Looking to buy a home? This NC city now offers up to $80,000 for down payment

Chantal Allam
·3 min read

As higher mortgage rates squeeze many would-be buyers across the Triangle, the city of Durham has upped the ante, offering up to $80,000 for down-payment and closing-cost assistance.

With the recent relaunch of its Down-Payment Assistance program, the city is now offering up to four times more than its previous limit to help residents get on the property ladder.

Administered through the City of Durham Community Development Department, the city is targeting lower-income workers who live and work in Durham but are increasingly priced out of the current for-sale markets. It’s allocated roughly $5.7 million for the program.

“Loans will be made on a first-come, first-served basis until available funding is depleted,” the city said in its release.

With rising house prices keeping homeownership out of reach for many, it’s one of a handful of options to help residents purchase their first home, even if they don’t have much money for a down payment.

How the program works

Eligible homebuyers may receive up to $80,000 for down payment and closing cost assistance. Funds will be provided as a forgivable, interest free, 15-year loan, with a zero payment.

The main requirements for the program:

  • Total household income cannot exceed 80% of the area median income (AMI) for the Durham-Chapel Hill metro area. HUD considers 80% of the AMI to be $56,650 for one person, $64,750 for two people, $72,850 for three people and $80,000 for four people.

  • Applicants must be first-time homebuyers or cannot have owned a home within the last three years, according to federal housing assistance statutes.

  • Applicants must plan to use the home as their primary residence.

Raleigh’s down-payment assistance

The city of Raleigh is also stepping up its efforts to help first-time buyers.

Though not as generous as Durham’s subsidy, the city hiked its homebuyer assistance from $30,000 to $45,000 in July. The purchase price cannot exceed $371,000.

In 2022, the city also launched its Enhanced Homebuyer Assistance program. Funded through the 2020 Affordable Housing Bond, it offers up to $60,000 in assistance.

Among the main requirements:

  • Total household income cannot exceed 80% of the AMI for the Raleigh metro area. HUD considers 80% of the current AMI to be $63,500 for one person, $72,550 for two people, $81,600 for three people and $90,650 for four people, according to the city’s website.

  • Homes must be in targeted geographic areas in Raleigh.

  • The purchase price cannot exceed $450,000. Homes are also subject to a 10-year deed restriction.

  • Applicants must attend a Homeownership Class. The city contracts with DHIC Inc. to provide homeownership and credit counseling.

Holly Gallagher, communications analyst at the City of Raleigh’s Housing & Neighborhoods, said the city has budgeted $1.5 million for the program this fiscal year.

“[We] anticipate an additional $6 million to be spent on the program through the bond cycle,” she told The News & Observer.

Triangle’s real estate market

While the region’s housing market is cooling after historic peaks last year, home prices remain high, especially compared to pre-pandemic levels.

Across the Triangle, the median home price stands at $416,000 in July, according to the latest data from Triangle Multiple Listing Service.

That’s down 1% compared to the same time last year, but income and wages are still not keeping up, say analysts.

The affordability index tracked by TMLS shows an 11.3% drop year-over-year in affordability. With current rates, the Triangle’s median income was roughly 71% of what is necessary to qualify for the July median sales price.

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