Many borrowers want to know how South Carolina mortgage rules and local property factors may affect their home loan review before they speak with a lender. They are concerned that state-specific guidelines may influence their home loan file before the process even starts. This guide explains what lenders may look for in South Carolina so you can move forward with confidence.
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What South Carolina Factors May Affect Your Home Loan?
SHORT ANSWER
South Carolina property taxes run among the lowest in the nation for owner-occupied homes, taxed at a lower assessment ratio than other property. A licensed real estate attorney must oversee every home loan closing in South Carolina. A CL-100 Termite and Moisture Inspection is required by most lenders on nearly all SC home sales.Smart Loan Savings Educational Content
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| Target Element Name | Underwriting Impact on Your South Carolina Home Loan Profile |
|---|---|
| South Carolina’s Owner-Occupied Assessment Ratio | South Carolina taxes owner-occupied primary residences at a lower assessment ratio than other property, which is the main reason the state’s effective property tax rate runs among the lowest in the nation. On top of that lower ratio, a separate state law eliminates the school operating portion of property taxes for owner-occupied primary residences entirely. Borrowers who assume a rental or second home in South Carolina carries the same tax treatment as a primary residence are often surprised to learn the assessment ratio is meaningfully higher for non-owner-occupied property. Lenders use the specific county millage rate applied to the correct assessment ratio when calculating the monthly escrow payment. What borrowers often learn on the call is that filing the primary residence designation promptly after closing is what unlocks both benefits, and a delay can mean paying the higher non-owner-occupied rate for a full tax cycle. |
| South Carolina’s Age and Disability Homestead Exemption | South Carolina’s homestead exemption is often assumed to be available to any owner-occupant, but it’s actually restricted to homeowners who are 65 or older, totally and permanently disabled, or legally blind. Borrowers who assume this exemption applies broadly are often surprised to learn a typical working-age buyer doesn’t qualify for it at all, even as a first-time owner-occupant. The exemption removes a set amount of fair market value from the taxable base for those who do qualify, on top of the lower assessment ratio every owner-occupant already receives. Certain surviving spouses may continue receiving the exemption after a qualifying spouse’s death. What borrowers often learn on the call is that this exemption and the broader owner-occupied assessment benefit are two separate things, and confusing them can lead to an inaccurate escrow estimate. |
| SC Housing Programs and Palmetto Home Advantage | SC Housing may offer below-market rate mortgages through the Homebuyer Program for qualifying first-time buyers across the state. Palmetto Home Advantage is available to both first-time and repeat buyers, with down payment assistance structured as a forgivable second mortgage. Borrowers who assume this assistance must be repaid immediately are often surprised to learn it forgives gradually over a set number of years of continued occupancy. Palmetto Heroes may offer additional forgivable assistance for teachers, nurses, law enforcement, firefighters, and military borrowers specifically. What borrowers often learn on the call is that a borrower’s profession alone can unlock a meaningfully different assistance amount than an otherwise-identical file without that profession. |
| South Carolina’s CL-100 Inspection Requirement | South Carolina uses a specific pest and moisture inspection called the CL-100, required by most lenders on nearly all home sales in the state. Borrowers who assume a standard home inspection covers this requirement are often surprised to learn the CL-100 is a separate, specialized report focused on termites, wood-destroying insects, and moisture damage. A failed CL-100 must be resolved and a clear re-inspection issued before most lenders will fund the loan. This can affect the closing timeline as much as the budget, since repairs and re-inspection both take time to schedule. What borrowers often learn on the call is that ordering the CL-100 early, rather than waiting until close to the closing date, gives more room to handle repairs without delaying the file. |
| South Carolina Coastal Insurance Costs | South Carolina’s coastal counties face meaningfully higher homeowners insurance costs than the rest of the state, driven by hurricane, wind, and flood exposure. Rates have risen noticeably over the past several years, and some industry projections point to further significant increases in coastal areas over the coming decade. Borrowers who assume a standard homeowners policy covers wind and hurricane risk in these counties are often surprised to learn a separate policy or endorsement may be required. Lenders require proof of all applicable coverage before a coastal file can close, and the added premium is collected through the escrow account like any other insurance cost. What borrowers often learn on the call is that getting a binding insurance quote early is essential on a coastal purchase, since the estimate at application can shift meaningfully by closing. |
