USDA Loans in North Carolina

USDA loans in North Carolina are an affordable way to access homeownership on favorable terms. People on low to moderate incomes may qualify for USDA loans to buy homes in rural areas with no cash down payment and a low interest rate.

Backed by the Department of Agriculture, USDA loans are geared toward helping households buy their homes in eligible USDA rural and suburban areas across the state. They promote rural development while helping home buyers within lower income limits find their dream homes.

In North Carolina, USDA loans cover large parts of the state’s landscape, including many rural communities and small towns that qualify for this mortgage loan program. From the Appalachian Mountains in the west to the coastal plains in the east, many areas of North Carolina fall within USDA-eligible areas, making these loans a viable option for a significant portion of the state’s population.

The primary beneficiaries of USDA loans in North Carolina are individuals and families who meet the income requirements and are looking to purchase homes in qualifying areas.

USDA Loan Requirements in NC

Household income criteria

As of 2024, the USDA income limit is $112,450 for a 1-4 person household in North Carolina. To access a USDA North Carolina loan, residents must have a stable income that doesn’t exceed more than 15% of the median income in the area they plan to buy into.

The borrower must show proof of stable income for at least the past two years.

Debt-to-income

The overall debt-to-income level shouldn’t exceed 41% of the income. This guarantees lenders that they will get repaid and that the borrower is not too risky.

Location

To be eligible, the property location must be in a USDA-approved rural area. This includes many suburban and rural regions but excludes urban areas and locations around major cities.

Potential buyers should use the USDA’s online eligibility map to verify that their desired property qualifies. Areas such as Charlotte, Raleigh, Fayetteville and Jacksonville are considered urban and do not qualify. You may need to push further away for a qualifying location on the USDA eligibility map.

Credit requirements

Prospective borrowers must meet specific credit guidelines, which include a minimum credit score of 640. Some lenders may consider lower scores with compensating factors, but your credit history plays a big role in approval. Lenders evaluate payment patterns, outstanding debts, and past delinquencies to ensure you meet USDA’s credit requirements.

Primary residence

To qualify for a USDA-guaranteed loan, the home must be the borrower’s primary residence and meet certain property eligibility standards set by the USDA loan NC.

USDA Loan Benefits in North Carolina

No down payment

USDA loans work by providing 100% financing, meaning that eligible borrowers can purchase a home without the need for a down payment. Many first-time homebuyers struggle to save money toward a down payment and a USDA home loan makes life easier for them.

Competitive interest rates

USDA loans in North Carolina often come with competitive rates. This means a lower monthly payment compared to conventional mortgages.

Mortgage insurance requirement

USDA loans don’t require private mortgage insurance (PMI). They do, however, include an upfront guarantee fee and an annual fee. These fees are usually lower than traditional PMI, which makes USDA more accessible to many North Carolina homebuyers.

Closing costs

USDA loans offer flexible credit terms and conditions for closing costs, as these can often be included in the loan amount. This helps reduce the upfront cash needed to purchase a home.

Applying for a USDA Loan in North Carolina

It’s easy to apply for a USDA loan in North Carolina with Society Mortgage. Here is the process you should follow.

USDA home loans NC income eligibility

First, determine your USDA loan eligibility and check your income against the local limits. Also, verify that your chosen real estate property is in a USDA-eligible area.

Find a lender

Find a lender approved to offer USDA loans in North Carolina, like Society Mortgage. If you’re searching online, you could try using the keyword “USDA loan lenders near me” to find qualified lenders like Society Mortgage close to your area.

Gather documentation

You will need to gather necessary documentation, including proof of income (such as pay stubs and W-2 forms necessary for employment verification), proof of identity, tax returns from the past two years, bank statements, and information about other assets and debts.

USDA Application process

Your USDA loan application is then processed. Your lender will include a credit check and an assessment of your debt-to-income ratio. After the initial approval, the application is sent to the USDA for final review and approval.

This two-step approval process can make USDA loans take slightly longer to process than conventional loans, so you should be prepared for a potentially extended timeline.

Throughout the loan process, your lender will stay in close communication, in case they need additional information.  

USDA construction loan

USDA loans in NC are a great way to buy a home in a rural or suburban area. If your lifestyle, work, and obligations allow you to live in a more provincial setting, then a USDA construction loan in NC is the perfect option. Their main limitation is that they have strict geographic limitations, but if you can work with these, then you may be eligible to buy your dream home.

USDA loans have lower mortgage rates and no down payment, and they are intended to help low—to moderate-income households become homeowners in North Carolina.

USDA Loan Lenders in NC

Society Mortgage is a professional mortgage lender with experience in USDA loans. Contact us today and talk to an experienced Loan Officer who will explain how you can buy your North Carolina home at the most affordable terms!