The USDA Home Loan NC is available to borrowers who meet income and credit standards. Qualification is easier than for many other mortgage loan types, since the loan doesn’t require a down payment or a high credit score. In act, if you don’t have a credit score at all, you might still be able to buy a house using USDA Home Loan NC Non-Traditional Credit.
Home buyers should also make sure they are looking at homes within a USDA-eligible geographic area, because the property location is the second most important factor for this loan type.
USDA Home Loan NC Eligible Geographic Areas
The property must be located in a USDA-eligible area. Borrowers can search USDA’s maps to browse certain areas or pinpoint a specific address. The good news? Every county in our State has an area that qualifies for USDA Home Loan financing.
Still worried that the area you are looking in is not eligible? Well, about 97% of the United States land mass is USDA-eligible, representing 109 million people. Many properties in suburban areas may be eligible for USDA financing. It’s worth checking, even if you think your area is too developed to be considered “rural”.
The USDA eligibility maps are still based on population statistics from the census in the year 2000. This is a unique opportunity to finance a suburban home with this zero-down mortgage program before the USDA updates their maps.
USDA Home Loans NC Credit Score Requirements
USDA Home Loans NC require that a borrower have two or more historical trade lines on their credit report with at least 12 months of repayment history reported. The trade lines may be open, closed and/or paid in full.
The minimum credit score for a GUS approval (meaning you sail through the Automated Underwriting System), is 640 – although in some cases we are seeing that you might need a minimum credit score of at least 680.
For borrowers who have credit – but maybe hit a bump in the road, you can likely buy a house too – it’s just gong to take a little longer.
Late payments must usually be at least a year in the past, and your current history must show that you have met your credit obligations on time and diligently for at least 12 months. If you have filed for previous bankruptcy, the declaration usually must be at least three years old. Since the bankruptcy, you must show that you have been diligent with credit and debt payments.
The GOOD NEWS is that we can do what’s referred to as a Manual Underwrite USDA Home Loan.
With that program, you will not receive an Automated Approval, however we can present all of the information on your file to the Underwriter directly. When we do that, there is a slightly higher risk associated with your loan, and there will likely be a slightly higher interest rate associated with that risk factor.
If a borrower has only one eligible trade line reporting, USDA Underwriting Guidelines state that we must obtain non-traditional credit. These are regular bills you are paying on time. Non-traditional refers to credit that you are receiving from the Power company, for instance.
USDA Home Loan NC Non-Traditional Credit may not be used to enhance poor payment records or low credit scores. This method is used in a situation where a borrower only has credit scores showing for Equifax (for instance) and not for Trans Union or Experian.
Or it can be used in a situation where someone has NO credit scores. That’s right, if you have ZERO credit scores, you might still be able to buy a house using the USDA Home Loan NC program!
Non-traditional credit should consist of a Verification of Rent for the last 12 months and two or more trade lines established for 12 months. If a Verification of Rent is not available, at least three trade lines are required. Those who have been living with a family member, and paying no rent will have a slightly higher credit requirement.
USDA Home Loan NC Non-Traditional Credit
There are multiple sources for USDA Home Loan NC Non-Traditional Credit that can be used to “build” a credit score for a USDA Home Loan NC borrower. Those sources include:
- Utility payment records
- Insurance premiums that are not deducted from paychecks
- Rent checks
- Payments to child care providers-made to a business providing such a service
- School tuition
- Payments to local stores such as department, furniture, appliance and specialty stores
- Payments for uninsured portions of any medical bills
- Internet/cell phone, auto leases
- Payments in internet providers for monthly video game subscription
- Personal loan from an individual (other than a family member) with repayment terms in writing and supported by cancelled checks or money order receipts
With Manual Underwritten loans (so folks who don’t have any credit scores), we also need to document a 12 month history of saving by regular deposits (non-payroll deducted/no NSF’s), resulting in a reserve account equal to three months of proposed mortgage payment (PITI) as a cash reserve post-closing. These funds can not be a gift. We need to see that the borrower is a “saver.”
Payments made to relatives for credit sources are ineligible as a non-traditional trade reference.
The alternative credit may be open, closed and/or paid in full—accounts may not have been closed more than six months prior to application.
NOTE: Max ratio’s for non-traditional credit: 29/41
USDA Home Loan NC Income Limits
Guaranteed loans are available to “moderate” income earners, which the USDA defines as those earning up to 115% of the area’s median income. For instance, a family of four buying a property in Johnston County, NC can earn up to $91850 per year.
The USDA Home Loan NC income limits are generous, and they vary by county. Typically, moderate earners find they are well within limits for the USDA Home Loan NC program.
It’s also important to keep in mind that USDA takes into consideration all the income of the household. For instance, if a family with a 17-year-old child who has a job will have to disclose the child’s income for USDA Income eligibility purposes. The child’s income does not need to be on the loan application or used for qualification. But the lender is required to look at all household income when determining eligibility.
We help folks everyday who do not have any credit scores buy their Dream Home with USDA Home Loans! USDA Home Loan NC Non-Traditional Credit can make all of the difference, and not all Lenders off this option. If you are new to the credit game – or if you want to see if your credit score is “big” enough to buy a house using the USDA Home Loans NC Program – call Steve and Eleanor Thorne, 919-649-5058. Remember, just disputing everything on your credit report is probably not going to work.