One of the great things about the North Carolina, South Carolina, and Virginia is that they have urban centers surrounded by suburbs and rural developments. For many, the allure of suburban and rural homes is greater than living in a city. If this describes you, USDA Loans may be your best option for purchasing your dream home. Although metropolitan parts of North Carolina, South Carolina, and Virginia are excluded from the USDA Mortgage program, all rural areas and many parts of the suburbs are eligible. Contact Rob Yo The Mortgage Pro to learn how we can help you get into your next home.
What is a USDA Loan?
As part of their Rural Development program, the US Department of Agriculture (USDA) has invested a significant amount of money to operate several housing assistance programs. The goal of this program is to help families and individuals have the opportunity to own safe and sanitary homes, specifically to “improve the economy and quality of life in rural America.” The USDA guarantees loans by approved vendors, and offers financial assistance, including zero down payments. Rob Yo The Mortgage Pro is an approved vendor for guaranteed USDA Loans in the areas surrounding North Carolina, South Carolina, and Virginia.
The USDA Single Family Housing Guaranteed Loan Program is tailored toward low and moderate income families, while USDA Single Family Housing Direct Home Loans are available to low and very-low income households. USDA Direct Home Loans are not insured, but are offered directly by the UDSA as a subsidy.
USDA Rural Development Single Family Housing Guaranteed Loans
Because the USDA insures home loans, it is more affordable for low and moderate income families to buy, rehabilitate or build a home in approved rural areas. There are many advantages to USDA Guaranteed Loans for prospective home buyers, including low interest rates, the ability to finance closing costs, and zero down payment. To be eligible, the borrower and the property being purchased must meet several requirements, set by the USDA.
USDA Guaranteed Loans Eligibility
- The home being purchased must be an owner-occupied primary residence
- The borrower must have acceptable credit history
- The borrower must prove they are able to afford the mortgage payments, taxes and mortgage insurance
- The household income must not exceed 115% of the area’s median income
- The home being purchased must be in one of the eligible Rural Development areas
There are two types of mortgage insurance that are required for USDA Guaranteed Loan borrowers. The first is that 1.00% of the purchase price must be charged as an upfront premium. Additionally, there is an annual premium, calculated at 0.35% of the annual mortgage balance. This premium is calculated annually, but is paid on a monthly basis.
USDA Rural Development Single Family Housing Direct Loans
The USDA Direct Loan Program is a payment assistance program offered by the USDA as a subsidy. This home loan program is often referred to as the Section 502 Direct Loan Program. This assistance program is only available to low and very-low income families. It is design to help those who are unable to obtain traditional mortgages and are without a safe and sanitary housing situation.
Low income is defined by the USDA as families that are between 50-80% of the area’s median income (AMI), while very-low income is defined as less than 50% of the AMI. If you are unsure what your income is, contact us at (919) 322-8201.
When the borrower no longer occupies the home, or decides to transfer the title, the loan will become due and must be repaid. To become eligible for a USDA Direct Home Loan, the borrower and property must meet several requirements.
USDA Direct Loans Eligibility
- The home being purchased must be an owner-occupied primary residence
- The home being purchased must be in one of the eligible Rural Development areas
- Borrowers must currently be without safe and sanitary housing
- The home being purchased must be less than 2,000 square feet, not have a market value in excess of the area’s loan limit and not have an in-ground pool
- Borrower must be unable to obtain a loan from other mortgage programs
- Borrower must meet the income requirements of low or very-low income
USDA Loan Eligibility
There are several conditions you and your property must meet to be eligible for a USDA Loan.
Property and Borrower Requirements
- The borrower must be a US Citizen
- Borrower must have proof of dependable income, typically over a period of 24 months
- Borrower must have an acceptable credit history. Typically the borrower must have a FICO score over 640 for automatic approval, although lower credit scores may be approved with additional conditions
- The monthly payment must be less than 29% of borrower’s monthly income
- Monthly debt payments you have must be less than 41% of borrower’s monthly income
Raleigh USDA Loan Limits
Numbers reflect household median incomes.
For loan limits in other counties, read the USDA table or contact Rob Yo The Mortgage Pro at (919) 322-8201.
Get Pre-Qualified for a USDA Loan
If you are a very low, low, or moderate income families in North Carolina, South Carolina, or Virginia seeking an opportunity to own a home in a suburban or rural area, a USDA Loan may be right for you. Rob Yo The Mortgage Pro’s goal is to move homeownership from a dream to a reality for families in NC, SC, or VA. For more information about USDA Guaranteed or USDA Direct Loans, contact us at (919) 322-8201 or fill out the form on this page.
