South Carolina First-Time Home Buying Assistance Programs & Grants for 2024

South Carolina First-Time Home Buying Guide

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    By Kim Franke-Folstad

    (Last Updated – 03/2024)

    South Carolina’s beautiful coastline, historic towns, and Southern hospitality have always been a magnet for tourists. But the state is also an appealing haven for homebuyers who fall in love with its charms.

    South Carolina is becoming a popular option for retirees, remote workers, and others who decide to migrate from large cities. And that can mean more competition and rising prices for first-time homebuyers in South Carolina’s seller’s market.

    According to Redfin, the median statewide sales price rose to $361,900 in February 2024 — a 6.7% increase in 12 months. In some South Carolina communities, the numbers were much higher. Prices rose especially steeply in Garden City, Spartanburg, and Hilton Head Island.

    Buyers in the Palmetto State may think homeownership is out of reach, but fortunately, assistance programs are offered by the state and some cities and counties. Longstanding federal programs also could improve a buyer’s chances of success.

    Recommended: First-Time Homebuyer Guide

    5 South Carolina Programs for First-Time Homebuyers

    Most first-time homebuyer programs in South Carolina are designed to help low- to moderate-income buyers who need help coming up with a down payment and/or closing costs. Generally, that assistance comes in the form of a second home mortgage loan that is fully forgiven if the buyer stays in the home for a set amount of time (usually three years).

    During that time, buyers don’t have to make a monthly payment or pay interest on the second loan. But if they sell the home before the full three years is up, they will be required to repay a portion of the assistance they received.

    Participants must meet limits regarding their income, credit scores, and debt-to-income ratio. Typically, the home must be the buyer’s primary residence, and there may be limits on how much the home can cost. Also, at least one of the buyers may be required to complete a homebuyer education course.

    Recommended: Understanding Mortgage Basics

    Here are details about South Carolina’s homebuyer programs.

    1. SC Housing Homebuyer Program

    The SC Housing Homebuyer Program offers qualifying first-time buyers a 30-year, fixed-rate mortgage paired with a forgivable no-payment, 0% interest second loan to put toward a down payment, closing costs, or both for a primary home.

    Participants have the option of choosing from several different types of mortgages, including FHA, VA, USDA, and conventional home loans.

    Availability: Statewide (though program benefits may differ by county)

    Type of Assistance: Second mortgage forgiven monthly over a 15-year term. If borrowers remain in the home for the full term, the second loan is fully forgiven.

    Benefits and Qualifications Include:

    •   In “non-targeted” counties, the program is for first-time homebuyers (including borrowers who haven’t owned a principal residence in three years)

    •   In “targeted” counties, borrowers cannot have any ownership interest in a home at the time of closing

    •   Minimum credit score of 620 or 640, depending on loan type

    •   Must complete homeownership education course

    To Apply: Contact an approved lender or SC Housing at [email protected].

    2. SC Housing Palmetto Home Advantage

    The Palmetto Home Advantage program offers qualifying first-time and repeat buyers a 30-year, fixed-rate mortgage paired with a forgivable no-payment, 0% interest second loan to put toward their down payment and/or closing costs. Participants may have the option of choosing from FHA, VA, USDA, and conventional home loans.

    Availability: Statewide

    Assistance Amount: 0%, 3%, or 4% of the loan amount

    Type of Assistance: Second loan forgiven monthly over a 10-year term.

    Benefits and Qualifications Include:

    •   No first-time buyer limitations

    •   Borrowers who require mortgage insurance may receive reduced rates

    •   Income limit for government loans is $124,000 per borrower

    •   Borrower income limit for conventional loans can’t exceed 80% of area median income

    •   Minimum credit score of 640 for all loan types

    To Apply:Contact an approved lender or SC Housing directly at [email protected].

    3. SC Housing Palmetto Heroes

    The Palmetto Heroes program benefits South Carolina teachers, law enforcement and corrections officers, firefighters, emergency medical services and health care workers, active-duty military, veterans, and members of South Carolina’s Army National Guard and Air National Guard by offering a reduced-rate first mortgage paired with $10,000 in forgivable down payment assistance through a 0% interest, no-payment second mortgage.

    4. SC Housing County First Initiative

    The County First Initiative is designed to help potential homebuyers in underserved communities with poor economic conditions. It offers a reduced-rate conventional, FHA, VA, or USDA first mortgage paired with a 0% interest, no-payment, forgivable second mortgage of up to $8,500 that can be used for a down payment and closing costs.

    Assistance Amount: Up to $8,500 for down payment and closing costs

    Type of Assistance: Second loan forgiven monthly over 10-year term. If borrowers remain in the home for the full term, the second loan is fully forgiven.

    Benefits and Qualifications Include:

    •   Available to first-time and repeat buyers

    •   Minimum credit score is 620 or 640, depending on loan type

    •   Must complete homeownership education course

    Like the Homebuyer Program, income and home price limits apply.

    To Apply: Contact an approved lender .

    5. SC Mortgage Tax Credit Program

    The SC Mortgage Tax Credit program offered by SC Housing is a different kind of assistance program designed to help low-income homebuyers. Borrowers can use a mortgage credit certificate to claim a portion of their annual mortgage interest, dollar for dollar, up to $2,000, as a federal tax credit every year for the life of their loan.

