The Maps are changing! The Maps are changing! I feel like that’s all I’ve said for the past 2 years – and yet – the maps haven’t changed, have they? What maps? The USDA Eligible Area Maps in NC are currently scheduled to change on .
With the proposed changes, over twenty-five percent of North Carolina will no longer qualify for the USDA Home Loan program.
What does that mean for folks who are not quite ready to buy? If you are interested in buying a home with no down payment, the USDA Home Loan NC Program is the best thing going. The loans are underwritten by a USDA Home Loan Underwriter – and they must have your loan package PRIOR to the end of business on September 30, 2013.
USDA Eligible Area Maps AFTER
For folks in NC who want to buy a home in an area that is CURRENTLY within the USDA Eligibility Area Maps, but with the change – don’t think the area you want to buy in will be eligible – there’s still hope.
The USDA Eligible Area Maps are due to change at the end of business on September 30th because that’s when the Federal Budget ends. Our Nations year end is September 30, and when Congress did not pass a budget in January, they extended the Current Budget to September 30th. The USDA Eligibility Maps could also change if we pass a Farm Bill, which has been knocked down twice now.
Bottom Line? There is about a 10% chance that the Federal Budget will go through when Congress gets back – and if they DO pass a Budget AND the Farm Bill (which is part of the Federal Budget) then the Maps might REALLY change on October 1st. More LIKELY, however, is that Congress will “kick the can” (again) and the Budget and the maps will remain exactly like they are until January of 2014.
If Congress passed the Farm Bill – both the Senate AND the House have provisions that delay the change in the “definition” of Rural until the Summer of 2015 – or later.
USDA Home Loan Eligibility Requirements for NC
- Credit Scores need to be at or above 640. There are some exceptions – so if you are slightly under this let us take a peak at your credit and we’ll let you know if you can buy a home with a USDA Home Loan! If you have 2 scores over 600, let’s talk, because it’s not that difficult to get higher credit scores, and we have scoring models that tell us EXACTLY what you need to do! Here are some Credit score tips we’ve seen work in the last 12 months.
- You can not have Judgments or Liens outstanding against you. This is not just with a USDA Home Loan requirement, it’s for any mortgage program. This requirement is non-negotiable, because you can not get Title Insurance if you have a Judgement or Lien against you. HOWEVER, having said that – please call us prior to paying off a ton of Collections. THOSE are different, and we might not have to have all of them paid for you to qualify.
- USDA Loans require a minimum waiting period of 36 months since a bankruptcy, short sale or foreclosure. Take that time to re-establish your credit and get your scores up. Not using credit is not going to help you get the scores you need to purchase a home after you’ve had a credit disaster. (5 things you can do now to build up your credit scores)
- Traditional Credit Scores are needed. We need at least three trade lines. If you are a first time home buyer, and you don’t have much credit – or if most of the credit you do have is Student Loans, well then call us. You can sometimes get added to a family member’s credit card, or you can get started with a couple of secured credit cards.
- USDA Counts Student loans that are in Deferment. Other mortgage programs don’t. If you are not making payments on a half dozen student loans, and you want to use this program, we suggest you start working on a payment plan that includes those deferred loans.
- You must not be over the Maximum Income Household Requirements for your area. In most parts of North Carolina, USDA Home Loan Eligibility Requirements are broken down between how many people are in the household. This changes per county, so check and see what the limits are for your County. Many loan officers don’t know how to do this – but we can make adjustments to the household gross income by following USDA Loan guidelines. The Income adjustments for USDA can be made based specific allowable deductions on tax returns for the past two years, child care expenses, retirement income, disability and several other factors. If you are just a little over the maximum numbers, call us – we might be able to help you figure it out. 919 649 5058
- The House must be within the USDA Home Loan “Footprint.” This is where the Map Changes are important. USDA is changing it’s classification and definitions for Rural Housing – when the maps change, more than 22 Communities in NC that CURRENTLY qualify for USDA Home Loan Financing could loose that USDA Home Loan designation due to Census Numbers. In the official USDA Loan Eligibility site – you’ll see these changes listed as “Future” Property Eligibility Maps in the sidebar.
- Qualifying is based upon your gross taxable income. This means that if you earn $48,000 a year, before taxes are taken out, we are qualifying you on $4000 a month. For the past 5 years we’ve been granted exceptions within the USDA Home Loan housing ratio, allowing us to obtain approvals for home buyers who had “front end” ratios of 33 and 34 percent. Those days are over. The maximum housing / PITI ratio allowed with GUS is now 32% with the “standard” ratio of 29% pretty strictly enforced. Newly updated USDA Home Loan Eligibility requirements also enforce a 41 to 43% total debt ratio – even though in months past, we were able to approve “back end” ratios of 47 to 48%. If you are over the Debt to Income Ratios, then we have to apply for a Debt Waiver, and follow those guidelines.
- Childcare is considered in qualifying for a USDA loan. But it is kinda’ complicated… it affects the income used for qualifying and it might mean that if you are over the income limits in your area, but you are paying child care expense – you could still qualify!
- USDA Home Loans in NC do have Compensating Factors that they will consider. This is very much a common sense underwriting for a mortgage loan.
- The USDA Home Loan program in NC does have monthly USDA PMI charges, but they are much less than other mortgage loan programs.
- It’s a 100% Loan, and you can get a gift, or the seller can contribute to the closing costs. There are no reserve monies needed after closing – so it can truly be a no money out of pocket loan!
Many first time home buyers in North Carolina are considering this program as an important tool for buying their new home. 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 Eligible Area Maps, or if that corner of North Carolina could see a change!
Have questions about the USDA Eligible Area Maps AFTER October 1, or how you can qualify for a home with a USDA Loan? Call Steve and Eleanor Thorne at 919-649-5058 , USDA Home Loan Experts in North Carolina. You can also find us on Google Plus and Facebook