1st Advantage Mortgage is a licensed mortgage broker and lender in Charlotte, NC. As a USDA lender, we compare USDA pricing across wholesale lenders and confirm property eligibility around Charlotte before you move forward. As a mortgage lender and broker, we put your file in front of multiple wholesale lenders.
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 option for eligible buyers purchasing in qualifying areas. Also known as USDA rural development loans, these loans are less well known than other loan programs and may provide a financing path for buyers who meet the program requirements.
USDA loans encourage people to move into more rural areas of the state and are part of the USDA Rural Development Guaranteed Housing Loan program⁶. The program is designed for low- to moderate-income home buyers purchasing property in a rural area. Each applicant will need to meet USDA home loan requirements. If you qualify, you may be able to secure 100% financing, subject to program and lender requirements; pricing and mortgage premiums vary, so we compare the available options.
USDA Loan Eligibility
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, South Carolina, Texas, Florida, Virginia and Pennsylvania 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.
Around Charlotte, the counties with eligible tracts are Gaston, Lincoln, Union, Cabarrus and Iredell. Eligibility is set by address rather than by county, so two homes on the same road can fall on different sides of the line. Send us the address and we will check it against the USDA map before you write an offer.
USDA Home 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, Wilson, Wilmington, and Greensboro. You’re likely to be eligible for a USDA loan in North Carolina 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 South Carolina. Some of those major cities include Columbia, Florence, Spartanburg, Myrtle Beach, Charleston, Greenville, Anderson, Aiken, and Rock Hill.
USDA Loans in FL: Eligibility Areas
Similar to other states, the areas in and around major cities are not eligible for USDA loans in Florida. Some of those major cities include Miami, Orlando, Tampa, Jacksonville, St. Petersburg, Tallahassee, Fort Lauderdale, Sarasota, and West Palm Beach.
USDA Loan Eligibility Requirements
USDA eligibility starts with location but also includes income limits. Generally, to be eligible for a USDA loan in North Carolina, South Carolina, Texas, Florida, Virginia and Pennsylvania, you cannot make over 15% 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 debt-to-income ratio of 41% or less. USDA loans allow scores as low as 580 with manual underwriting, subject to lender guidelines. Scores of 640 and above qualify for streamlined approval.
If you’re not sure of your USDA loan eligibility, contact 1st Advantage Mortgage. Our Mortgage Experts 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.
Benefits & Disadvantages of USDA Loans
A USDA guaranteed loan may be a fit for some buyers. Pricing and mortgage premiums vary by lender and borrower scenario, so compare USDA and conventional options when the property and borrower qualify. 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 or FHA Home Loan? Which Is Better?
USDA home loans are often compared to FHA home loans because they are both good opportunities for many people. USDA home loans and FHA home 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 payment². That means you can finance 100% of the purchase price for your home. That’s a nice benefit to anyone hoping to buy a home. FHA loans require 3.5% 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.
USDA Home Loan Requirements
USDA loan requirements are similar throughout the United States, including in North Carolina, South Carolina, Texas, Florida, Virginia and Pennsylvania. To qualify for a USDA loan in NC, SC, or FL, you must meet the following:
- Income Limits: You must prove you have a stable income, but your income cannot be more than 15% 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 you should compare the USDA rate, guarantee fee, annual fee, and cash-to-close with other eligible programs before choosing a loan.
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 1st Advantage Mortgage, your Mortgage Experts can help you with any questions.
The first step is to apply through 1st Advantage Mortgage’s online system. Once you apply, you will work with a Mortgage Expert to gain pre-approval⁷.
When you apply for a conventional loan with the mortgage professionals at 1st Advantage Mortgage, you get to close with confidence and enjoy our five-star process. Ready for better?
Timeline
Applying for a loan takes just minutes. From there, lenders need to start processing information. Depending on the lender, this can take from 30 days to three months to complete.
Documents & Paperwork to Submit
- Proof of Income: This includes pay stubs, two years of federal tax returns, W-2 statements, and other documentation proving income.
- Asset Verification: In addition to this, lenders need to see proof of assets you own, such as investment accounts and bank statements to prove down payments and cash reserves.
- Employment Verification: Many lenders want to ensure you are working.
- Identification: You will need to show proof of your identity, such as your driver's license
All of this information is verified as accurate to ensure only those who should apply can do so.
USDA Program and Eligibility
USDA home loans are offered through approved lenders. We compare USDA pricing across wholesale lenders and confirm property eligibility across NC, SC, TX, FL, VA and PA. If you are interested in a USDA loan, get in touch with our Mortgage Experts.
Apply For A USDA Home Loan with 1st Advantage Mortgage Today
If you’d like to discuss your options further or have any questions about our lending services, speak with one of our friendly Mortgage Experts.
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