A lot of our clients are looking for a home with a front porch swing, away from all the hustle and bustle they encounter during their daily travels. That’s why the USDA Home Loan Program has been so perfect, because in NC, it doesn’t take much time at all to be smack dab in the middle of some Country Road!
However, beginning Monday, February 2, 2015 there will be changes to the areas that are eligible for the USDA Home Loan NC program. The largest changes (areas that are shrinking) are around the Urban areas of Jacksonville, NC; Greenville, NC; Rocky Mount, NC; Goldsboro, NC; Raleigh, NC; Greensboro, NC; and Charlotte, NC. Any new applications beginning February 2 will be underwritten to the New USDA Loan Maps for NC 2015.
USDA Loans are NO DOWN PAYMENT, and they have very low PMI payments. This helps keep the mortgage payments with a USDA Loan very affordable. They are not restricted to First Time Home Buyers, they have very attractive (read low) mortgage rates, and you can own another home, in many circumstances, and still qualify for a USDA Home Loan.
These loans are restricted to the more “Rural” parts of our state, so you have to be willing to drive a little ways. That’s the spirit of the program, to help more rural areas get financing, where they would normally have a struggle.
USDA Loan NC Requirements
As part of the “new” requirements for USDA Home Loans in NC that went into place last fall – many of the good people here in NC that “use to be” eligible for a USDA Home Loan, no longer qualify. The USDA Loan NC requirements have gotten substantially tougher. I’m going to tell you what WE SEE working, not necessarily what the “guidelines” say. I’m doing this, because USDA is shifting it’s Underwriting Process so that MANY LOANS are requiring a Manual Underwrite.
What does a Manual Underwrite of your USDA Loan mean, and why do you care?
I’m not smiling while I write this.
USDA Home Loans are Underwritten (approved) under an archaic system (IMHO). You have to get the loan approved through an Automated System (called an AUS, computer system like other loans). Then it goes to the Bank Underwriter (just like other loans). AND THEN it goes to the USDA Home Loan Underwriters located all over the State. THOSE Underwriters are verifying that the Computer, and the Banks Underwriter knew what they were doing when they approved the loan. This is the only program that requires this extra manual step.
This is a terrible system, because at points last year it was taking more than 55 days for a loan to be seen by the USDA Loan Underwriters here in NC. In some states it was worse. The USDA system simply was not built to have the amount of business it was getting. In North Carolina, EVERY COUNTY has some portion (albeit shrinking) that qualifies for USDA Home Loans.
Because of this strain, and the lack of USDA Loan Underwriters, they adjusted the Automated System last fall… and fewer loans are getting approved without a Manual Underwrite. Because that system is so new – few Underwriters are committing to approving these “marginal” USDA Home Loans, kicked out by the AUS.
In NC, the Loan Officer, and the Underwriter have their ID recorded with the Deed Of Trust. This means that if a loan goes bad, there’s a trail to see if the LO or the Underwriter were actually to blame.
Bottom Line??? It’s TOUGH to get a Manual Underwrite, USDA Home Loan NC approved. There’s no other way to word that.
Fortunately, there are alternatives. We’ve migrated most of our clients over to the NCHFA Grant program, and I’ll explain why in just a minute.
USDA HOME LOAN NC Eligibility – USDA Loans are NO DOWN PAYMENT, very low PMI Fee mortgages. This makes them VERY desirable. To qualify for a USDA Loan in NC, you NOW need to meet the following Guidelines
- Be under the HOUSEHOLD Income Limits for the County in which you are buying a house. This is not just the folks who are on the Application, this is every man, woman and child over the age of 18 who lives in the house. NCHFA Grants income limits are based solely on the folks who are applying for the loan.
- Buy a property that is within the New USDA Loan Maps for NC 2015 footprint. When you look at the Raleigh USDA Loan Map below (for instance) you will note that there are many new places that no longer qualify for the program. Areas marked in “pink” do not qualify.
- Raleigh NC – New USDA Loan Maps for NC 2015
- Greenville NC – New USDA Loan Maps for NC 2015
- Jacksonville NC – New USDA Loan Maps for NC 2015
- Rocky Mount NC – New USDA Loan Maps for NC 2015
- Goldsboro NC – New USDA Loan Maps for NC 2015
- Greensboro NC – New USDA Loan Maps for NC 2015
- Charlotte NC – New USDA Loan Maps for NC 2015
- All applicants must have 2 credit scores over 640 AND you can NOT exceed the income to debt ratios of 29.0000% and 41.0000000000% AT ALL. Otherwise… you will be a manual Underwrite. For those folks with scores over 680, we might be able to go to 32.000% and 44.0000% as long as you have some offsetting factors… like additional cash left over after closing. READ: USDA Loans really need 680 scores, or VERY low debt ratios. We can get much lower credit scores, or higher debt ratios approved with other programs.
- Student Loans will be counted in ratios. There’s tons of stuff out there, we’ve written about it, and we’ve tried 3 different times since December to get loans approved with LOTS of documentation on Deferred Student Loans… and the Underwriters still counted Deferred Student Loan debt. It doesn’t really matter, based upon what we can tell if the loan is genuinely in a long term deferment. USDA Home Loan Underwriters, from everything we can see count the debt, deferred or not deferred, doesn’t matter.
We’ve heard all of the doubts from folks who think, “I am just able to save a LITTLE bit of money renting – HOW am I going to afford Home Ownership?” The good news is that there are First Time Home Buyer Loans available in NC – that make it possible to buy a home with less than $1000… often times you can buy a house with as little as $500.
Even with the New USDA Loan Maps for NC 2015, and the tougher USDA Loan guidelines, there ARE many other options that allow you to buy a house, with affordable payments, and virtually NO CASH out of your pockets!
We are NC lenders, we do a TON of NO DOWN PAYMENT loans in North Carolina. For MOST PROGRAMS, you do NOT have to be a First Time Home Buyer to Qualify. We are familiar with where you want to buy, the New USDA Loan Maps for NC 2015, and we want to help you! If you have more questions, call us! Steve and Eleanor Thorne 919 649 5058. You can also connect with us on Facebook, Twitter,Pinterest, Instagram… we’re here for you, whenever you are ready to get started!