USDA Loans in NC and SC
Dash Home Loans is here to help you find the most affordable loans for your needs. As USDA loan lenders, we can help you with USDA loans in NC and SC.
What Is a USDA Loan?
A USDA home loan is a type of residential home loan that’s backed by the U.S. Department of Agriculture. USDA loans are meant to support homeowners in rural areas and encourage rural development.
USDA loans are an opportunity for many people to secure low-cost loans in some areas. Also known as USDA rural development loans, these loans are less well known than other loan programs are an exceptional opportunity for many people to secure the financing they need to buy a home.
USDA loans encourage people to move into more rural areas of the state and are part of the USDA Rural Development Guaranteed Housing Loan program. The program is designed for those who are low to moderate-income home buyers that are purchasing property in a rural area. Each applicant will need to meet USDA home loan requirements, but if you qualify, you may be able to secure 100 percent financing with lower mortgage premiums and interest rates that are very competitive.
USDA Loan Eligibility in North Carolina and South Carolina
To get a USDA rural home loan, you will need to meet specific requirements, most notably purchasing a home in a rural area. To help you determine if your home is in a rural area, you can use the USDA eligibility map. The USDA eligibility map will help you find areas in North Carolina and South Carolina that have a population under 20,000 people, meaning they fit the rural designation put in place by the U.S. Department of Agriculture. You can check out eligibility maps through the USDA.
USDA Loans in NC: Eligibility Areas
North Carolina has a large number of rural areas that may be eligible for USDA loans. Areas that are not eligible typically surround major cities, including Charlotte, Raleigh, Fayetteville, Jacksonville, Greenville, Wilson, Wilmington, and Greensboro. You’re likely to be eligible for a USDA loan in NC if you are planning to buy a property that’s a significant distance from these cities.
USDA Loans in SC: Eligibility Areas
Similar to North Carolina, the areas in and around major cities are not eligible for USDA loans in SC. Some of those major cities include Columbia, Florence, Spartanburg, Myrtle Beach, Charleston, Greenville, Anderson, Aiken, and Rock Hill.
Other USDA Loan Eligibility Requirements
USDA eligibility starts with location, but also includes income limits. Generally, to be eligible for a USDA loan in NC or SC, you cannot make over 15 percent more than the local median salary. Your USDA loan application will need to reflect your income.
The USDA rural housing loan has additional requirements such as having proof of a steady job and income, as well as a FICO credit score of at least 640 and a debt-to-income ratio of 41 percent or less.
If you’re not sure of your USDA loan eligibility, contact Dash Home Loans. Our Mortgage Coaches can review your situation and determine if you qualify for a USDA loan, or if another type of home loan would better fit your needs. Check out the other types of loans we offer here.
Benefits and Disadvantages of a USDA Loan
A USDA guaranteed loan is a great option for some people. The biggest benefit of this loan is that it will offer competitive rates. Often, USDA loan rates are more affordable than conventional loan rates. In addition, your USDA mortgage may be easier to qualify for if you have a limited credit score.
The major disadvantage of a USDA mortgage is its location restriction. You have to be willing to buy a home in an area that is rural. You also need to fall within income limits, which may not work for all individuals and families.
USDA Loan Requirements
USDA loan requirements are similar throughout the United States, including in North and South Carolina. To qualify for a USDA loan in NC or SC, you must meet the following:
- Income Limits: You must prove you have a stable income, but your income cannot be more than 15 percent over the median salary in the area you plan to buy into.
- United States Citizenship: Permanent residents may also qualify for USDA Home Loans
- Mortgage Insurance: USDA loans require mortgage insurance.
- Primary Residency in a Rural Area: All USDA loans are for homeowners who plan to live in a rural area. The home cannot be a secondary residence.
If you meet these USDA loan requirements, you are then able to apply. Keep in mind that there are some outstanding reasons to consider these loans including the fact that USDA mortgage rates tend to be much more affordable than others.
How to Apply for a USDA Loan
Applying for a USDA home loan is similar to applying for any other type of home loan. Your lender will provide you with all of the paperwork to document your home loan purchase. At Dash, your Mortgage Coach can help you with any questions.
The first step is to apply through Dash’s online system. Once you apply, you will work with a Mortgage Coach to gain preapproval. You will need:
- Proof of income from W2 and tax returns
- Proof of your debts to determine your debt-to-income ratio
- Paycheck stubs
- Bank statements
- A photo ID
- Other documents as requested by your Mortgage Coach
At Dash, your Mortgage Coach will be with you throughout this entire process. We don’t use mortgage processors, so the USDA loan process will be faster, easier, and simpler for you. Learn more about our unique process here.
The timeline for closing on a USDA loan really depends on the property and the team. At Dash, we move fast so you can too. We’ll work with you to help you meet your deadlines and fulfill any additional requirements, such as an appraisal of the property.
USDA vs FHA Loans
USDA home loans are often compared to FHA home loans because they are both are good opportunities for many people. USDA loans and FHA loans are both backed by the U.S. government, meaning they are less risky for lenders. However, they also have some key differences.
USDA loans do not require a down payment. That means you can finance 100 percent of the purchase price for your home. That’s a nice benefit to anyone hoping to buy a home. FHA loans require 3.5 percent of the sale price as a down payment. Who qualifies for a USDA loan can also be a factor for some with a higher income. FHA loans have no income limits.
On the other hand, USDA loan requirements NC and SC buyers have to meet can be limiting. The biggest factor is buying in an area that is considered rural.
Learn more about FHA loans in NC and SC.
USDA Mortgage Lenders in NC and SC
Only USDA approved lenders can offer USDA home loans. Dash is an approved USDA mortgage lender that offers USDA loans throughout North Carolina and South Carolina. If you’re interested in a USDA loan, get in touch. We have offices in Charlotte and Raleigh, and we’re always available to help you.
USDA Home Loan FAQs
What is a USDA home loan?
A USDA home loan is a loan backed by the U.S. Department of Agriculture. It is a part of the USDA Rural Development Guaranteed Housing Loan program. USDA loans are only available in rural areas.
What are USDA loan closing costs?
Closing costs for USDA loans are three to five percent of the purchase price in most cases. Closing costs can vary from one lender to the next.
How much will a USDA loan approve me for?
A USDA loan will approve you for a different amount based on your income and credit qualifications. The amount of home you can buy is not limited based on the value of the property, but on your debt-to-income ratio.
What is a USDA eligible area?
A USDA eligible area is a rural area where the population is under 20,000 people. The government designates some areas to qualify for rural development and offers USDA loans to encourage people to live in them.
What is the income limit for USDA home loans?
The income limit for USDA home loans is no more than 15 percent above the median salary for the area.