Top Things to Know About USDA Home Loans in NC

If you’re dreaming of a home in an area with warm weather and beautiful landscapes, North Carolina may be the state for you. It’s one of the fastest-growing states in the United States, and with the USDA home loan program, you could be one step closer to affordable living in the Tar Heel State.

USDA loans are awarded by the U.S. Department of Agriculture from the USDA Rural Development Guaranteed Housing Loan Program. They offer 100 percent financing with no downpayment required and low mortgage insurance rates. This article will cover everything you need to know about USDA home loans in NC.

Overview of USDA home loans in NC

In North Carolina, there are three types of USDA loans available to residents:

  • The Single Family Direct Loan: This loan assists low and very-low-income applicants and is fully funded, serviced, and insured by the USDA. The USDA direct loan has repayment options for 33 years and 38 years, depending on your income level.
  • The Single Family Guaranteed Loan: This loan is intended to help moderate-income borrowers. It’s funded and serviced by private lenders but is partially insured against default by the USDA. The USDA-guaranteed loan has 15-year and 30-year fixed-rate options.
  • The Single-Family Housing Repair Loan and Grant: This loan enables low-income borrowers to improve or modernize their homes or remove health and safety hazards. It’s funded entirely by the USDA.

In general, USDA loans are more affordable than other loans. That’s because USDA loans provide 100 percent financing for borrowers with no down payment required, unlike conventional and FHA loans.

However, some borrowers believe USDA loans are stricter than other loan types due to eligibility requirements. The essential requirements are income and property eligibility. Luckily, several rural areas in North Carolina may qualify for USDA loan property eligibility. Areas that are not eligible are around major cities like Charlotte and Raleigh.

Basic requirements for a USDA home loan in NC
There are a few basic requirements you must meet to be eligible for a USAA home loan in NC:

  1. You must hold U.S. citizenship or have permanent residency.
  2. You must have dependable income for a minimum of 24 months.
  3. You must be able to make a monthly payment, including principal, interest, insurance, and taxes, that is 29 percent or less of your monthly income.
  4. Your total debt payments cannot exceed 41 percent of your income.
  5. You must have an acceptable credit history, with no accounts converted to collections within the past 12 months.

Ways to use a USDA home loan in NC

There are several ways you can use or benefit from a USDA home loan in NC. These include:

  • Purchasing new or existing residential property to be used as a permanent residence
  • Buying a site with a new or existing dwelling
  • Refinancing your current home
  • Adding special design features or permanently installed equipment to accommodate disabilities
  • Purchasing essential household equipment (ex. Carpeting, ovens, refrigerator, washers, dryers, etc.)
  • Installing energy-efficient appliances (ex. insulation, solar panels, double-paned glass, etc.)
  • Installing fixed broadband service

Secure your dream home in NC with Mortgages By Jill

If you're planning to buy a home in North Carolina, working with a mortgage broker is the best way to simplify the process and get a great deal.

At Mortgages by Jill, we’re here to help you secure the financing you need to make your dream home a reality. Start your mortgage loan application online now. You can also schedule a consultation by calling 336-740-9068 or through our contact form, and get started on your journey to homeownership.

A bird's eye view of a North Carolina small town.
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