South Carolina First-Time Home Buyer

What to know about buying a house in South Carolina

South Carolina first-time home buyers have plenty of resources at their disposal. The state offers home buyer education classes, special mortgages, and down payment assistance (DPA).

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

---

In this article (Skip to …)

---

South Carolina home buyer overview

The median home sales price in South Carolina was $326,000 in May 2022, according to South Carolina REALTORS. That was a 20.7% increase from the previous year. By comparison, the median list price nationwide was $430,695, according to Redfin.

South Carolina home buyer stats

Average Home Sale Price in SC1	$326,000
Minimum Down Payment in SC (3%)	$9,780
20% Down Payment in SC	$65,200
Average Credit Score in SC2	693
Maximum SC Home Buyer Grant3	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.

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% 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 premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan
• VA loan: Only for veterans and military service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance premiums 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 loan 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 home purchase, your lender can help you find the right match based on your finances and home buying goals. Also, your real estate agent or Realtor can help identify loan programs that may be suited to your needs.

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.”

SC Housing Homebuyer Program

Low-to-moderate income buyers may find what they’re looking for with South Carolina’s homeownership assistance program. Support comes in the form of a 30-year mortgage with a fixed interest rate, which can be used with either a Conventional 97 or any of the government-backed loans: FHA, VA, or USDA.

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.

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

Palmetto Heroes

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, “Due to overwhelming demand, the 2022 Palmetto Heroes Program has been closed.”

Presumably, the program may be open to applicants again in 2023. So check back to see if things have changed.

SC first-time home buyer grants

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

1. SC Homeownership Program Forgivable Down Payment Assistance: A forgivable loan toward your down payment
2. Palmetto Home Advantage: Another forgivable loan up to 4% of the loan amount
3. Mortgage Credit Certificates: A tax credit for SC home buyers

Here’s a little more detail on each one.

Forgivable Down Payment Assistance

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

Those forgivable second mortgages are fairly lenient. 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).

Palmetto Home Advantage

SC Housing also operates the Palmetto Home Advantage program. This can offer down payment assistance of up to 4% or 5% of the loan amount. You’ll need at least a 640 credit score to qualify. Similar to the SC Housing Homeownership Program, this is a ten-year forgivable loan with a 0% interest rate.

Mortgage Credit Certificates

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.”

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 mortgage.production@schousing.com.

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 hot real estate markets 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.

First-time home buyers may find friendlier market conditions in Columbia where homes are 30% cheaper than the statewide average.

Charleston first-time home buyers

In April 2022, the median list price of homes in Charleston was $477,500, which was an increase of 17.9% 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:

• $14,330 for 3% down payment
• $95,500 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 organization offers different amounts on different terms.

Help is available to qualifying 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 April 2022, the median list price of homes in Columbia was $225,000, which was an increase of 15.4% 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:

• $6,750 for 3% down payment
• $45,000 for 20% down payment

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

The loan lasts for five years. And, provided 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 April 2022, the median list price of homes in North Charleston was $299,900, which was an increase of 17.6% year-over-year, according to Realtor.com.

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

• $9,000 for 3% down payment
• $59,980 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.

Experiment with a mortgage affordability calculator to see how down payment, interest rates, homeowners insurance, and property taxes will all affect your monthly mortgage payments.

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

¹Source: South Carolina REALTORS Market Activity Report

²Source: Experian.com study of 2021 and 2020 data

³Based on a review of the state’s available DPA grants at the time this was written