Raleigh mortgages: what homes cost and how the City helps buyers

#Raleigh next to Charlotte and North Carolina

Raleigh and Charlotte are the two North Carolina cities buyers compare most often. Raleigh’s median home is $18,400 more expensive than Charlotte’s while its median income is lower. That puts Raleigh’s price-to-income ratio at 5.3, against 5.0 in Charlotte and 4.5 statewide.

Raleigh is split almost down the middle between owners and renters: 49.6% of occupied homes are owner-occupied. The figures cover the City of Raleigh only; Cary, Wake Forest, Apex and other Wake County towns have their own prices and tax rates. For the Charlotte side of the comparison, see the Charlotte market page.

#What a Raleigh median income can buy

Start from income rather than price. A household earning Raleigh’s median of $85,060 that keeps housing under Freddie Mac’s 30% guideline has $2,127 a month to spend. With 10% down at today’s average rate, that budget supports a home of about $280,000 — $170,300 (38%) below the median home value.

Lenders may approve more than this, because they look at total debt-to-income rather than housing alone. Whether you should borrow more is a separate question — the affordability calculator shows the price at four debt-to-income limits for your own income and debts.

#Monthly payment on the median Raleigh home

At the median value of $450,300, the same 10% down and today’s average rate produce a loan of $405,270 and a full monthly cost of about $3,419: $2,762 principal and interest, $270 property tax, $184 insurance at the national per-$1,000 figure and $203 PMI. To keep that under 30% of income, a household would need about $136,744 a year — $51,684 more than the median.

Cash to close is the $45,030 down payment plus closing costs of roughly $9,006–$22,515, so $54,036–$67,545 in all. Adjust any of these in the mortgage payment calculator.

#City of Raleigh homebuyer assistance

The City’s housing department runs two second-mortgage programs for homes inside Raleigh city limits. Both are zero-interest deferred loans: there is no monthly payment, and the balance is due when you sell the home or stop living in it as your primary residence.

The enhanced program’s price limit is just under the city’s median value, and its maximum award equals 13.3% of a home at that limit — enough to cover a 10% down payment with some left over for closing costs. The deed restriction is the tradeoff: sell within the restriction period and the City limits what you keep from the sale, so this suits buyers who plan to stay put.

North Carolina Housing Finance Agency loans can be used across the state, including in Raleigh — see the North Carolina guide and first-time buyer programs.

#Wake County property tax and the seller-paid excise

Raleigh’s effective property tax rate of 0.72% is higher than Charlotte’s and below the national 0.89%. Most of the city lies in Wake County, and a Raleigh bill combines the county rate with the City rate on the county’s assessed value; a small part of Raleigh extends into Durham County, which sets its own rate.

At closing, North Carolina’s excise tax of 0.2% — about $901 on the median home — is paid by the seller under state law. Buyers pay lender, title, appraisal and recording costs, plus prepaid interest, taxes and insurance.

#Renting or owning in Raleigh

The median Raleigh renter pays $1,661 a month, below Charlotte’s median, against about $3,419 to own the median home before maintenance. The gap narrows if you buy below the median or put more down, and owning pays off only if you stay long enough to recover buying and selling costs. The rent vs buy calculator opens with Raleigh’s numbers so you can test your own timeline. For a Midwestern comparison, see Columbus.