MANY neighborhoods qualify for USDA Loans in Raleigh NC, but what’s the big deal? Most folks I know, don’t want to live on a FARM in Raleigh! USDA Home Loans are not restricted to properties that are farms, in fact, it’s hard to get a USDA Loan on a farm! These loans are so popular because they don’t require a down payment! Frankly, the number one reason most people tell us they haven’t bought a house, is because they don’t have an extra $10,000 for the down payment! The requirements for USDA Loans in Raleigh NC are pretty simple.
The payments and Mortgage Rates for USDA Loans in Raleigh are some of the lowest available. The USDA Loan PMI Rates are also extremely low. Because there’s no down payment, the Government does require a slightly higher credit score than some other mortgage programs. However, minimum Credit Score requirements for USDA Loans are as low as 640.
Is the USDA loan program limited to First Time Home Buyers?
No, USDA Home Loans in Raleigh (and the surrounding area) can be used by First Time Home Buyers and repeat buyers. We’ve done several loans for folks who currently have a house (in Tennessee for instance) and get transferred to NC – meaning that when they buy in NC… they’ll have 2 houses. There are some ways for this to work. (Call us 919 649 5058).
In addition to other programs that offer no down payment options, North Carolina offers a Mortgage Tax Credit for folks who have not owned a home in the past three years. A Tax Credit is better than a deduction, because a deduction decreases your basis for taxation – but a Tax Credit comes straight off what you owe in Federal Taxes!
The spirit of the program is that if you’re paying less in Federal Taxes, you will take the income to help offset any extra costs in home ownership.
Requirements for USDA Loans in Raleigh NC
PROPERTY: You need to buy a house that is within the USDA Home Loan Raleigh “footprint.” The spirit of the program is to help encourage housing in more “Rural” areas. So downtown Raleigh Condos will not qualify. However, there are MANY areas that DO! See the map, and remember that homes located in the areas shaded “pink” will not be eligible for USDA Home Loans. Rolesville, Zebulon, Knightdale, Holly Springs, Fuquay – all qualify for USDA Loans.
LOAN LIMITS: There are no “Maximum” loan amounts for USDA Home Loans in Raleigh. This is different from the FHA Loan Program, which has a maximum loan limit for Raleigh of $300,150. If you are applying for a First Time Home Buyer Mortgage Tax Credit, the maximum allowable Sales Price is $245,000.
INCOME CAPS: USDA Home Loan requirements include a maximum income “cap” for the household. This means that the before tax income of everybody over the age of 18, even if they are not going to be on the home loan now, will be added together, and that total amount can not be over the “cap” for the county you are buying a house in. For USDA Loans in Raleigh, Apex, Wake Forest (read the Raleigh “Metro” area) the limits are:
1 to 4 person family $91,850
5 person or higher, the limit is $121,250
If you have Disability Income, Retirement or Social Security Income, we can gross that income up to help qualify you for a slightly bigger home!
CREDIT SCORE REQUIREMENTS: Here’s what I tell folks about Credit Scores. A credit report is just a snapshot in time… think about someone taking a picture of you in one day. Well, they might get a picture of you at Starbucks, at your desk, in a meeting – you move during your day. Creditors can submit information to the Bureaus on any given day at any given time – so the snapshot (or pull of your credit) on a given day by different people might have slightly different scores. It doesn’t happen often – but it can happen.
The Minimum Credit Score requirement for a USDA Home Loan in Raleigh NC is 640. That means that at least 2 of your 3 credit scores need to be at that number. Not quite there? Don’t get too hung up, go ahead and call us EARLY in the process if you want to buy a house. We have the ability to look at your credit with the benefit of a special analysis that tells us how many “extra” points you can get! By that I mean, if you pay off a collection, what will that do to your score? If you pay a credit card down – how is that going to help? Our credit score analysis will LITERALLY tell us how many points you can get from each thing you do – and we will be more than glad to help you figure out YOUR credit score “predictor” for free!
Waiting Periods for USDA Loans in Raleigh NC are a little longer than those for other programs. Meaning, if you had a Bankruptcy or a Foreclosure, we can probably help you buy a house using a FHA or VA loan in as little as 24 months after the problem. With USDA Loans, you will be asked to wait 3 years.
CLOSING COSTS: USDA Loans in Raleigh NC allow the Seller to contribute up to 6% of the Sales Price towards the Buyers Closing Costs. This sounds good, and it is, but we rarely see the Seller actually pay ALL of the Buyers Closing Costs.
In reality what normally happens is the Seller raises the agreed upon Selling Price by the amount of the Closing Costs that they will be contributing.
SO, if the seller is asking $220,000 for the home, and you settle on a price of $216,000 and you want the Seller to pay $5000 in closing costs… then the final sales price will normally be $221,000 with the Seller paying a maximum of $5,000 in closing costs.
There are no “unusual” fees with a USDA Loan in Raleigh NC, and the appraisal fees, etc. are just like those for other mortgage programs. Closing Costs in Raleigh include Attorney fees, so if you are looking at an Internet Company – and they are quoting a Title Agent Fee… that quote is probably off by a bit.
INTEREST RATES FOR USDA LOANS IN RALEIGH NC: USDA Home Loan mortgage rates are backed by the US Government. Because of that, more banks are interested in having them, and the mortgage rates are usually lower than Conventional Loans. Additionally, because the USDA PMI rates are so much lower, USDA home loans are usually much cheaper than the FHA programs!
If you are considering a USDA no money down home loan, call Steve and Eleanor Thorne 919-649-5058. We can help you find out if your income qualifies for the program in your county
Hi Eleanor
I really appreciate the information on loan options and repayment.It seems to mr that the USDA loan would best suit me.What do you suggest?Now I guess my next step is getting my credit score increased.I only have 1 credit card and 2 collection that have already been paid but not removed.I have Lexington law firm working on it.I plan to pay off the credit card at the end of this month.That should help my score.Since the house I would like to purchase is in Zebulon what would be my next step?
Jamie – the next step is to increase your credit scores. Credit is based upon what the most recent credit looks like. You’ll need at least 2, probably three credit accounts that show payments on time for at least 12 months. We normally suggest that folks go to the bank at Walmart and open a Secured Credit Card first. You don’t have to pay it off – just keep the balance around $50. Paying a little bit of interest each month really does help get your scores higher. The key is keeping the balance on the cards VERY low.