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.
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!