The 2014 Farm Bill Congress passed actually did us a huge favor in NC. It says that USDA Rural Development must finally figure out which cities in North Carolina are “still” Rural, after all these years, and which ones are now, essentially Urban. Once that determination is made for the State, we will have USDA Loan Eligibility Maps for NC in place until 2020.
USDA Loan Eligibility Maps for NC 2014 currently show that areas predicted to change around Smithfield, Clayton, Belmont (and 26 other Communities here) will remain ELIGIBLE for USDA Home Loan funding for years to come. Even the USDA Home Loan maps for the “future eligibility” on the USDA Loan Site reflect little to no changes for North Carolina in the next few years.
But there’s other stuff hidden in the update, that will make getting a USDA Home Loan in NC even tougher (* See USDA Loan Eligibility Requirements Below).
USDA Loan Eligibility Maps
The 2014 Farm Bill defines areas as Rural if they showed a population of less than 35,000 in the 2010 Census Data. However it removed all “grandfathering,” which is what we’ve been working off of for years. Under the new Bill, all areas were suppose to be determined to meet the rural criteria as of Sept. 30, 2014, that’s been delayed.
This provision to the Farm Bill will ensure that rural communities that are currently eligible for the USDA rural housing programs that would have lost eligibility because of the USDA’s use of the 2010 Census data will now retain their eligibility through 2020 if their populations are below 35,000.
THIS is great news for NC towns, neighborhoods and communities that were otherwise slated to lose eligibility – because the “old” threshold for determining if a town was “Urban” was one that had a population greater than 25,000. The added 10,000 in population gave most of North Carolina a “breather.”
In our conversations last week with NC Director of the USDA Home Loan Program, William Kenny, he confirmed that only a FEW “minor” areas in NC would be affected by the changes in the definition of Rural. Those areas include a handful of streets in Raleigh, Fayetteville and Greensboro. We understand that these minor changes will be reflected on the USDA Home Loan site prior to October.
Additionally – he confirmed that the USDA Loan Eligibility Maps are not going to change for ANYONE prior to December 1, 2014 – giving everyone a few more weeks to confirm even the smallest of changes.
USDA Loan Eligibility Requirements Changing
In addition to the USDA Loan Eligibility Map changes slated to take place on December 1, 2014 – the qualifications for approval of this program are also getting tighter. Our current experience is that these more stringent USDA Loan Eligibility Requirements are already “baked” into the GUS Automated Approval System, and likely started within the last 10 days. USDA Loan Eligibility Requirements currently include:
- No Down Payment Required
- Property must be located within the USDA Loan Eligibility Map footprint, meaning in a “more” rural area
- Borrowers must be under the maximum household income for the County in which you are buying a home.
- USDA PMI rates, effective 12/1/14 will be an Upfront fee (which is always included in the loan amount, so the loan is effectively 102% of the sales price) and an ANNUAL fee (which is divided by 12 and included in the monthly payment) of .5% of the principal balance.
- Qualifying Ratios of 29/41 for USDA Home Loans NC – if you are over the ratios, it is possible that you will get a “refer” from USDA, which requires a Manual Underwriting of your loan. Unless you meet other factors – we might suggest that you consider a NCHFA loan as an alternative. These loans ALSO have very little down payment requirements, and they are MUCH faster to get through the Underwriting Process!
- With a Manually Underwritten USDA Loan, the minimum credit score requirements are tied to over-all debt ratios. Like Compensating Factors, we can ask for a Debt Waiver from the USDA Loan Underwriters, and we will go over all of your options if your scores are lower than USDA is looking for, or your ratios are higher. We WILL work with folks who do not CURRENTLY meet the minimum credit scores requirements for a USDA Loan 2014, to help you get them higher so you can buy. We can run “simulators” that tell us exactly what you need to do to get your scores higher. We are not a Credit “fixing” fill in the blank company. We are not charging you for our time, or expertise – we just hope you WILL use us when you’ve gotten your credit fixed and you’re ready to buy a house We are genuinely here to help!
- If you are over the USDA Loan Qualifying ratios, then credit score requirements could go over the “traditional” 620 credit score requirements. Even as high as 680
- We can use cash on hand after closing as an off-setting factor if you are over the USDA Loan Qualifying Ratios
- We can use the fact that you will have little or no payment shock after closing as an off-setting factor if over the USDA Home Loan Qualifying Ratios
- Debts from people who are living in the home, but are NOT on the loan will not be considered in NC, as we are not a Community State
- STUDENT LOAN DEBT is looked at in a completely different way by USDA Home Loan Underwriters – and again, depending on your situation, it might be another reason we suggest looking at the NCHFA loan, which generally requires less than a $1000 out-of-pocket to buy a house.
- ALL non-Tax Collections may not have to be paid off, per the new USDA Loan Guidelines that go into effect 12/1/14 – call us for details
First Time Homebuyers in NC, looking for a USDA Home Loan, should also look at the way they calculate maximum Income for your county.
Want to see the specific Requirements for A Home Loan in your situation, and what the Underwriters will think about your USDA Loan Eligibility? Call Steve and Eleanor Thorne 919 649 5058 – find us on Facebook – add us to your Circles on Google + / we want to connect and find out how the housing market looks in YOUR corner of NC! We also have the most current and accurate information when it comes to USDA Loan Eligibility in NC!