTI.

8. Close on your new home.

Closing time! During the closing process, you’ll review and sign all loan documentation and pay any closing costs. The amount you pay in closing costs is based on several factors, including your mortgage type, loan amount, the type of property you’ve purchased and your city, county or state of residence. Closing costs can include:

• Appraisal fee
• Origination fee
• Document preparation free
• Credit report fee
• Legal fees
• Title search
• Title insurance
• Escrow fees
• Homeowners insurance
  Regarding the last item in this list, FHA buyers are specifically required to pay MIP. With MIP, homebuyers must pay an upfront premium of 1.75% of the loan amount and an annual premium of 0.15% to 0.75%. Buyers who purchase a home with an FHA loan and pay less than 10% down are required to pay MIP for the lifetime of the loan.

One benefit for buyers who apply for an FHA loan in NC (or anywhere else in the country) is that they can ask the seller to pay some of the fees associated with closing, as well as apply monetary gifts from family and friends toward their closing costs.

Buying a home is one of the most rewarding investments you’ll ever make. To have the most seamless experience possible, it’s important that you compare your options with the help of a qualified mortgage broker to find the loan — FHA or otherwise — that best meets your needs.

With over 150 years of collective experience, the brokers at Blue Water Mortgage have seen and done it all. That means we have the expertise to secure the best terms and lowest rates possible for you. With Blue Water, you get a team that will guide you through every step of the process and answer any questions you might have. Contact us today to learn more.