Hoping to Be a First-Time Homeowner? How to Find Grants Meant Just for You

First-time homeowner grants can help when you want to buy a house but struggle to save a down

First-Time Homebuyer Grants: How to Cover Your Down Payment

Finding and using zero-down grants can help North Carolina buyers overcome the biggest hurdle to homeownership

August 1, 2025

Saving for a down payment is often the greatest barrier between renters and owning a home, especially for households in North Carolina’s growing cities and rural counties alike. First-time homebuyer grants, paired with low-down-payment mortgage programs, allow qualified buyers to purchase their primary residence with little or no cash up front. These grants are technically deferred loans, with subsidized interest and forgiveness terms, and can cut years off your repayment timeline. Below is a step-by-step guide to how these grants work, where to find them in North Carolina, program requirements, and tips to maximize your chances of approval.

How first-time homebuyer grants function

Grants designed for first-time buyers effectively bridge the gap between zero down and your mortgage’s minimum requirement. You apply for a primary mortgage, FHA, USDA, VA (for eligible veterans) or conventional portfolio loans with as little as 3 percent down—and request grant funds to cover the balance needed for your lender’s required down payment. Unlike cash gifts from family, these grants carry an interest rate, typically between 0 and 3 percent, and require small monthly payments that often mirror or undercut market rates. If you maintain ownership for a predetermined period—usually three to five years—the remaining balance may be forgiven entirely. Because they target low- and moderate-income borrowers, grants also impose household income caps tied to area median incomes.

State and local grant programs in North Carolina

NC Housing Finance Agency (NCHFA) Home Advantage Grant – Offers up to $10,000 forgivable over five years at 0 percent interest, for borrowers with incomes up to 80 percent of area median income. Used with Home Advantage Mortgage or Community Partners Loan Pool.
Community Partners Loan Pool (CPLP) – Provides second-mortgage assistance plus a deferred forgivable grant. Income limits vary by county; check program details at nchfa.gov/homebuyers.
City of Charlotte Get CHPed – City grant up to $7,500 for down payment and closing costs for buyers in qualifying Charlotte neighborhoods. Income up to 80 percent of Charlotte-Mecklenburg AMI.
City of Raleigh Affordable Homeownership Program – Grants up to $15,000 combined with low-interest second mortgages for buyers earning up to 120 percent of Raleigh AMI.
City of Durham Soft Second Loan – Forgivable loan of up to $8,000 for down payment and closing costs, paired with Home Advantage Mortgage.

Finding additional local and nonprofit resources

Counties and municipalities across North Carolina often run their own assistance programs or partner with nonprofits. To locate opportunities near you:

Contact your county housing department or community development office. Many list grant programs online.
Visit Habitat for Humanity affiliate chapters, some offer zero-interest second mortgages or down payment assistance.
Attend workshops hosted by NC Cooperative Extension or community action agencies; they often feature guest speakers from grant programs and local lenders.
Use the U.S. Department of Housing and Urban Development’s locator tool at hud.gov/states/north_carolina.

Key eligibility requirements

While program specifics vary, most first-time homebuyer grants share common criteria:

First-time buyer status: No ownership of a principal residence in the past three years (some programs allow repeat buyers purchasing in targeted areas).
Owner-occupancy: The home must be your primary residence, no vacation or investment properties.
Income limits: Household earnings cannot exceed a set percentage (often 80 to 120 percent) of your county’s area median income (AMI). In high-cost areas AMI caps rise accordingly.
Purchase price limits: Homes must fall below program price thresholds, typically aligned with 95 percent of local median home values.
Homebuyer education: Completion of an approved counseling course (8 to 12 hours) from a HUD-certified counselor is required before closing.
Credit and debt ratios: Lenders generally require a credit score of at least 620 for conventional loans, lower for FHA, and a debt-to-income ratio under 45 percent.

Selecting the right mortgage product

First-time grants pair best with these mortgage options:

FHA Loan – 3.5 percent minimum down, flexible credit guidelines, acceptable for grants but with mortgage insurance premiums.
USDA Rural Development Loan – Zero down payment for rural homes; combine with grant to cover closing costs or secondary expenses.
VA Loan – Zero down for veterans and active-duty service members; grants can cover funding fees and closing costs.
Conventional 97 – 3 percent down payment; eligible for HomeReady or Home Possible programs with reduced mortgage insurance and combined grants.
NC Housing Finance Agency Home Advantage Mortgage – 3 percent down, below-market rates, up to 100 percent financing when combined with NCHFA grants.

Application and documentation tips

Grant applications require detailed documentation. To streamline the process, gather these items early:

Proof of income: Recent pay stubs, W-2s and federal tax returns verifying household earnings.
Bank statements: Two months of checking, savings and retirement accounts.
Purchase contract: Signed offer on a qualifying primary residence.
Homebuyer education certificate: Completion proof from an approved 8-hour course.
Identification: Valid driver’s license or state ID for all applicants.
Social Security numbers: For credit and background checks.

Submit the grant application to the sponsoring agency concurrently with your mortgage preapproval. Ask your mortgage loan officer to confirm grant submission deadlines, missing the grant cutoff can delay closing or disqualify you from assistance.

Managing the deferred loan and forgiveness

Grants function as deferred-payment second mortgages. Monthly payments often range from $50 to $150 at 0 to 3 percent interest. To maximize forgiveness:

Remain in the home and avoid refinancing or renting out the property during the forgiveness period (typically three to five years).
Make payments on time each month; late or missed payments may trigger full repayment of the grant balance.
Notify the grant administrator of any title transfers, relocations or changes in occupancy status.

Once the forgiveness term ends, and you have complied with all requirements—the remaining grant balance is automatically forgiven and removed from your mortgage record.

Working with experienced lenders and counselors

Not all lenders participate in every local grant program. To ensure you receive and properly document grant funds:

Use the NCHFA list of approved lenders at nchfa.gov/homebuyers.
Choose a mortgage loan officer with prior experience closing first-time buyer grants in your county.
Work with HUD-certified housing counselors, many local nonprofits and community action agencies in North Carolina offer free or low-cost counseling.

Additional North Carolina resources

NC Housing Finance Agency: Program details, lender lists and income limits at nchfa.gov.
NC Department of Commerce, Division of Community Assistance: Local grant listings and community development contacts at nccommerce.com.
City and County Housing Offices: Search online for your city or county name plus “first time homebuyer program.”
HUD NC Homeownership page: Federal and state program locator at hud.gov/states/north_carolina.

Zero-down first-time homebuyer grants empower North Carolina households to enter the housing market without depleting their savings. By pairing the right mortgage product, completing homebuyer education, submitting accurate documentation and adhering to payment schedules, you can secure forgiveness of grant funds and build equity in your new home. Reach out to local housing agencies, certified lenders and nonprofit counselors early in the process to turn your homeownership goals into reality.