What is the NC Extra Credit Grant for First-Time Home Buyers?

If you're buying your first home in North Carolina, you might have heard about the NC Extra Credit Grant-but what exactly is it, and does it actually help you buy a house? This isn’t a loan you pay back. It’s not a tax credit you claim later. It’s a direct grant that reduces your mortgage amount upfront, and it’s designed to help people with low to moderate incomes get into homeownership without needing a huge down payment.

How the NC Extra Credit Grant Works

The NC Extra Credit Grant is part of the North Carolina Home Loan Program, run by the North Carolina Housing Finance Agency (NCHFA). It gives eligible buyers up to 5% of the home’s purchase price as a grant. That money goes straight toward your down payment or closing costs. For example, if you buy a $250,000 home, you could get up to $12,500 in grant money. That’s like having a second mortgage that doesn’t need to be repaid-ever.

Unlike other programs that require you to save for months or years, this grant can cover a big chunk of what you’d normally need to bring to closing. Many first-time buyers struggle to save 3% to 5% for a down payment. With this grant, that barrier disappears.

Who Qualifies for the Grant

You don’t need to be rich to qualify. The income limits are set by county, so they’re higher in expensive areas like Wake or Mecklenburg and lower in rural counties. For 2025, the maximum household income for a family of four in most counties is $115,000. In high-cost counties like Orange or Durham, it’s $135,000.

You must also be a first-time home buyer. That means you haven’t owned a home in the last three years. There’s an exception if you’re buying in a targeted census tract-then you can qualify even if you owned before, as long as it was more than three years ago.

And yes, you can use this grant with other programs. Many people pair it with an NCHFA 30-year fixed-rate mortgage, which often comes with lower interest rates than what you’d get on the open market.

What Kind of Homes You Can Buy

The grant isn’t just for new builds. You can use it to buy:

• Existing homes
• Manufactured homes (if they’re permanently affixed to a foundation)
• Condos or townhomes
• New construction homes from approved builders

You can’t use it to buy investment properties, vacation homes, or second homes. The home must be your primary residence. And there’s a price cap-homes can’t cost more than $450,000 in most counties. In high-cost areas, the limit goes up to $525,000.

How It Compares to Other First-Time Buyer Programs

North Carolina has several housing programs. Here’s how the Extra Credit Grant stacks up against the others:

The Extra Credit Grant stands out because it’s the only one that gives you 5% as a true grant-no strings attached. Other programs might offer the same amount, but they’re structured as second mortgages that need to be paid back if you sell or refinance within five years. This one doesn’t. You own it outright.

What You Need to Do to Get It

Getting the grant isn’t automatic. You need to:

1. Work with a lender approved by NCHFA
2. Complete a homebuyer education course (online or in-person, about 6-8 hours)
3. Apply for the NC Home Loan Program before you sign a purchase contract
4. Submit proof of income, credit history, and a signed sales contract

The homebuyer course is free and offered by nonprofit agencies across the state. You can take it in person in Raleigh, Charlotte, or Greensboro-or online anytime. The course covers budgeting, credit repair, mortgage terms, and maintenance. It’s not just a requirement-it’s one of the most useful things you’ll do as a first-time buyer.

Once you’re approved, the grant money is wired directly to your closing agent. You don’t see it. You don’t handle it. You just walk away with less debt.

Real-Life Example

Sarah, a teacher in Winston-Salem, made $58,000 a year. She saved $5,000 over two years. She found a home listed at $210,000. With the Extra Credit Grant, she got $10,500 toward her down payment and closing costs. That meant she only needed to bring $2,500 to closing-$2,500 she already had. Her monthly mortgage payment ended up being $1,075, including taxes and insurance. Without the grant, she’d have needed $15,000 in savings and a monthly payment over $1,300.

She’s been in her home for 18 months. She’s already built equity. She didn’t have to take on a second loan. And she didn’t have to wait another three years to save up.

Common Misconceptions

People often think:

• “I need perfect credit.” Not true. You can qualify with a credit score as low as 640. The average score among approved buyers is 690.
• “I have to buy a cheap house.” The program allows homes up to $525,000 in high-cost areas. That’s not a starter home-it’s a real home in a real neighborhood.
• “It’s only for low-income families.” The income limit is $135,000 in some counties. That’s above the median income in many parts of North Carolina.
• “It’s hard to get.” In 2024, over 8,200 first-time buyers used this grant. Approval rates are above 85% for applicants who meet the basic criteria.

What Happens If You Sell or Refinance?

Nothing. Unlike other grants that require repayment if you move within five years, the NC Extra Credit Grant is yours forever. You can sell, refinance, or rent out the home later-no penalties, no clawbacks. The only rule is that you must live in it as your primary residence for at least 12 months after closing.

That’s a big deal. Many programs trap you in your home because you’d owe money if you left. This one doesn’t. You own your equity. You own your freedom.

Where to Apply

You can’t apply directly to the state. You need to go through an approved lender. Most banks, credit unions, and mortgage brokers in North Carolina are approved. Ask them: “Do you offer the NC Extra Credit Grant?” If they say yes, they’ll walk you through the steps.

You can also visit nchfa.com to find a list of lenders, check income limits by county, and sign up for free homebuyer education.

Next Steps

If you’re thinking about buying your first home in North Carolina:

1. Check your credit score. Aim for at least 640.
2. Find out your county’s income limit on nchfa.com.
3. Call a few local lenders and ask about the Extra Credit Grant.
4. Sign up for the free homebuyer course-it takes less than a weekend.
5. Start looking at homes under $450,000 (or $525,000 if you’re in a high-cost area).

This grant isn’t magic. But it’s real. And for thousands of North Carolinians, it’s the only reason they were able to buy their first home. You don’t need to be rich. You don’t need to wait. You just need to start.