Although the program has been around for a long time – many people are just now hearing about the USDA Home Loan program that offers No Money Down Home Loans in North Carolina! Sweet! Best news is… it doesn’t have to be a FARM! Over one-third of the first time homebuyers recently surveyed said, “We’d love to buy a house, but we don’t have thousands and thousands of dollars for a down-payment!” USDA does have certain things that they are looking for in order to qualify you for the program.
USDA Home Loan Qualifying Requirements in NC
Geographic Footprint: USDA Home Loan underwriters must insure that the house you are buying is in one of the “geographically qualifying areas in North Carolina which is designated as Rural for USDA Loans.” (This will be changing later in 2014, view all of the USDA Eligibility Map Changes in NC) You might be surprised at what they consider rural! Many “typical” subdivisions outside of cities like Charlotte, Raleigh and Greensboro qualify. In fact, every county in NC has at least some part of it that qualifies for the program (Durham County is probably the toughest area to find a home).
Because of this qualifying condition for USDA Home Loans, before you put an offer on a house, to be sure and verify that the property is in a qualifying area. You can verify that the property meets USDA Home Loan “Geographic Qualifying Requirements” with us; or directly through the USDA database.
Property Qualifying: USDA Loans requirements say that the home you are buying must be a single family residence. No Duplexes, or tri-plexes. It must also be your primary residence. SOME Condominiums and town homes qualify for USDA Loans, but mobile homes do not. We talked to a couple in Mt. Airy who wanted to use USDA Home Loan financing on a Condo, the problem was that the units were not FHA approved. Now I realize USDA and FHA are not the same entity – but a condo project has to meet the FHA standards to qualify for a USDA Home Loan.
Some USDA Home Loan Lenders will not finance a property that has an in ground swimming pool, we do. If you are buying a home with an in ground swimming pool, and you want to use the USDA Loan Program – it is important that you talk with us prior to making the offer. That way both you and your Real Estate Agent understand the process and what to expect in regards to swimming pools and USDA Loans.
Credit Qualifying: USDA Loans get underwritten several different times – but the very first “pass” at qualifying is done by an automated underwriting system known as GUS, Government Underwriting System. GUS is good at approving borrowers who have a credit score of 640 or higher. For buyers with credit scores in the 620 – 639 range, GUS will not issue an approval.
Scores in the lower range just require Manual Underwriting. That basically means that a human has to underwrite the file and verity that it meets all the requirements for USDA Loans. A manual underwrite is a more difficult to get approved and it is more restrictive – meaning you MUST have compensating factors, such as a lower debt ratio. If you have a 620 score – we can probably help you get your score up so that you can purchase! Call us!
Debt Ratio Qualifying: USDA Home Loans qualifying requirements include a ratio between your GROSS income and your total housing payment, and your GROSS Monthly income and your total debt. They require that your total housing payment expense (the amount of principal + interest + taxes + insurance) be less than 29% of your GROSS Monthly income. They also require that all of your monthly debts including the new house payment, be less than 41% of your total GROSS (pre-tax) income.
Student loan payments are not calculated the way you might think by USDA Home Loan underwriters. Deferred payments could be counted at $100 a month! We have seen GUS approvals for those with really good credit scores and back end ratios of 48% and higher!
Income Qualifying: USDA Home Loan requirements for maximum income change per county. If you make more money than the limit, you will not qualify. The USDA qualifying requirements for maximum income are determined by your geographic area and the number of people living in the household. Currently, the household buckets are 1 – 4 people, 5 – 8 people and then 9 and more. The more people in the household, the more income you are allowed to make.
USDA Loans also have income adjustments that can be made if you are over the limits, at first glance, be certain that you have us check the adjustments to see if you qualify (some lenders don’t know about this!) To check income limits for your area you can contact us or check the USDA database (here’s a video to show you how to do that… sorry, but I had just gotten through laryngitis when I made this video!). Whenever income limits are updated for USDA Loans they will be posted on this site.
Compare No Money Down Home Loans in NC
We do tons of USDA Home Loans each month – we would love to help you buy a house in NC with a USDA Loan, the closing costs are VERY reasonable and you can get a gift! Please call Steve and Eleanor Thorne 919 649 5058 to get more information about USDA Home Loan Qualifying Requirements in NC! Are you on Google +? Connect with us!
we want a loan for land with multiple homes on it. would this qualify? also we can not afford this loan before purchasing the home. we will be able to afford it once we have it though because the many homes on the property are rented to others. so we would be able to pay the mortgage with the rent coming in. i hope this makes sense. anyway would this be something that would qualify for a usda loan? we need a loan that doesnt require a down pament.
Tara – it sounds like a great plan, unfortunately, you’ll likely need a private investor to help you with it. I don’t know of any programs in NC that will allow it – because we are required (by law) to verify that you can CURRENTLY afford the payment on a mortgage loan. So approval based upon what you WILL make is not possible at this time. Good Luck!
Do I have to have any money upfront and if I already am buying a home can I get approve before I sell the one I am buying at present time
Yes, you can get approved before you sell your home, and no you don’t have to pay anything.
Is a septic tank inspection a requirement of USDA loan?
Only if the Appraiser notes that there appears to be an issue. Well water will need to be checked for USDA Home Loans
Hello I am currently working on my credit and my equifax score is 640. I am not sure of the other scores…but I’m interested in purchasing a home. I have been in my career field for 6 years but at my current job for 1 month. What steps should I take ?
Samantha – CALL US! Yippee! You can probably meet the USDA requirements for a home purchase. As long as you have at least one paystub from your current employer, and you’ve had no more than 30 days without a job in the last 2 years… you should be golden! CALL US 919 649 5058
Hi Eleanor,
I appreciate the information on USDA loans. I live in Buncombe county. Can I get a USDA loan for another county (New Hanover) where the homes are better priced? I would love to buy a home in Wilmington and move out of expensive Asheville. My credit score is 709 but I am self-employed.
Kim
Kim! Please cal us, we re glad to help you buy a house near the coast (we love that area too), and frankly we will need to know more about your self employment to give you great advice! 919 649 5058
Hi Eleanor,
I am considering buying a home in Brunswick County. Are USDA Loans currently available in any part of Leland or any of Brunswick county? With all of the changes from year to year, it is so hard to tell what the most current information is regarding these eligibility areas.
Jennifer
Jennifer! Yes there are lots of areas that qualify for USDA home loans near Wilmington. You can call us, and we will be glad to help! 919 649 5058
Are their any homes in Nashville NC that qualifies for this type of loan?
All of Nashville, NC qualifies over to S Old Carriage Road. That seems to be the “line” that gets close to Rocky Mount.
Ok thanks, what are the requirements for this loan such as credit?
We are allowed to do Manual Underwrites for USDA Loans (not all Banks have this privilege). Because of that we can approve loans under a 620 credit score. For that to work, there are generally some offsetting requirements that must be met. You can read about those here.