Today’s North Carolina Mortgage Rates: What to Know Before Making a North Carolina Home Purchase

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Homebuyers have a lot to love in the Tar Heel State, from mountains to coastlines and everything in between. Each housing market in North Carolina is different, so you’ll need to research home prices and mortgage rates in the specific area where you’re looking to buy. 

“If you look at areas around Charlotte or Raleigh, you’re seeing an appreciation of home prices as well as demand more than in certain areas in other states,” says Matthew Ricci, a home loan specialist with Churchill Mortgage. “There’s been a lot of job creation in certain areas like the Research Triangle, outside of Raleigh, which leads to higher housing demand.” 

Here’s what to know about mortgage rates in North Carolina along with home prices and how to qualify for down payment assistance. 

What Are Today’s Mortgage Rates in North Carolina?

For Monday, February 06, 2023, here are the current mortgage rates in North Carolina. The average 30-year fixed mortgage rate is 6.380%. The average 30-year fixed mortgage refinance rate is 6.500%. Today, the average 15-year fixed mortgage rate is 5.650%.

This information is from Bankrate’s latest survey of the nation’s largest mortgage lenders.

Current Mortgage Rates in North Carolina

Loan TypeRate
30-year Fixed6.380%
15-year Fixed5.650%
30-Year Refi6.500%

How Much of a Mortgage Do You Need to Buy a Home in North Carolina?

When you take out a mortgage, you’ll typically need to commit a down payment toward the home loan. The minimum down payment depends on the mortgage program and the lender’s specific rules. FHA loans require either 3.5% or 10% down, depending on your credit score, and most VA loans don’t come with a down payment at all. Conventional loans require at least 3% down. 

If you’re worried about rising home prices and saving for a down payment, there’s some good news. Rising interest rates are starting to cool demand and reduce bidding wars, which is “opening the door to first-time homebuyers,” says Nicole Rueth, a producing branch manager with Fairway Independent Mortgage Corp. When you don’t have to offer over the asking price, Rueth says, you’ll end up with smaller payments. “It’s an opportunity that not enough young people are talking about,” she says.

Below is a table showing estimated down payments in different metro areas across North Carolina. 

Metro AreaMedian Home Price3.5%10%20%
Durham – Chapel Hill$418,000$14,630.00$41,800$83,600
Source: National Association of Realtors (NAR) data for Q1 2022

Types of Home Loans Available in North Carolina 

The major mortgage programs in North Carolina include FHA loans, VA loans, and conventional loans. Lenders may also offer their own home loans, which could help you qualify if you don’t fit eligibility requirements set by the major mortgage programs. Here’s what to know about major mortgage types in North Carolina. 

Conventional loans

Conventional loans are mortgages that aren’t associated with government programs, and they’re the most popular type of home loan—for both buyers and sellers. “It’s like a fast pass at Disneyland,” Rueth says. “It’s going to get you into more listings and give you more opportunities to get (your bid) accepted if you fit within the box.” 

To qualify for a conventional loan, you’ll need a down payment of at least 3%, a credit score of at least 620, and a maximum debt-to-income ratio of 45% in most cases. You’ll also pay monthly private mortgage insurance if you put down less than 20%, but you can eventually drop PMI.    

FHA loans

Homebuyers who don’t qualify for conventional mortgages often turn to FHA loans, which are home loans backed by the Federal Housing Administration (FHA). These are much less strict when it comes to credit score and down payment requirements. “It could be good for first-time homebuyers who might not have been able to build up their credit,” Rueth says. “Maybe their DTI (ratio) is higher or their wages a little bit lower.”

Buyers either need a minimum credit score of 580 and a down payment of 3.5%, or a credit score of 500 and a down payment of at least 10%. The buyer’s DTI ratio can be up to 50%. These loans come with both upfront and monthly mortgage insurance, which can make them more expensive than conventional loans over time.

VA loans

VA loans are mortgages available to service members, veterans, and surviving spouses. These home loans are insured by the U.S. Department of Veterans Affairs and come with no down payment, no mortgage insurance, and very low closing costs. However, borrowers must meet the lender’s specific credit score and DTI ratio requirements and pay an upfront funding fee.

Pro Tip

Homebuyers in North Carolina pay $3,406 in closing costs on average, but there are programs on the state and local level to help cover some of the costs. To use one of these programs, you’ll need to find a lender that accepts homebuyer assistance and then meet eligibility requirements.

First Time Homebuyer Programs in North Carolina

There are many homeownership assistance programs in North Carolina, both on the state and local level. These programs provide money to help offset the down payment and closing costs. 

But if you use one of these programs, “it becomes difficult to compete against other buyers,” Ricci says. “You must have to increase your offer, work with a very good real estate agent, or play the waiting game. It might take someone with a large (self-funded) down payment three or four months to buy a house and make three to four offers. It might take someone with down payment assistance 10 to 15 bids before they finally get accepted.”

That shouldn’t deter you from using these programs, but it’s good to know going into the process. Here are some of the programs you’ll find in North Carolina. 

North Carolina Home Advantage Tax Credit

First-time homebuyers and military veterans can use the North Carolina Home Advantage Tax Credit to save on their federal income taxes. To get started, you’ll apply for a Mortgage Credit Certificate (MCC) at the same time as your mortgage. Then, during the next tax season, you can claim a federal tax credit for 30% of the interest you pay on an existing home or 50% on a newly built home. The credit is worth up to $2,000 per year for every year you live in your home. To qualify, you’ll need to meet the income and sales price limits and occupy the home as your principal residence within 60 days of closing.

Down payment assistance

The North Carolina Housing Finance Agency (NCHFA) offers the NC Home Advantage Mortgage, which is a home loan with a fixed interest rate and down payment assistance of up to 3% of the loan amount. Both first-time and move-up homebuyers can qualify. 

The agency offers another down payment assistance option that’s worth up to $8,000. It’s geared toward first-time buyers and military veterans who meet additional eligibility criteria. For both options, repayment is not required if you live in the home as your principal residence for at least 15 years. 

Community Home Buying Programs

If you’re buying a home and your income is below 80% of your county’s area median income, you may qualify for homebuyer assistance from one of the Housing Finance Agency’s Community Home Buying Programs:

  • Community Partners Loan Pool: Borrowers who meet household income limits can receive up to 25% of a home’s sales price or a maximum loan of $40,000, whichever is less. The money can be used toward the down payment. It’s provided as a 0% interest, subordinate loan that must be combined with an NC Home Advantage Mortgage or a USDA 502 Direct loan. 
  • Self-Help Loan Pool: This is another down payment assistance program that provides 0% interest, shared mortgage financing to buyers who meet income limits. The homes are built and sold by a participating Habitat for Humanity affiliate.

Raleigh’s Homebuyer Program

Raleigh is the second-largest city in North Carolina with one of the largest student populations in the state. The city offers a Homebuyer Program, in which eligible homebuyers can receive low-interest loans of up to $20,000 to help cover down payments and closing costs. The principal balance is forgiven if you live in the home for at least 20 years. To qualify, you’ll need to be a first-time homebuyer (you haven’t owned a home for the past three years) and meet income limits.