    The cost of a SC Mortgage Tax Credit is $500, and participating lenders also may charge a processing fee up to $500. This cost may be paid by the borrower or by the seller.

    Applicants must be first-time homebuyers (you can’t have owned a home within the past three years) unless you’re a qualified military veteran or buying in a designated area. Income and home purchase price limitations may vary by county.

    To Apply: You can apply for the credit certificate when you take out a home loan through a state-approved participating lender. To get the credit, you’ll need to complete IRS Form 8396 when you file your taxes.

    Recommended: 6 Simple Ways to Reduce a Mortgage Payment

    City and County First-Time Buyer Programs

    If you’ve already picked out the South Carolina city or county you hope to make your home, you may want to research the local buyer assistance programs that are available. Here’s the rundown on a few.

    City of Charleston Homeownership Initiative First-Time Homebuyer Program

    The City of Charleston partners with several agencies to assist first-time homebuyers in low- to moderate-income families. For information on the program’s benefits and eligibility requirements, check out the program’s brochure or call (843) 724-3766.

    Richland County Homeownership Assistance Program

    Richland County Community Development offers down payment and/or closing cost assistance to low- to moderate-income households through forgivable loans of up to $10,000. For information on the program’s benefits and eligibility requirements, go to the program’s website or contact the Ombudsman Response Center at (803) 929-6000 or [email protected].

    City of Rock Hill First-Time Homebuyer Program

    The Housing Development Corporation of Rock Hill provides up to $5,000 in down payment and closing cost assistance to eligible homebuyers through a forgivable second mortgage.

    Who Is Considered a First-Time Homebuyer in South Carolina?

    For most programs offered in South Carolina, as elsewhere, applicants are considered first-time homebuyers if they haven’t owned a primary home for at least the past three years.

    However, it’s a good idea to be clear on each program’s specific eligibility standards before you start the application process.

    Federal Programs for First-Time Homebuyers

    Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.

    The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

    The state and county assistance programs include most of these loans, so if you qualify for one of those programs, that might be the smarter move.

    Federal Housing Administration (FHA) Loans

    The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the FHA loan program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

    In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 45% maximum for a conventional loan.

    Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

    FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

    Freddie Mac Home Possible Mortgages

    Very low- and low-income borrowers may make a 3% down payment on a Home Possible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

    The Home Possible mortgage is for buyers who have a credit score of at least 660.

    Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

    Fannie Mae HomeReady Mortgages

    Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

    For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

    Fannie Mae Standard 97 LTV Loan

    The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

    Department of Veterans Affairs (VA) Loans

    Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, which can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

    Another benefit of VA loans is that they do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

    Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

    Native American Veteran Direct Loans (NADLs)

    Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. The VA itself is the mortgage lender. The funding fee applies.

    US Department of Agriculture (USDA) Loans

    No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

    The USDA also directly issues loans to low- and very low-income people. The agency details income and property eligibility .

    HUD Good Neighbor Next Door Program

    This program helps police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

    South Carolina First-Time Homebuyer Stats for 2024

    Ever wonder how you compare with the flock of first-timers? Here are some recent stats:

    •   Median home sale price in South Carolina: $361,900

    •   3% down payment: $10,857

    •   20% down payment: $72,380

    •   Percentage of buyers nationwide who are first-time buyers: 32%

    •   Median age of first-time homebuyers: 35

    •   Average credit score (vs. average U.S. score of 714): 699

    Additional Financing Tips for First-Time Homebuyers

    In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. Some examples:

    •  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

    •  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

    •  401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

    •  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

    •  The mortgage credit certificate program. As noted above, first-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

    •  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

    •  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

    The Takeaway

    First-time homebuyers who qualify for one of the many assistance programs in South Carolina may be able to reduce the costs of getting a mortgage. For those who don’t meet income limits and other criteria, conventional and government-backed mortgages are alternatives. While you’re noodling on your options, keep in mind that borrowers who go with a mortgage from a private lender don’t necessarily have to come up with a 20% down payment. (And most buyers don’t.)

    Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

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    Should I take first-time homebuyer classes?

    Yes! Good information is key to a successful home-buying experience for anyone, but especially for newcomers. Indeed homebuyer classes are often required for some government-sponsored loan programs.

    Do first-time homebuyers with bad credit qualify for homeownership assistance?

    Often they do. Many government and nonprofit homeowner assistance programs are available to people with low credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. That said, almost any lending program has credit qualifications. That’s why it’s important to take all possible steps to improve your credit standing before you go house hunting.

    Is there a first-time homebuyer tax credit in South Carolina?

    Yes. The South Carolina State Housing Finance and Development Authority (SC Housing) administers a mortgage credit certificate program that allows borrowers to claim a portion of their annual mortgage interest as a federal income tax credit every year for the life of their loan.

    Is there a first-time homebuyer assistance program for veterans in South Carolina?

    VA-backed home loans are available to eligible service members, veterans, and eligible surviving spouses, and may be paired with one of the assistance programs if the applicant qualifies. South Carolina also offers the first come, first served Palmetto Heroes program to veterans, active military, and members of the state’s Army National Guard and Air National Guard.

    What credit score do I need for first-time homebuyer assistance in South Carolina?

    Most South Carolina programs require a minimum FICO score of 620 or 640, depending on the loan type.

    What is the average age of first-time homebuyers?

    The typical first-time buyer is 35.

    Photo credit: iStock/benedek

    *SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

    ¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

    †Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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