Compare Current Mortgage Rates in North Carolina

The interest rate you get on a mortgage loan affects how much you pay each month. The higher your interest rate, the more your mortgage payment will be, and the lower your interest rate, the less your payment will be. For example, on a 30-year fixed-rate $400,000 loan with an interest rate of 6%, you’d pay about $2,398 each month. With an interest rate of 8%, you’d pay about $2,935 each month. In this case, those 2 percentage points equal $537 a month.

Lenders in North Carolina look at different sources when setting interest rates for customers:

• The Federal Reserve: The Federal Reserve sets the federal funds rate, which is the rate lenders charge each other. If this rate is high, mortgage rates will probably rise, and if this rate is low, mortgage rates should drop.
• Economic conditions: In a strong economy, people are more likely to have money to buy a house. This tends to create more demand for home loans, and increased demand usually means a rise in interest rates. In a weak economy with fewer people buying homes, interest rates should fall.
• Inflation: Inflation rises when there is more money in circulation than products to buy. That means consumers need to spend more to buy goods and services. Mortgage rates rise during inflationary times because investors seek higher interest rates to compensate for the decrease in purchasing power.

The North Carolina Housing Finance Agency has several programs for first-time homebuyers offered by participating lenders throughout the state:

• NC Home Advantage Mortgage: First-time and move-up buyers can get down payment assistance up to 3% of the loan amount. This down payment assistance is forgiven if you live in the home for 15 years. You need to be a resident of North Carolina for 60 days and purchase a home in North Carolina to qualify. You also need to have a credit score of 640 or higher and earn no more than $134,000 a year.
• NC 1st Home Advantage Down Payment: First-time buyers and military veterans might qualify for an additional $15,000 in down payment assistance. All down payment assistance is forgiven after 15 years of living in the home.
• NC Home Advantage Tax Credit: First-time buyers and military veterans could save up to $2,000 per year on federal taxes. You must first apply for and receive a mortgage credit certificate (MCC) from the NC Housing Finance Agency. You can apply for this when you apply for your mortgage. You must live in a targeted census tract to qualify.

Low- and moderate-income North Carolina buyers might qualify for buyer assistance through community homebuying programs:

• Community Partners Loan Pool (CPLP): Homebuyers can receive up to $50,000 or 25% of the loan, whichever is less, in the form of a 0% interest loan. You must have an NC Home Advantage mortgage or a USDA loan, meet certain income and price limits, and complete six hours of education and two hours of pre-purchase counseling to be eligible.
• Self-Help Loan Pool (SHLP): This program works with Habitat for Humanity affiliates and provides a 0% interest shared mortgage for buyers purchasing a Habitat for Humanity home. You must meet certain income and home price limits, complete six hours of education and two hours of pre-purchase counseling, and participate in the construction or rehabilitation of the home.

There are also national first-time homebuyer programs:

• Habitat for Humanity: Volunteers in this program help build safe and affordable houses for families in need worldwide. 
• Freddie Mac Home Possible® mortgage: This mortgage is for very-low- to low-income borrowers. There is a 3% down payment requirement, and the sources of funds can be flexible. For example, co-borrowers don’t need to live with you if you’re buying in a one-unit residence.
• Homeowner vouchers: This program is for low-income buyers already in the Housing Choice Voucher (HCV) program. You can use your voucher to buy a home and receive monthly assistance for home expenses.
• Government-backed home loans: You can get help buying a home through the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the United States Department of Agriculture (USDA). These are helpful for homebuyers who have smaller down payments or lower credit scores than they would need for a conventional loan.

Some factors lenders use to determine the interest rate on a loan are out of your control, such as the Federal Reserve, economic conditions, and inflation. But there are some things you can do to get a better rate:

• Improve your credit score: Your credit score affects the interest rate you’ll get. The higher your score, the lower your interest rate should be, and vice versa. FICO credit scores of 800 to 850 are exceptional, 740 to 799 are very good, 670 to 739 are good, 580 to 669 are fair, and 579 and below are poor. You can get a copy of your credit report by visiting AnnualCreditReport.com. Reviewing it can help you determine steps you might take to help improve your credit score so you can improve it as much as possible before applying for a loan.
• Down payment: A larger down payment often means you'll get a lower interest rate. The more money you invest in the home, the less risky you appear to lenders. To get a lower rate, you often need to put down at least 20%.
• Compare lenders: By contacting several lenders and asking for a loan estimate, you can determine the best deal for you. Lenders will want some basic information, such as your name, income, Social Security number, the prospective home address, the home’s price, and how much you want to borrow. Note that your credit score might go down a few points after the initial inquiry, but as long as you get all your loan estimates within 45 days, your credit score will not be affected again.
• Get a pre-approval letter: After you’ve picked a lender and are ready to buy within 30 to 60 days, you should apply for a pre-approval letter. Your lender will tell you which documents are needed. You or your real estate agent can present this letter to home sellers to show you’re a serious homebuyer. 

North Carolina residents have a variety of mortgage types available to them.

Conventional

• Description: Any mortgage loan not insured by the government. The loan amount must be less than $766,550 (as high as $1,149,825 in high-cost areas).
• Qualifications: Minimum down payment of 3%, minimum credit score of 620, DTI below 43%.

Jumbo

• Description: Loan amount higher than $766,550, available only in certain counties.
• Qualifications: Credit score of 700 and up, DTI below 43%, 20% or more down payment often required.

Standard 97 Percent Loan-to-Value Mortgage

• Description: Helps homebuyers who don't have enough down payment for a conventional mortgage.
• Qualifications: Must be a first-time homebuyer, single-family homes of 1, 2, 3, or 4 units and condos are eligible; manufactured homes are not.

FHA

• Description: Part of the Department of Housing and Urban Development. Provides mortgage insurance on loans. FHA-approved lenders make the loans.
• Qualifications: Down payment of 3.5%, DTI of less than 45%, typically need a FICO score of 580 or more to qualify for 3.5% down.

VA

• Description: Home loan program for service members, veterans, and certain family members. No down payment is required.
• Qualifications: You need a COE from the VA.

USDA

• Description: Helps people in rural areas buy a home. No down payment is required.
• Qualifications: Income must not exceed 115% of median income, must live in the residence, home must be in an eligible rural area.