South Carolina First-Time Home Buying Assistance Programs & Grants for 2023

South Carolina First-Time Home Buying Guide

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    By Kim Franke-Folstad

    (Last Updated – 06/2022)

    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 — as well as home prices and property taxes that are lower than the national average.

    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 went from $290,500 in April 2021 to nearly $343,000 in April 2022 — an 18.2% increase in 12 months. In some South Carolina communities, the numbers were much higher. In Surfside Beach, where home prices were up 92.5% compared with 2021, the median purchase price in April 2022 was $550,000. Even in more affordable Garden City, home prices were up 60% year-over-year, with homes selling for a median price of $322,000 in April 2022.

    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: The SoFi Guide to First-Time Home Buying

    5 South Carolina Programs for First-Time Homebuyers

    Most first-time homebuyer programs in Arizona 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 mortgage 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 Arizona’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)

    Assistance Amount: Up to $8,000 for down payment and closing costs

    Type of Assistance: Second mortgage forgiven monthly over a 10- or 20-year term. (Term is based on household income.) 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

    Here are income and home price limits .

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

    up to $5,000

    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 $115,000 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 closed by midyear, thanks to “overwhelming demand.” The 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 Country 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.

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    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 program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers with FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

    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. You can learn more about FHA loans in general and loan limits by state or county.

    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, 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 surviving spouses may apply for loans backed by the Department of Veterans Affairs. VA loans , 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.

    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.

    U.S. 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.

    First-Time Homebuyer Stats for 2022

    Ever wonder how you compare with the flock of first-timers? Here are some recent stats from the National Association of Realtors® (NAR):

    Percentage of buyers nationwide who are first-time buyers: 34%

    Percentage of buyers in the NAR’s South region who are first-time buyers: 30%

    Median household income of first-time buyers nationwide: $86,500

    Type of home purchased by first-time buyers:

    •  Detached single-family home: 80%

    •  Townhouse/rowhouse: 9%

    •  Condo/apartment (five or more units): 1%

    •  Duplex/condo/apartment (two to four units): 2%

    •  Other: 8%

    Median home price for first-time homebuyers: $252,000

    Median down payment for first-time homebuyers: 7%

    Median age of first-time homebuyers: 33

    Relationship status for first-time homebuyers:

    •  Married: 50%

    •  Single females: 20%

    •  Unmarried couples: 17%

    •  Single males: 11%

    First-time buyers with kids:

    •  No children: 70%

    •  One child: 15%

    •  Two children: 11%

    •  Three or more children: 5%

    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. 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 applying for and receiving 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.)

    Make your dream of being a homeowner come true with SoFi’s competitive mortgage rates and down payments as low as 3% for qualifying first-time homebuyers.

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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, who can easily be overwhelmed by the jargon, technicalities, and magnitude of applying for a mortgage and purchasing a home. First-time homebuyer classes can help. Indeed they are 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 33, NAR reports. First-time buyers make up 30% of buyers in the South.

    Photo credit: iStock/benedek

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