What should I know about buying a home in South Carolina?

If you’re looking to buy a home in South Carolina, you’re in luck! The state offers several first time home buyer and down payment assistance programs to make homeownership more attainable.

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Does South Carolina have a first time homebuyer program?

South Carolina offers several programs through the South Carolina State Housing Finance and Development Authority (SC Housing) to assist first time homebuyers and those with low to moderate incomes. These programs aim to make homeownership more accessible by providing:

South Carolina First Time Home Buyer Programs

There are several first time homebuyer programs available through SC Housing. Let’s discuss each program and the eligibility requirements to help you determine the best option for you.

SC Housing County First Initiative

The SC Housing County First Initiative assist’s both first time and move up buyers in specific rural areas to purchase a home. This program offers up to $8,500 in forgivable down payment assistance and special fixed rate financing. Eligible borrowers can choose from FHA, Conventional, USDA, or VA loans.

Requirements: SC Housing County First Initiative

To be eligible for this program, you must reside in one of the following counties: Abbeville, Allendale, Bamberg, Barnwell, Calhoun, Chester, Clarendon, Dillon, Edgefield, Fairfield, Georgetown, Hampton, Jasper, Lee, Marion, Marlboro, McCormick, Newberry, Saluda, or Williamsburg County. There are also income and purchase price limits you must meet to qualify.

South Carolina Housing Home Buyer Program

The SC Housing Homebuyer Program provides a 30 year, competitive fixed interest rate loan to assist low to moderate income borrowers in purchasing a home. This program is available to both first time homebuyers and buyers in specific targeted counties and can be used with FHA, Conventional, USDA, or VA Loans.

Requirements: South Carolina Housing Home Buyer Program

The requirements to be eligible for this program vary depending on the location where you intend to buy your home. For specific non-targeted counties, you must be a first time homebuyer. However, in targeted counties, borrowers should not have ownership in a home at the time of their loan closing. The minimum credit score and down payment requirements depend on the type of loan you select.

Palmetto Home Advantage Program

The Palmetto Home Advantage Program offers FHA, Conventional, USDA, and VA loan options for all buyers across all 46 counties in South Carolina. The program provides forgivable down payment assistance of up to 4% of the loan amount. This assistance comes in the form of a forgivable loan. This means you won’t owe it back if you stay in the home for a certain period, then typically 10 years. For those choosing a conventional loan with a down payment of less than 20%, the program may also help you qualify for a lower rate on private mortgage insurance (PMI).

Requirements: South Carolina Palmetto Home Advantage Program

To be eligible for the Palmetto Home Advantage program, you must meet income requirements and have a minimum credit score of 640. The specific income limits will vary depending on the type of loan you choose and your location.

Pros and Cons of South Carolina First Time Home Buyer Programs

South Carolina’s First Time Home Buyer Programs offer various benefits to eligible borrowers. However, it’s important to weigh the pros and cons to determine if this is the best fit for you.

Pros of South Caroline First Time Home Buyer Programs

  • Accessibility to Homeownership: These programs could make buying a home more accessible for first time buyers by offering lower down payments and financial assistance.
  • Variety of Loan Types: Many programs offer different loan options including conventional, FHA, VA, and USDA loans. This allows you to choose the loan that best suits your needs and credit score.
  • Fixed Interest Rates: Many loan programs offer fixed interest rates which could save you money over time compared to higher-interest variable rates. This could also give you more stability in your monthly mortgage payment.

Cons of South Caroline First Time Home Buyer Programs

  • Strict Eligibility Requirements: These programs typically have specific eligibility, income limits and credit score requirements you must meet to qualify.
  • Must work with Participating Lender: Programs may require you to work with a participating lender that partners with SC Housing. Direct Mortgage Loans is a participating lender that can guide you through the process, speak with one of our Loan Officer’s today!
  • Limited Funding: Some programs have limited funding available and operate on a first-come, first-served basis. This means that even if you qualify, then there might not be funds available when you apply.

See how much you can afford.

Your approval amount will give you an estimate on how much house you can afford.

Down Payment Assistance SC 

SC Housing offer’s several programs that provide forgivable down payment assistance to eligible buyers. This means you will not have to repay the assistance granted you live in the home for a set time. Let’s take a closer look at these programs.

Forgivable Down Payment Assistance SC 

Through SC Housing, eligible borrowers could qualify for Forgivable Down Payment Assistance (DPA). This DPA could be used towards your down payment and closing costs, and comes with zero interest and no monthly payments. The forgiveness period for the loan depends on your household income and is either 10 or 20 years. If you stay in the home for the full term, then the loan will be fully forgiven at the end of this period.

  • 10 Years: If your household income is at or below 80% of the Area Median Income (AMI) when you receive the down payment assistance loan, then the loan will be forgiven after ten years if you live in the home during that time. 
  • 20 Years: If your income is higher than 80% of the Area Median Income (AMI), then the loan will be forgiven over 20 years. You must live on the property for the entire 20 year term to have the loan forgiven.

Requirements Forgivable Down Payment Assistance SC 

The requirements for forgivable down payment assistance in South Carolina will vary depending on the loan forgiveness period. However, you will need to meet sales price, income limits, as well as the SC Housing first mortgage requirements. Furthermore, you must occupy the property for a period of either 10 or 20 years for the loan to fully be forgiven.

The South Carolina Housing DPA Program 

The South Carolina Housing DPA Program provides a forgivable second mortgage that could be used for down payment and closing costs. This is a 15 year loan with 0% interest and no monthly payments. If you live in the home for the full loan term, then the loan will be completely forgiven.

