The 20 percent myth
Twenty percent down is not a requirement for most first-time buyers, it's a threshold that lets you skip private mortgage insurance on a conventional loan. Many first-time buyer programs and loan types allow far less down, in some cases as little as zero to five percent, depending on the loan program.
What actually determines your minimum
Your minimum down payment depends on the specific loan type: conventional loans, FHA loans, USDA loans (for eligible rural and some suburban areas), and VA loans (for eligible veterans) all carry different minimums. NC's first-time buyer down payment assistance programs can layer on top of several of these, reducing the cash you need at closing even further.
Through the NC Housing Finance Agency, the NC Home Advantage Mortgage offers down payment assistance of up to 3% of the loan amount, while first-time buyers and military veterans who meet additional criteria may qualify instead for the NC 1st Home Advantage Down Payment, worth $15,000.1 Both are repayable only if you sell, refinance or transfer the home before year 15, and are forgiven at 20% per year across years 11 through 15.1
The trade-off with a smaller down payment
A smaller down payment typically means private mortgage insurance added to your monthly payment until you build enough equity to remove it, plus a somewhat higher interest rate in some cases. It's not automatically the wrong choice, but it's worth understanding the full monthly cost picture, not just the amount of cash needed at closing.
Down payment assistance is closely tied to NC's specific first-time buyer mortgage program; see how the NC Home Advantage Mortgage program works for the mechanics of the most common option.
Frequently asked questions
- Down payment assistance percentage, the $15,000 option and forgiveness terms: NC Home Advantage Mortgage, NC Housing Finance Agency.