What to know about buying a house in South Carolina

A South Carolina first–time home buyer can expect plenty of support. You’ll easily find home buyer education classes, special mortgages, and down payment assistance (DPA).

And that assistance may be helpful because home prices in the Palmetto state have been rising sharply, as they have in the rest of the country.

Ready to take your first step toward buying a home? Here’s what you should know.

Verify your home buying eligibility in South Carolina. Start here (Dec 17th, 2021)

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South Carolina home buyer overview

According to South Carolina REALTORS, in the year ending September 2021, “Prices moved higher as the median sales price was up 11.5% to $282,000. This time last year the median sales price was $253,000.”

That 11.2% was actually lower than home price inflation nationwide. But that doesn’t help a South Carolina first–time home buyer who’s trying to save for a down payment and needs that much extra.

Luckily, the Palmetto State has assistance programs that may help. So read on for more details.

South Carolina Home Buyer Overview
Average Home Sale Price in SC $294,000
Minimum Down Payment in SC (3%) $8,820
20% Down Payment in SC $58,800
Average Credit Score in SC1 689
Maximum SC Home Buyer Grant2 Up to 5% of the loan value statewide through Palmetto Home Advantage

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

Verify your home buying eligibility in South Carolina. Start here (Dec 17th, 2021)

First–time home buyer loans in South Carolina

If you’re a first–time home buyer in South Carolina with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first–time buyers have saved enough for 20 percent down. But the good news is, you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low–down–payment mortgage programs:

  • Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum FICO score. You can usually stop paying mortgage insurance after a few years when you have 20% equity
  • FHA loan – Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move home, or pay off your loan
  • VA loan – Only for veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
  • USDA loan – For those on low–to–moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
  • SC Housing – May include competitive interest rates and down payment assistance. More information below

Note that government loan programs (including the FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.

Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

These programs even let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage loan, your lender can help you find the right match based on your finances and home buying goals.

Find the best first-time home buyer loan for you (Dec 17th, 2021)

SC first–time home buyer programs

The South Carolina State Housing Finance and Development Authority (SC Housing) says it “offers competitive mortgage loans and down payment assistance (DPA) to help families and individuals become homeowners. We offer competitive, fixed–rate mortgage loans combined with money to help cover down payment and closing costs.”

As is usual with state–run mortgage programs, you’ll need to choose a lender from SC Housing’s approved list. And you must complete a home buyer training course.

You’ll need a credit score of 620 or higher for an FHA loan and 640 or higher for all other types of mortgages. And there are household income limits as well as purchase price caps.

You can download a PDF of SC Housing’s Homeownership Program handout for those caps and other details.

In terms of down payment assistance, SC Housing operates the Palmetto Home Advantage program. This can offer down payment assistance of up to 5% of the loan value (more below).

SC Housing also operates the Palmetto Heroes Program. This normally helps buyers working in medicine and the military, plus teachers, police officers, and other public servants. But, when we checked the webpage, it said, “The 2021 Palmetto Heroes is now closed. Look for future program announcements.” So check back to see if things have changed by the time you read this.

SC first–time home buyer grants

South Carolina has three main, statewide home buyer assistance programs. These are:

  • SC Homeownership Program Forgivable Down Payment Assistance – A forgivable loan toward your down payment
  • Palmetto Home Advantage – Another forgivable loan up to 5% of the loan amount
  • Mortgage Credit Certificates – A tax reduction for SC home buyers

SC Housing doesn’t offer grants to South Carolina first–time home buyers. But it does offer forgivable loans to those who are eligible. You can check the eligibility requirements here.

Those loans are fairly benign. They charge 0% interest and require no monthly payments. And they last for either 10 years or 20 years, depending on your household income. At the end of that period, your loan will be forgiven in full.

However, the website says, “The borrower must occupy the subject property for the term (10 or 20 years) of the lien for the assistance to be fully forgiven.” So, if you move before then, you may have to repay some or all the original loan.

SC Housing doesn’t specify how much the loans can be worth. But it says the funds can go toward your down payment, closing costs, and prepaid items (these include upfront property taxes and homeowners insurance due at closing).

The organization also offers its Palmetto Home Advantage loans, and those can provide 0%, 4%, or 5% of the loan amount. You’ll need at least a 640 credit score to qualify.

Finally, SC Housing offers the SC Mortgage Tax Credit Program, which is a Mortgage Credit Certificate (MCC) for home buyers. This can provide a tax credit of “up to $2,000 per year for the life of the loan.” Interestingly, SC Housing also says “The credit can also be used as additional income on a mortgage application to allow a borrower to lower their debt ratio to help qualify for a loan or be able to qualify for a larger loan.”

If you’d like clarification, you can call (803) 896–2211 or email [email protected]

Verify your home buying eligibility in South Carolina. Start here (Dec 17th, 2021)

Buying a home in South Carolina’s major cities

Home price inflation in South Carolina’s three biggest cities hasn’t been too far off the statewide average. But, especially in expensive places like Charleston, rising prices can present a challenge for first–time home buyers.

Luckily, there are statewide and local down payment assistance programs to help.

Charleston first–time home buyers

In October 2021, the median list price of homes in Charleston was $425,000, which was an increase of 10.4% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

  • $12,750 for 3% down payment
  • $85,000 for 20% down payment

The City of Charleston’s Homeownership Initiative can provide down payment assistance to first–time buyers. However, it partners with various agencies to do so, and can’t give many details because each org offers different amounts on different terms.

Help is available to eligible borrowers with incomes between 50% and 120% of the area median income. And people wishing to buy in five target neighborhoods get priority. You’ll need to complete a home buyer education course to qualify.

Download the city’s down payment assistance brochure. And, if you still need more information, call (843) 724–3766.

Columbia first–time home buyers

In October 2021, the median list price of homes in Columbia was $209,900, which was an increase of 12.3% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

  • $6,300 for 3% down payment
  • $41,980 for 20% down payment

Richland County, which includes Columbia, has a down payment assistance program that can provide up to $10,000 to eligible borrowers. That comes in the form of a forgivable loan. So you get a 0% interest rate and don’t have to make monthly payments.

The loan lasts for five years. And, providing you don’t move out of the home during that time, it should be fully forgiven at the end of that time.

For more information, call (803) 576–2052 or download the FAQ sheet.

North Charleston first–time home buyers

In October 2021, the median list price of homes in North Charleston was $277,600, which was an increase of 13.4% year–over–year, according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

  • $8,330 for 3% down payment
  • $55,520 for 20% down payment

Unfortunately, we could find no down payment assistance programs run by the City of North Charleston. However, it may be worth checking whether the county in which you wish to buy (the city is within Berkeley, Charleston, and Dorchester counties) offers one.

Where to find home buying help in South Carolina

All the organizations we’ve listed above should provide advice freely to any first–time home buyer in the state of South Carolina or in their local areas.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a list of statewide resources:

What are today’s mortgage rates in South Carolina?

You can see today’s live mortgage rates in South Carolina here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least 3 mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

Show me today’s rates (Dec 17th, 2021)

1 Source: Experian.com 2021 study of 2020 data

2Based on a review of the state’s available DPA grants at the time this was written

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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