Requirements for the South Carolina Housing DPA Program 

To be eligible for this program you must meet sales price, income limits, as well as the SC Housing first mortgage requirements. Additionally, you must occupy the property for the full 15 year term for your loan to be fully forgiven.

SC Palmetto Home Advantage DPA 

The SC Palmetto Home Advantage DPA Program offers forgivable down payment assistance with a 0% interest rate and a 10 year loan term. The program offers a forgivable DPA of either 3% or 4% of the loan amount, depending on the loan size.

Requirements SC Palmetto Home Advantage DPA 

To be eligible for this program, you must meet income requirements and have a minimum credit score of 640. The specific income limits will vary depending on the type of loan you choose and your location.

FHA 100% DPA

Those looking to purchase a home in South Caroline could be eligible for FHA 100% DPA. This program provides homebuyers with 100% financing without requiring a down payment. However, closing costs are still required. This is achieved through a combination of a 1st and 2nd mortgage.  

This DPA program can be used to obtain an FHA loan, and the amount of the 2nd mortgage could be up to 3.5% of the sales price or the appraised value, whichever is less. The term for the 2nd mortgage is 10 years.

Eligibility for 100% FHA DPA 

To qualify for the program, you need to have a minimum credit score of 620 and a maximum debt-to-Income (DTI) ratio of 45%. You also need to complete an approved Homebuyer Education course and buy one of the following types of properties: single-family homes, duplexes, manufactured homes, PUDs, townhouses, or condos.

Pros and Cons of SC Down Payment Assistance Programs 

Like first time homebuyer programs, there are pros and cons to weigh before deciding if the SC Down Payment Assistance Program is right for you.

Pros of SC Down Payment Assistance Programs 

  • Bridge the Down Payment Gap: These programs could help you make up the difference between your savings and the minimum down payment required for a home. 
  • Free Up Cash for Other Costs: Some programs offer grants for your down payment and closing costs, freeing up your existing savings for moving expenses, unexpected repair, or future home improvements.  
  • Lower Monthly Payments: A larger down payment could qualify you for a conventional loan with a lower interest rate and eliminate the need for private mortgage insurance (PMI).

Cons of SC Down Payment Assistance Programs 

  • Eligibility Requirements: These programs often have specific requirements, such as income limits or the need to buy a home in a particular area, which could make it more difficult to qualify. 
  • Occupancy Restrictions: Some programs require you to live in the property for a set period to avoid repaying the assistance or qualify for loan forgiveness. 
  • Limited Funding: Some programs have limited funds and operate on a first-come, first serve basis. This could make it challenging to qualify if there are limited resources available.

SC Mortgage Tax Credit Program 

The SC Mortgage Tax Credit Program is a Mortgage Credit Certificate (MCC) which provides a federal income tax credit of up to $2,000 annually to eligible homebuyers. Through this Mortgage Credit Certificate (MCC) program, homeowners can convert a portion of their yearly interest deduction on their primary residence into a federal tax credit. This credit could be claimed each year to lower your federal taxes owed.  

Additionally, the credit could be used to decrease the debt ratio on a mortgage application. This allows borrowers to qualify for improved loan terms or higher loan amounts. The program has a cost of $500, and lenders may impose an additional processing fee of up to $500, which can be paid by the borrower or the home seller.

How To Apply for First Time Home Buyer SC Down Payment Assistance Programs and Grants 

  1. Find a Participating Lender: Connect with an SC Housing participating lender to learn about the program options and to confirm your eligibility. 
  2. Gather Required Documents: Once you confirm your eligibility, gather the documents needed to apply for the program. This usually means collecting pay stubs, tax returns, and bank statements. 
  3. Get Pre-Approved for a Mortgage: Submit your documents and a mortgage application to your lender 
  4. Complete Homebuyer Training Course: Many SC Housing programs require you to complete a homebuyer education course. Your lender can advise you on approved courses that meet program requirements.

Find out what your mortgage options are!

Get expert advice and find out what you qualify for when you submit your application online.

First Time Home Buyer SC Down Payment Assistance FAQ’s

What qualifies as a first time home buyer in South Carolina? 

In South Carolina, to be considered a first time homebuyer, you must either have never owned a home or not owned one in the past few years. More specifically, individuals are classified as first time homebuyers if they have not owned a primary residence for at least the last three years. 

Are these programs exclusive to SC first-time homebuyers only?  

These programs are not necessarily exclusive to first time homebuyers. Each program has its unique eligibility criteria. Other potential qualifiers include repeat buyers in specific targeted counties, single parents, veterans, households with a disabled member, and move-up buyers. Discuss with your loan officer which program you may be able to qualify for. 

Can I combine multiple programs to maximize benefits?

You can combine certain first time homebuyer and down payment assistance programs. However, keep in mind that there are program specific requirements; some allow combination, while others do not. Review each program’s terms and conditions to see if combining them boosts your home buying benefits. 

What is the minimum credit score to buy a house in South Carolina? 

In South Carolina, the minimum credit score for a mortgage depends on the loan you choose. It’s recommended to have a minimum credit score of 620, however some programs require a score of 640. 

Do these programs only apply to specific areas within South Carolina? 

The availability of down payment assistance programs in South Carolina depends on the specific program chosen. For example, the SC Housing program is available statewide for eligible borrowers. On the other hand, some down payment assistance programs, like the County First Initiative program, are only available to buyers in specific targeted regions. 

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