| South Carolina Attorney Closing Requirement | South Carolina law requires a licensed real estate attorney to oversee every home loan closing in the state. The attorney conducts the title search, prepares closing documents, and records the deed. The lender or loan officer often already has a closing attorney who regularly handles files in the borrower’s area, assigned by default once the file moves toward settlement. A borrower who already has a preferred attorney can typically request them instead. What borrowers often learn on the call is that attorney fees sit apart from standard lender and title fees, so budgeting for this cost upfront helps avoid a surprise at the settlement table. |
| SOUTH CAROLINA OVERVIEW — South Carolina taxes owner-occupied homes at a favorable assessment ratio, among the lowest effective rates in the nation, though a separate age- and disability-restricted homestead exemption applies only to some owners. SC Housing offers below-market mortgages and forgivable down payment assistance. A licensed attorney and a CL-100 inspection are both required on nearly every South Carolina home purchase, and coastal counties carry meaningfully higher insurance costs. | |
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| South Carolina Loan Factor | What Lenders May Check on a South Carolina File |
|---|---|
| Credit Score Baseline | Home loan programs in South Carolina may not share one standard minimum score. Individual lenders may use their own program rules on top of the published minimum. SC Housing programs set their own minimum score requirement by loan type. |
| Required Equity or Down Payment | Some South Carolina home loan programs may allow borrowers to purchase with no money down. VA and USDA programs may be available for eligible borrowers, and SC Housing’s Palmetto Home Advantage may offer forgivable down payment assistance. Palmetto Heroes may offer additional assistance for qualifying professions. |
| Emergency Cash Reserve | Lenders check your bank accounts to see if you have enough money to help cover home loan closing costs on a South Carolina file. Attorney fees and the cost of a CL-100 inspection should be included in the total cash-to-close estimate alongside standard lender and title fees. |
| Your Personal Income | Lenders check your pay history, employment history, or tax paperwork to confirm your home loan capacity on a South Carolina file. SC Housing uses income limits that vary by program and household size. |
| Debt-to-Income Limits | Lenders check your total monthly bills plus the new mortgage to see if they fit within standard debt rules used across South Carolina home loan programs. Coastal county buyers should confirm the full insurance cost before finalizing the monthly payment estimate used in this calculation. |
| Property Value Checks | South Carolina home loans use a property appraisal to check if the property value fits the final mortgage loan amount. A CL-100 inspection is required by most lenders before the file can close. Coastal properties may also require a separate wind mitigation inspection on older homes. |
| Coastal Insurance Requirements | Properties in South Carolina coastal counties may require hurricane, wind, and flood insurance in addition to standard homeowners coverage. This affects the monthly escrow payment and total housing expense in the DTI calculation. Lenders require proof of qualifying coverage before any coastal file can close. |
| Attorney Closing Requirement | South Carolina law requires a licensed real estate attorney to oversee closing. Attorney fees apply at settlement, separate from lender and title fees. Factor this cost into the total closing cost estimate before the file is finalized. |
| Sources Used on This Page | South Carolina Department of Revenue — dor.sc.gov, Exempt Property | South Carolina Code of Laws — § 12-37-250, Homestead Exemption | South Carolina General Assembly — Act 388 of 2006 | SC Housing — schousing.sc.gov |
| South Carolina home loan guidelines follow federal program standards. Individual lender overlays may apply and vary by program. This page is provided for educational purposes only. Smart Loan Savings Educational Content | |
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| Question | Answer |
|---|---|
| Does South Carolina require an attorney for a home loan closing? | South Carolina law requires a licensed real estate attorney to oversee every home loan closing. The attorney conducts the title search, prepares all closing documents, and records the deed. This is not optional. Attorney fees should be included in the total cash-to-close estimate before the file is finalized. |
| What is the SC Housing Palmetto Home Advantage program? | Palmetto Home Advantage is an SC Housing program available to both first-time and repeat buyers statewide. It may offer below-market rate mortgages with down payment assistance structured as a forgivable second mortgage. A minimum credit score and homebuyer education course are required. |
| What is a CL-100 inspection in South Carolina? | A CL-100 is a Termite and Moisture Inspection required by most lenders on nearly all South Carolina home sales. The inspection checks for active termite infestations, wood-destroying insects, and moisture damage. A failed CL-100 must be resolved and a clear re-inspection issued before most lenders will fund the loan. |
| Explore Our Learning Center | What You’ll Find Inside |
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| Mortgage Basics Guide | Simple explanations of core terms like principal, interest, escrow, and PMI |
| Income and Employment Requirements | How income, self-employment, bonuses, and job gaps affect your approval |
| Credit & Approval | Credit score requirements, how to improve your score, and how lenders approve a file |
| Homebuying Tips | Preparing for a mortgage, choosing the right program, and avoiding common mistakes |
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