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Tips and Advice for First Time Home Buyers in North Carolina

The breezy beach cottage by the coast, the farmhouse style ranch, the eclectic bungalow – in North Carolina, any of these could be the perfect home for you. And with its natural beauty, diverse ecosystems and low cost of living, the Tar Heel State is a great option for any first time home buyer.

North Carolina is a great state in which to achieve your dream of homeownership. From its seemingly endless coastline and striking mountain views to its vibrant college towns and growing industrial hubs, there is truly something for everyone. In this article, we’re covering the first time home buying process and sharing our expert tips for first time home buyers in NC.


Steps to Get Started on Your First Time Home Buying Journey

Step 1: Assemble Your Team
Purchasing your first home is a major life milestone – which is why it is crucial to assemble your own team of professionals that have the knowledge and experience to ensure you are granted the best outcome. Your team should consist of a realtor, a real estate attorney, a lender and a mortgage broker that can keep your needs top-of-mind every step of the home buying process.

Step 2: Explore Your Options
The numerous loan options available in North Carolina can be a bit overwhelming upon initial glance, which is why it is important to take your time and research which products and programs will fit your unique needs.

Here’s a closer look at the available national loan options for first time home buyers:

Loan Type Description Benefits 
FHA A type of low down payment government loan insured by the Federal Housing Administration, a program office of the U.S. Department of Housing and Urban Development.
  • Low down payment
  • Flexible credit review
  • Fixed or adjustable rate
  • Limited closing costs; seller can help pay closing costs
  • No prepayment penalty
  • Available to individuals with low credit scores or no credit history
  • Special 203(k) program for home repairs
USDA A type of government loan insured by the U.S. Department of Agriculture’s Rural Housing Program that enables low- and moderate-income households to purchase property in eligible rural areas.
  • No down payment required
  • Low mortgage rates
  • 100% financing
  • Reduced monthly mortgage insurance
  • Closing costs can come from a gift
  • Easy to qualify for
VA A loan provided by a private lender and guaranteed by the U.S. Department of Veterans’ Affairs in order to make homeownership more affordable for veterans.
  • No down payment
  • No cash reserves
  • No application fee
  • No monthly mortgage insurance premiums
  • Funding fee may be financed
  • Seller can help pay closing costs
  • Low interest rates
Conventional The most common type of loan, conventional mortgages are private-sector loans that follow the guidelines set by Fannie Mae and Freddie Mac. Borrowers can choose between 15-year, 20-year and 30-year mortgages.
  • Low down payment
  • No upfront mortgage insurance
  • Potential for lower mortgage insurance rates or no mortgage insurance at all
  • Stable interest rates
  • More appealing to sellers
  • Shorter underwriter approval process
Jumbo (Non-Conforming) Any mortgage that exceeds the conforming lending limit of Fannie Mae or Freddie Mac.
  • Borrow more than a conventional or government-backed loan
  • Potential for lower mortgage insurance rates or no mortgage insurance at all


Step 3: Look for Available Programs & Grants
One advantage for first time buyers is the opportunity to receive grants to supplement your mortgage or to put towards your down payment. The programs and grants you could be eligible for include:

  • Good Neighbor Next Door: This program is only available to law enforcement officers, firefighters, emergency medical technicians and teachers. Funded by the U.S. Department of Housing and Urban Development (HUD), the Good Neighbor Next Door initiative provides qualified first time home buyers with a 50% discount off the list price of homes in the HUD inventory if they agree to live in the property for at least 36 months.
  • Fannie Mae’s HomePath ReadyBuyer Program: With the completion of an online course, this program provides first time home buyers with up to 3% closing cost assistance toward to purchase of a HomePath property.
  • The HUD Dollar Homes initiative: Designed for low- to- moderate income families, this program grants buyers the opportunity to purchase a home that was foreclosed for just $1.
  • Down Payment Assistance (DPA) Programs: The National Homebuyers Fund (NHF) offers DPA programs to home buyers that are able to afford monthly payments but do not qualify for the FDA’s 3.5% down payment requirement.

Step 4: Get Prequalified
Once you feel confident about a loan type that fits your needs, the next step is to get prequalified. Although prequalification is not mandatory, it can be helpful to get an estimate of the maximum amount you can borrow to subsequently set a price range. Another benefit of getting prequalified is that it makes a seller more likely to accept your offer over other buyers.

To get prequalified, you will need to provide your mortgage broker with the following:

  • Proof of income
    • Employee verification letter
    • Pay stubs from the past two months
    • IRS W-2 forms and tax returns from the past two years
  • Your tri-merge credit report
  • Proof of assets
    • Savings account
    • 401(k)
    • Stock dividends
    • Investment account statements
  • Your debt-to-income ratio

Note that once you are prequalified, you will still need to go through the standard loan application process in order to actually secure funding. This means you aren’t obligated to work with the same lender that prequalifies you – in fact, you can even shop your prequalification around to other lenders to get a better deal. This is where it becomes vital to work with your mortgage broker because they can act as a liaison between you and lenders.

Get Prequalified Today!

Step 5: Start House Hunting
Enough preparation — it’s time to start the search for your dream first home. Given North Carolina’s natural beauty, some might say that it’s nearly impossible to go wrong when finding the perfect home. As a first time home buyer, here are a few questions you’ll want to consider:

  • What is your budget/how much can you afford?
  • Would you prefer to live in the city, the suburbs or somewhere more rural?
  • What type of property are you looking for? (e.g. a single-family home, a duplex, condo, townhome, a co-op, etc.)
  • How many bedrooms and bathrooms do you need? (Be realistic and don’t forget to think ahead!)
  • What are your must-have features in a home, and which features would simply be nice to have?
  • What is important to you? (e.g. a good school district, proximity to work, room to grow, etc.)

