fbpx Skip to content

USDA Loans in North Carolina

Created on: November 13, 2024,

Updated on: December 1, 2024

Reviewed by David Naimey

Approved by Chad Turner

Key Takeaways

Table of Contents
    Add a header to begin generating the table of contents

    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!

    Frequently Asked Questions

    USDA loans have their pros and cons. Disadvantages of USDA loans include their strict geographic USDA eligibility requirements, which means that properties in urban or densely populated areas are excluded. Additionally, USDA loans usually involve a longer approval process compared to conventional loans due to their two-step review system, requiring USDA’s final sign-off.

    If USDA loans are not the best government guaranteed housing loan for you, you could consider FHA loans or other government backed loan programs, also available to North Carolina home buyers. Contact us to find the best North Carolina mortgage option to finance your new home.

    USDA mortgage loans do not have set limits on the loan amount the home buyer can borrow. Instead, home buyers are qualified based on their dti ratio, which should not exceed 41% of their gross monthly income.

    USDA Loan Calculator

    Facebook
    Email
    LinkedIn

    Written by:

    Related Articles

    USDA Home Loan Wisconsin

    If life in a rural setting of Wisconsin suits your life expectations, then you could apply for a USDA loan in Wisconsin and benefit from friendly terms and favorable lending requirements. Society Mortgage is an…

    USDA First Time Home Buyer (2025)

    USDA loans are a great way for first-time homebuyers to access the property ladder. These loans, backed by a government agency, come with no down payment, which is particularly helpful for buyers who don’t have…

    USDA Loan Rates

    The interest rate on your USDA loan will determine your mortgage’s overall cost and monthly mortgage payments. Lower USDA interest rates mean lower monthly payments and lower interest charges throughout the lifespan of your mortgage.…