Many times we talk to Home Buyers in Charlotte who want to buy a house, but their “barrier” for entering the Home Ownership market rests on their ability to come up with large sums of cash for a Down Payment. This is especially true for First Time Home Buyers in Charlotte NC. We generally start the conversation by asking if they’ve heard about USDA Home Loans Charlotte NC, and the response is normally…. “ugh, we aren’t really interested in buying a farm?”
Well good news! They are not really “farm” loans. USDA Home Loans Charlotte NC are for those folks with decent credit, and stable jobs – who are willing to live a little further out from downtown Charlotte in areas like the areas around Mint Hill, Monroe, Belmont, Harrisburg, and Concord.
USDA Loans share many qualities with other Government back home loans, like FHA loans and VA loans… but because USDA Home Loans Charlotte NC do not require ANY down payment – and they have a very favorable PMI structure, we believe they can be the BEST mortgage loan for home buyers in Charlotte NC that qualify for the program.
What is a USDA Home Loan Charlotte NC?
A USDA loan (also sometimes called a USDA Guaranteed Home Loan or a USDA RD Loan) is a mortgage loan that is backed by the U.S. Department of Agriculture. These loans exist to help spur development in our more rural parts of the country. As it turns out, they were first introduced during the Great Depression, and continue to provide mortgage loans in every county in NC. Because the program has no down payment required, allows the Seller to pay for the closing costs, and has the lowest mortgage rates available – it’s a very, very popular mortgage loan in the Charlotte NC metro area.
Are USDA Home Loans Only for First Time Home Buyers?
No, USDA Loans do not require that you be a first time home buyer to qualify for the program. However, the program is designed for owner occupied homes, not investment property. If you have a Rental House, perhaps you moved to Charlotte, and couldn’t sell your home in another state, you might still qualify for a USDA Home Loan in Charlotte. Loan Officers who are not familiar with the USDA Loan program might tell you that you can’t own another house, and qualify for a USDA Home Loan in Charlotte, NC, they are wrong. Call us, that loan officer doesn’t do many USDA Loans in NC. We know the guidelines.
ADDITIONALLY –>>READ IMPORTANT–>> We are one of FEW NC Mortgage Lenders that offer all of the NC Housing Programs. These NC First Time Home Buyers Programs for Grants do not have a maximum sales price in Charlotte.The First Time Home Buyer Programs for Charlotte NC include both GRANTS that can cover closing costs on a USDA Home Loan and Mortgage Tax Credits (still available in 2017).
The Income limits for the program are subject to change annually and are based upon the median income for the County. The program does allow us to make adjustments to the Income limits based upon child care and certain deductions taken over the last 2 years on your tax return, so if you are close, please call us for more info. (how to calculate income)
- Income Limits for GRANTS in Charlotte, Monroe | Mecklenburg County
- $87,500 is the maximum income limit.
- MCC Mortgage Tax Credit for a household with 3 or more people is $81,000. The maximum sales price for a home that is going to be using the Mortgage Tax Credit in Charlotte is $250,000.
**A Quick Note**
We refer to these programs as “mortgage grants” because there are no payments to be made, there is no interest charge, and there’s no expectation that you will have to repay ANY of the money you receive for down payment, unless you move out of the property or refinance prior to the dates assigned by your specific down payment assistance program.
The literal term for this down payment assistance program is a “forgivable loan.” Under the terms of the program that best suits you, a portion of this down payment assistance will be forgiven on a schedule that we will share with you when you make loan application. These funds are available to us through NC Housing Finance Agency (NCHFA) and are available through other lenders in the state as well. The interest rates for these programs, however, will not vary from lender to lender as that is set by NC Housing.
There’s not a “maximum” cap on the sales price for USDA Home Loans. You can finance a home purchase entirely, meaning home buyers are not obligated to pay a down payment. USDA Home Loans have a PMI fee that is charged by the government “upfront” that equals 1.0% of the loan amount. The USDA RD Loan program allows us to add that to the loan amount, so the USDA Loan can be as much as 101% of the sales price. Again, if the sales price is $200,000 – with the 1% USDA Upfront PMI fee, the loan amount would be $202,000. There are additional monthly USDA PMI fees that will be added to the monthly payments.
How Do I Qualify for a USDA Home Loan in Charlotte, NC?
There are really just 3 things you need to qualify for a USDA Home Loan in Charlotte NC:
- The property must be located within the CHARLOTTE ARE USDA “Rural” Map Footprint. NOTE: there’s each year the “footprint” for USDA Home Loans could be change slightly in the Charlotte, NC area.
- Minimum credit score requirements for USDA Home Loans are 600 for a manual underwritten file, and 640 for a “slam dunk” approval through GUS (please do not read that to mean that if you have 2 scores over 640 you are automatically approved – but most folks that we get over that barrier get a loan!) The Credit Score requirements for a FHA Loan in Charlotte are easier to qualify for.
