I was very surprised by just how much of Orange County, NC qualifies for USDA Home Loans! Pleasantly Surprised! There are three basic requirements to qualify for USDA Home Loans in Orange County using the USDA Home Loan Program. The first is that you need to have decent credit. Second you need to buy a home that is within the USDA Eligibility Footprint for Chapel Hill and Orange County and third you need to be under the Household income limit for the County.
The 2018 maximum income amounts for Orange County are lower than Wake County!
- 1- 4 people in household maximum income is $84,300
- 5 or more people in the household maximum income is $111,300
The 2018 maximum income amounts for Alamance County are:
- 1- 4 people in household maximum income is $78,200
- 5 or more people in the household maximum income is $103,200
The USDA’s loan’s biggest feature is that it is a No Money Down Home Loan! That’s right, if you qualify – this is a 100% mortgage loan.
USDA Home loans are one of the best mortgage programs available, especially for First Time Home Buyers. These are fixed rate, 30 year payback mortgage loans, designed exclusively for owner occupied properties. This program is not suitable for Investment Property. The USDA Home Loan NC program is so desirable because it has very low monthly USDA PMI rates – especially if you do a side by side comparison against a FHA Home Loan. Let’s look at the difference when we have a loan at the exact same interest rate
USDA Home Loan Sales Price of $200,000
USDA Down payment Requirement: $00
USDA Upfront PMI Premium: $4000
Monthly USDA PMI Premium: $84 (.5% rate)
Monthly Payment with P&I and USDA PMI = $1101
FHA Home Loan Sales Price of $200,000
FHA Home Loan Down Payment Requirement: $7000
FHA Home Loan Upfront PMI Premium: $3860
Monthly FHA PMI Premium: $281 (1.75% rate)
Monthly Payment with P&I and FHA PMI = $1278
Is the USDA loan program limited to first-time buyers?
No, the USDA Rural Housing Program can be used by first-time buyers and repeat buyers. We’ve done several loans for folks who currently have a house (in Tennessee for instance) and get transferred to NC – meaning that when they buy in NC… they’ll have 2 houses. There are some ways for this to work… but it’s tricky.
Granted, downtown Carrboro and Chapel Hill do not qualify – but MOST of the county does! Unfortunately, the USDA Eligibility Maps for Chapel Hill, Carrboro and Orange County are scheduled to change in 2020. With this change, many areas that are currently eligible for the program will no longer be eligible.
Currently much of the area in Orange County and Alamance county qualify for USDA Home Loans, and there’s no sales price limit like we have for the Down Payment Assistance Programs that are offered.
USDA Home Loans in Orange County
USDA Home Loans in Orange County require a minimum credit score of “around” 640 for a fully Automated Approved loan. We can do manually underwritten loans, but the debt to income ratios on those loans are substantially tighter.
The guidelines for housing and debt ratios for USDA Home Loans in Alamance County (and Orange County) are 29/41.
We’ve seen folks who have income we can’t count – maybe they’ve only worked at a part-time job for a year, or they receive bonus checks, but haven’t been paid for their bonus this year, or they are eligible for a raise in 90 days… folks who needed us to look at their situation a little differently.
In those “common sense” mortgage underwriting scenarios, the USDA Home Loan program allows us to use Compensating Factors on a limited basis.
USDA Home Loan Debt Ratio Waivers will be considered when the borrower has a middle credit score of 660 or higher, and the co-borrower has a credit score of at least 620. In those cases, the Bank may request a Debt Ratio Waiver for loans with ratios exceeding program guidelines of 29/41.
The parts in the “shaded” areas do not CURRENTLY qualify for USDA loans, however, all of the rest does!
If you have questions about qualifying for a USDA Home Loan in Orange County, NC – please call Steve and Eleanor Thorne, Connect With Us on Facebook, 919-649-5058! If you are considering a USDA no money down home loan, call Steve and Eleanor Thorne. We can help you find out if your income qualifies for the program in your county – and if the property you have your heart set on is within the USDA Footprint!