USDA Home Loans in Wake County

There’s a mortgage program that has been very popular in Western Wake County that requires no down payment, and it is offered by USDA.  It’s designed for “Rural Areas,” and is offered as a way to spur growth in those more traditionally rural parts of our state.  In Holly Springs, Fuquay Varina, Knightdale and Wake Forest the USDA Home Loans have been traditionally available within the whole city limits.  The maps that govern where USDA Home Loans in Wake County can be making it more difficult to buy a home using USDA Home Financing after June 4, 2018.

Holly Springs is located about 30 minutes from downtown Raleigh – and is also close to Fayetteville. Many families choose this area to live because of the proximity to Ft Bragg.  More recently, because of the advancement of I-540, commuting to jobs in the Research Triangle Park are that much quicker.  The Town has also added many large box retail shops along Highway 55, making it easier to stay in the Fuquay Holly Springs area for shopping.

Fuquay Varina, also in the Western Wake County area is in a unique location – not just because it’s located near Raleigh – it’s also one of the closest Wake County Communities to Fayetteville. Because of it’s unique location – Fuquay Varina is experiencing a faster paced Real Estate Market than other parts of the Triangle.  It is benefiting from expansions at Fort Bragg,  the completion of I-540, and the number of manufacturing facilities coming to this part of Wake County, including the growing Lenovo and Novartis plants.  The town grew from 4500 residents 2 decades ago to 27,000 people now.

Many of those new residents are looking for homes with little or no down payment, because many first time home buyers have not been able to save for a home.  Why is that?  Rent prices are at an all time high, and most first time home buyers have student loan debt.  This means they are having to rely on family and the “Bank of Mom and Dad” to help out buying a home.  What if that’s not an option?

USDA Home Loans in Wake County

That’s where USDA Home Loan Mortgages come into the consideration.  For years folks who wanted to live in a small town like Holly Springs, Fuquay Varina, Knightdale and Wake Forest needed to have enough money pulled together to pay for part of their closing costs, but other than that they knew they didn’t need money for a down payment.

USDA Home Loans in Wake County don’t require a  Down Payment, they are 100% of the Sales Price Loan!   For the last 10 years, you could ask the Sellers to pay closing costs.  With the shortage of houses available to purchase shrinking so drastically, the chances of having a Seller pay closing costs is limited.

According to one survey, more than 17 percent of millennials surveyed expect financial help from family towards a down payment.  Gifts are allowed with USDA Home Loans.  In fact there are only a few “quirky” restrictions for USDA Home Loans in Wake County:

• Property must be located within the USDA Home Loan “Geographic Footprint.”
• Household Income must be under the maximum (it changes each year) which is currently $127,950 for a family of 4 or more.
• You need at least a middle credit score of 620.  If your scores are under 680, the GUS system right now is making those a Manual Underwrite, and there are additional requirements for Debt to Income Ratios and slightly higher interest rates.
• We have to count student loan debt that is not on a level payment plan at 1% of the balance.
• You can’t use USDA Home Loans in Wake County to buy a working farm.

The “big deal” about this change in June, is that it looks to us like the Incorporated areas of Fuquay Varina and Holly Springs are will no longer be eligible for the USDA Loan Program.

Here’s a Map that shows what is available for USDA Home Financing TODAY.  The shaded areas do not qualify, but you can see that Fuquay and Holly Springs are pretty much in the clear.

Here’s the way that map looks effective June 4th, 2018

That’s a pretty massive area that is now shaded, and will no longer be eligible for USDA Home Loans in Wake County.

We are seeing the same thing in other cities near Raleigh.  If you are interested in a home in Knightdale, NC and you want USDA Home Loan Financing in Knightdale, it looks like it will be unavailable after June.  Now it could have a Knightdale address, and if the home is NOT in the incorporated city of Knightdale, it could still be eligible.

The first image is the map as it looks today.  The shaded areas do not qualify for USDA Home Loans.

This is what that same map looks like in June.  Shaded areas now don’t qualify.

Moving just north of Knightdale, we took a look at Wake Forest and it’s pretty much the same.  Here’s the map of eligible areas in Wake Forest in June, and under that the one that is currently in place.

USDA Home Loans in Wake County Map Changes

If you are currently looking for a home in Wake County, and you want to take advantage of the USDA Home Loan Program, our suggestion is to have a contract dated before June 4th.

Here’s what USDA sent us:

“On June 4, 2018, all properties for new applications must be located in an eligible rural area based on the new maps.  However, a property that is located in an area being changed from rural to non-rural may be approved if all of the following conditions are met:

1. The application is dated and received by the lender prior to June 4, 2018 and the Loan Estimate was issued by the lender within 3 days of application receipt.
2. The applicant has a signed/ratified sales contract on a property that is dated prior to June 4, 2018. 
3. Applicant meets all other loan eligibility requirements.

If the property is located in an area being changed from rural to non-rural, lenders must provide Rural Development all of the following information in addition to all other required documentation.  For loans submitted via the Guaranteed Underwriting System (GUS), the documentation must be uploaded into the system.

• Copy of the signed/ratified and dated sales contract.
• Copy of the Loan Estimate issued to the applicant.
• Verification that the property was located in an eligible rural area prior to June 4, 2018.  Note: Maps of the “Previous Eligible Areas” will be available on the Eligibility site beginning June 4, 2018.  A printout of the map indicating the property address was previously eligible is acceptable.”

It’s not just Wake County that is losing USDA Eligibility.  By 2020, more than 1/3 of our state will lose the program.  USDA Home Loans are the ones we try to get folks qualified on, because the cost of PMI is so much lower than FHA loans (or Conventional Loans when you look at under 720 credit scores), and the mortgage rates are so much lower.  There are other First Time Home Buyer programs available, but if you can qualify for a USDA Home Loan, it almost always saves you thousands of dollars over time.

If you have questions about USDA Home Loans in Wake County and the upcoming Map Changes, please call Steve an Eleanor Thorne 919 649 5058.  We love this program and we work with people every day buying a house in NC.  We want to be your USDA Home Loan resource!