100% Mortgage Loans in Chapel Hill?

100% Mortgage Loans in Chapel Hill?  Yep!  You can use the USDA Home Loan Program to buy a home there!  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 $109,850
• 5 or more people in the household maximum income is $145,000

The 2022 maximum income amounts for Alamance County are:

• 1- 4 people in household maximum income is $103,500
• 5 or more people in the household maximum income is $136,600

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.

100% Mortgage Loans in Chapel Hill?

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

Base Loan Amount is $193,000

FHA Home Loan Down Payment Requirement: $7000

FHA Home Loan Upfront PMI Premium:  $3500 (1.75% of 193,000)

Monthly FHA PMI Premium:  $135.79 (.85% if you put less than 10% down)

Monthly Payment with P&I and FHA PMI = $1278

APR of 6.105 – NOTE RATE of 5.0 Fixed FHA Loan

**Equal Housing Lender, this is not a commitment to lend, rates change daily – this is to be used only as a comparision of the costs associated between a USDA Home Loan and a FHA Loan in the Chapel Hill area.  Taxes and Homeowners Insurance charges will also be part of your mortgage.  Please call us to find out the exact figures for the home you are interested in 919 649 5058.

Is the USDA home loan program limited to first-time buyers in Chapel Hill NC?

No, the USDA Rural Housing Program can be used by first-time buyers and repeat buyers.  You can no longer own a home in another area, and then purchase a home in NC with a USDA Home Loan.  If you qualify, you might be able to purchase a home with here with a FHA Loan, but you will not be able to receive down payment assistance if you own another home.

Granted, downtown Carrboro and Chapel Hill do not qualify for USDA Home Loans – but MOST of the county does! The USDA Eligibility Maps for Chapel Hill, Carrboro and Orange County are currently .  With this change, many areas that are currently eligible for the program will no longer be eligible.  What we are finding in 2022 is that land that is in an INCORPORATED City area, generally does not qualify for USDA Home Loan financing.

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.  Later this fall, USDA says they are going to allow us to make the exceptions on loans outside of the automated system they use.  Meaning, we would not have to send the file directly to USDA for them to approve someone who is just shy of the computer approving them for a loan, but otherwise is a great candidate for homeownership.  We think this will be a great change for 2022!!

The parts in the “shaded” areas do not CURRENTLY qualify for USDA loans, however, all of the rest does!  As you can see, 100% Mortgage Loans in Chapel Hill are available!!

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!