- The Borrowers must not be over the USDA Home Loan maximum household income for the County they wish to borrow in.The USDA Loan Maximum household income requirements for Counties near the Charlotte Metro area are broken down into TWO different Maximum Household Limits. Because most Loan Officers are not familiar with the slight differences in the way FHA and USDA MSA areas are broken down, be certain you are getting the correct limits based upon where you want to live. It’s only a couple of thousand dollars difference, but for some families, that’s the difference between qualifying for a USDA Home Loan Charlotte, NC – or not.
Are USDA “Guaranteed” Loans Only for Low Income Borrowers?
There are two forms of USDA Loans in NC. One is a Direct USDA Loan, meaning you are applying at the USDA Home Loan Offices near you – and those loans, we understand, take a minimum of 4 months right now. They are being made to lower-income families. For the Guaranteed program, that our bank offers, the program is NOT just for those in a “lower-income bracket” and you can see that from the USDA Loan Maximum Income Limits for the Counties in the Charlotte NC area above.
While USDA loans can benefit low-income borrowers tremendously, buyers with higher income can apply for USDA loans as well. In terms of income limits, the USDA will approve any borrowers with an income that does not exceed 115% of the median income in the area, based on your family size. For example, if the median income of a USDA-approved area averages at $100,000, eligible borrowers must have an income of $115,000 or less.
Can I Get a USDA Loan After a Bankruptcy?
As with other mortgage loan programs, USDA loans include a mandatory waiting period for borrowers who have been through a bankruptcy, short sale or foreclosure. Borrowers who have undergone a Chapter 7 bankruptcy must wait a minimum of 36 months from the date of discharge before regaining USDA Loan eligibility, assuming the original loan was NOT a USDA Loan. For Chapter 13 bankruptcy, borrowers must wait a minimum of one year, provided that all court payments have been made on time. Minimum credit score requirements are 620, with no “bad stuff” being added to your credit file in the past 12 months (the underwriters are looking for 12 months of clean credit).
Can USDA Loans be Used to Purchase All Kinds of Property in Charlotte?
This program is really not designed to help you buy a horse farm in Charlotte. I’m not saying you can’t – cause we have certainly done our fair share of USDA Loans for folks who had a couple of horses – but if you are running a “Business” and a School, etc. – this is probably not the loan you are looking for. The USDA Loan eligibility guidelines say that they will do mortgage loans on Condos, and Brand Spanking (not “used” or existing) manufactured homes – we’ve had zero success making that happen. Most of these loans are for single family, stick built homes that are in a rural setting. Outbuildings and in-ground swimming pools were especially difficult to get approved, however, new guidelines mean these should be easier to finance! All roads leading to the Home must have all-weather “tops” meaning dirt roads are probably not going to work, add some gravel.
How Much Can I Borrow with a USDA Loan in Charlotte?
While USDA loans do not include a maximum loan limit amount, they are restricted by borrower debt ratios and income restrictions. In order to qualify for a USDA mortgage loan, borrowers must have a debt-to-income ratio (DTI) that does not exceed 29% for your total housing payment, and 41% for total monthly debt. This means USDA Loan mortgage payments for home buyers in Charlotte, NC cannot exceed 29% of a borrower’s gross monthly income and total monthly debt payments cannot exceed 41% of a borrower’s gross monthly income. As with most loans, with good compensating factors, a borrower may go slightly over those ratio requirements.
USDA Home Loan Debt Ratio Waivers will be considered when the borrower has a middle credit score of 660 or higher, and the co-borrower has a credit score of at least 620. In those cases, the Bank may request a Debt Ratio Waiver for loans with ratios exceeding program guidelines of 29/41. To be eligible for a waiver we need to prove that the borrower will not experience any payment shock, and that they have other compensating factors, as well.
ADDITIONALLY –>> READ IMPORTANT –>> We offer the NCHFA Mortgage Tax Credit Program for First Time Home Buyers in Charlotte NC. If you qualify, it can shave off $166 a MONTH from your house payment. MOST NC Loan Officers do NOT offer this program, and once you close, you can NOT go back and get it.
Can I “Roll In” the USDA Loan Closing Costs into the Loan?
You can’t really “roll in” or add the closing costs to the USDA Loan in Charlotte. Borrowers who have not set aside funds for closing costs may finance any difference between the contract price and the home’s appraised value into the mortgage balance, up to 101% (see that part above about USDA Loan PMI Rates). As with most other loans, you can also have the seller pay your closing costs, and USDA allows the Seller to contribute up to 6% of the loan amount. We often help borrowers in Belmont and Charlotte negotiate these costs into the loan.
We have a great program in NC that will help with closing costs if there are no other options. If you have not saved up, or gotten gifts, or negotiated with the Seller (which is by far the most popular way MOST home buyers in Charlotte are paying for closing costs)… then we can help those who qualify use the NCHFA GRANT. The Grant will pay up to 3% of the loan amount in Closing Costs. Many Loan officers do not offer this program – so ASK US for it!
I’ve almost written a BOOK about USDA Home Loans Charlotte NC. We are NC lenders, we do a TON of these loans in the Charlotte area, we are familiar with where you want to buy, and we want to help you! If you have more questions about USDA Home Loans Charlotte NC (and I kinda hope you do) then 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!