Step 6: Make an Offer
Once you find a home you love, it’s time to make an offer. You can rely on your real estate agent’s knowledge of the local housing market and your financial situation to put together a competitive offer that remains within your budget. Remember that list prices aren’t adamant – your realtor has room to negotiate price based on the home’s location, how long it’s been on the market and if it requires any renovations.

Within a few days of submitting your offer, be sure to schedule an official home inspection. A home inspector will provide a report of any pre-existing issues with the home that you can use to leverage your offer throughout the negotiation process.

Step 7: Apply for a Mortgage
You have 90 days to apply for a mortgage after your final offer has been submitted. At this point, your mortgage broker will step in and guide you throughout the application process. A good mortgage broker will use their connections and work with a wide variety of lenders to negotiate favorable mortgage terms for you.

After you apply to the lender, an underwriter will review your application and assess your credit score, credit history, employment history, income stability, debt-to-income ratio and assets to determine your ability to repay your debt. Based on their assessment, the underwriter will either approve, deny or suspend your application.

If approved, you can move on to obtaining a home appraisal. If suspended, it is likely that the underwriter needs additional information before they can proceed. There is no need to panic if your application is denied — the underwriter will provide definitive reason as to why it was rejected so that you can work with your mortgage broker to make any necessary changes and apply again.

Step 8: Obtain a Home Appraisal
Before the underwriter issues their final mortgage application approval, borrowers are required to receive a home appraisal from a lender-approved appraiser. The appraiser’s role is to give the lender an idea of the home’s value to ensure that the homeowner does not over-borrow.

The appraiser will review the following:

  • Current market trends
  • The general condition of the home
  • Square footage
  • The number of bedrooms and bathrooms
  • Additional space (e.g. basement, attic, crawl space)
  • Building materials
  • Foundation type
  • Home improvements, upgrades and added amenities
  • Neighborhood characteristics
  • Lot size
  • Recent sales of similar properties

Once the underwriter receives the appraiser’s findings and approves, they will work with your mortgage lender to lock in your interest rate to prepare for closing.

Step 9: Close on Your Home
Ah, closing day! During closing, your broker and realtor will work with you to review and sign all loan documentation. At this point you will also be required to pay closing costs, including an appraisal fee, an origination fee, legal fees, title search and insurance, escrow fees and more. The amount you pay in closing costs will vary based on your loan type, loan amount, the type of property you purchase and its location, etc.

bwm have some questions

Things to Avoid When Considering Buying Your First Home

For the first time home buyer, this process is entirely new. To minimize any room for mistakes, here are some important things to avoid when buying your first home:

  • Buying before you’re ready
  • Being unrealistic about your budget
  • Underestimating the cost of homeownership
  • Not saving enough for emergencies
  • Neglecting to do your research
  • Not exploring different mortgage options
  • Shopping with just one lender
  • Not working with a mortgage broker
  • Not getting prequalified
  • Letting your debt run rampant
  • Turning a blind eye to your credit score
  • Not making a wish list
  • Waiting for the “perfect” house
  • Settling for the wrong house
  • Prioritizing the house over the neighborhood
  • Skipping the home inspection
  • Putting too much or too little money down

If you have any questions about buying your first home, contact one of our experienced mortgage brokers today.

Tips for First Time Home Buyers NC

With 150 years of collective experience, our mortgage brokers have narrowed down the most notable tips for first time buyers in North Carolina:

  1. Assemble a real estate team
  2. Look at North Carolina-specific first time home buyer loan options
  3. Review the national loan options available to first time home buyers in North Carolina
  4. Know how much money you’ll need to put down on a house
  5. Apply for real estate programs and grants
  6. Get prequalified for a mortgage
  7. Don’t confuse being prequalified for a mortgage with being approved
  8. Educate yourself about PMI
  9. Study up on how to make an offer
  10. Get a home appraisal
  11. Prepare for closing on your home

bwm getting ready to buy a home

First Time Homebuyer Programs Available to NC Residents

  • NC Home Advantage Mortgage: Provides qualified individuals with stable, fixed-rate mortgages and down payment assistance up to 5% of the loan amount
  • NC 1st Home Advantage Down Payment: $8,000 down payment assistance option for first-time buyers and military veterans
  • NC Home Advantage Tax Credit: Grants a Mortgage Credit Certificate (MCC) for eligible first-time buyers and military veterans to save up to $2,000/year on their federal taxes


FAQs for First Time Homebuyers in NC

Q: How much money do I need to put down on a house in North Carolina?
A: If you qualify for a VA or USDA loan, you’re eligible to put no money down; if you qualify for a conventional loan, you can put as little as 3% down.

Q: Is being prequalified for a loan the same as being approved for a mortgage?A: No, they are not the same! You’ll still have to secure funding by going through the standard loan application process. A mortgage broker can expedite it by serving as a liaison between you and lenders.

Q: How much is the average PMI for NC?
A: PMI will fluctuate based on your credit score and down payment; use a fact of 0.7% for a good ballpark. For example, on a $100,000 loan, multiply $100,000 by 0.7% for a $700 annual cost, or $58.33 a month.

Q: How can I get approved as a first-time home buyer in NC?
A: The first step is to talk with an experienced loan officer who can answer all your questions and walk you through the prequalification process.

Ready to embark on your journey to homeownership in North Carolina? Our team of experts awaits you! Contact Blue Water Mortgage today and speak with a member of our first time home buyer team to learn how we can help you land the home of your dreams.

Blue Water is now licensed in New Hampshire, Maine, Massachusetts, Connecticut, Vermont, Rhode Island, Florida, North Carolina, Colorado, Texas, Georgia, and South Carolina.

Roger Odoardi

Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.