The USDA Home Loan Website that Real Estate Agents (read all of us) use is currently misleading. We’ve talked to 3 borrowers in the past week who thought they were writing offers on homes that would qualify for the USDA Home Loan NC Program – only to find out the home no longer qualifies. The borrowers were not happy with their agents, the agents were not happy because they looked where they thought they should… The USDA Loan Future Eligibility Map is where we should all be looking in December of 2014.
USDA Loan FUTURE ELIGIBILITY MAP
The USDA Loan Maps for North Carolina actually changed on October 1 – so you would think that the USDA Loan Eligibility Website would be updated. Unfortunately, it’s not complete yet. We suggest clicking on the FUTURE ELIGIBILITY MAP feature, because it has the MOST up to date USDA Loan Map changes available.
I know, you would think the “Current” Property Eligibility would be the most current place to see if a property qualifies for USDA Loans, but we are finding that it’s not (in all cases). I think that’s why they left the USDA Loan Future Eligibility Map in place.
There are some USDA Loan Map changes around Charlotte, Greensboro and Greenville, where dozens of neighborhoods have been eliminated. Parts of Durham County and areas around Chapel Hill will also be effected by the change. Below you will see the current USDA Loan Eligibility Maps for Raleigh NC. The areas shaded in “pink” do NOT qualify for the program. You will notice that there are no shaded areas near most of Knightdale, Wake Forest, Fuquay, Holly Springs or Clayton
USDA Loan Eligibility Updates for 2015
The USDA Home Loan program in NC really only has 4 basic underwriting requirements for borrowers to meet.
- The Household income has to be below the maximum limit set for the County. This can be a very different income than the income we use to qualify you for the mortgage. Let’s say there’s an aging parent living in the home – their income would be used to see if you meet the maximum income limit, but they might not be on the loan for “qualifying” purposes. These income limits are subject to change at the end of each year.
- The Household income on the Application (so everybody who will be on the loan) must be enough to meet the debt to income guidelines. The Income must be able to support the 29/41 ratios set by USDA Home Loan Requirements – meaning your TOTAL house payment (including taxes and insurance and paying the mortgage back) can be no more than 29.000% of your GROSS monthly income. So for easy math, let’s say your total income (before taxes, etc) is $3000 a month. For a USDA Home Loan, your total monthly payment should be no more than $870. If your monthly gross income is $3000, then with your car loan, and student loans and credit car payments AND your total house payment – your monthly debts should be no more than $1230.
- We can ask for Debt Waivers if you are over the 29/41%. However, you will need some “offsetting” or Compensating Factors for us to work with… for instance, low payment shock or higher credit scores, or savings left over after closing.
- The Credit Scores of everyone on the loan needs to be above 640 – this is a change. If you read that you can get a USDA Home Loan with a 620 credit score – that’s changing. The “target” score in the new USDA Home Loan requirements 2014 Updates is 680, but they will allow us to go down to 640, under very specific circumstances . (see below)
- The house must be located within the USDA Loan Eligibility Map “footprint.” The USDA Loan Eligibility Map NC is also changing .
Credit Scores and Credit Requirements USDA Loans NC /UPDATE
- USDA Home Loan Requirements now demand that we document that borrowers have not been 30 days late on rent in the past 12 months. There’s also language that says if you have scores under 680, and you have not paid rent for the past 12 months (perhaps you were in college or the military) it’s considered a RED FLAG.
- Being an Authorized User is not going to help you raise your credit scores as much. “When the loan is manually underwritten, the primary wage earner should be treated as the applicant and all other applicants are considered co-applicants. Credit trade – lines that list the applicant as an “authorized user” cannot be considered in the underwriting decision unless another applicant in the mortgage transaction is the owner of the trade line, or the owners of the trade line is the spouse of an applicant, or the applicant can provide documented evidence that they have made the payments on the authorized user account for 12 months preceding application.” THIS IS A HUGE CHANGE If you are added to a parent’s account (for instance) so that you have 2 trade lines, with history – we will no longer be able to consider that credit in qualifying you, unless we can prove that you’ve been making the payments – which almost never happens.
- The new underwriting guidelines for USDA Home Loans state that borrowers under a 640 credit score must provide evidence of Extenuating Circumstances – these loans are going to be more and more difficult to get approved. You will need to have cash left over after closing from savings, and very low debt ratios to qualify. Also a HUGE UPDATE – and we are already seeing this in the Automated Approvals we receive.
For more information about USDA Home Loan Requirements in North Carolina, or to USDA Loan Future Eligibility Map, please contact Steve and Eleanor Thorne, 919-649-5058, Connect with us on Google Plus or via Facebook to keep up to date on any changes to the USDA Home Loan program in NC!
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