Qualifying for USDA Home Loans in North Carolina

horse farmI wish I had a nickle for everytime I'd heard somebody tell me, "I'm just lookin' for some land."  They don't really mean they want a horse farm (necessarily) but they do want some room to stretch out!

Well - good news! USDA has a 100% program for those looking for a home in a rural setting. It does NOT need to be a farm - in fact if it's an income producing farm, I'll probably have to refer you to someone who knows a lot more about Commercial loans than I do... no a USDA loan is for folks who are buying a rural home (Here's a link to where you can check and see if the home is within the USDA Footprint) and who has fairly decent credit. 

Basic Qualifying Information for USDA Loans:

  • Credit Scores need to be at or above 620.  There are some exceptions - so if you are slightly under this let us take a peak at your credit and we'll let you know if you can close now - or if you need to do some work and close in six or eight months!
  • Traditional Credit Scores are often needed.  Like FHA we can "build" credit... but if your total payments are higher than an underwriter wants them, or if your income is difficult to "document" or if you have been paying $300 a month rent and now your house payment is going to be $800... the underwriter is probably going to want to see some additional credit history.  If you do not have a credit score - call us and we will show you how to get this started.
  • It's a 100% Loan, and you can get a gift or the seller can contribute to the closing costs.  There are no reserve monies needed after closing - so it can truly be a no money out of pocket loan!
  • Qualifying is based upon your gross taxable  income.  This means that if you earn $48,000 a year, before taxes are taken out, we are qualifying you on $4000 a month.   We look at two things to see if you qualify.  We want to see what percent of our total gross income is going to your house payment.  So again, if we are using $4000 a month - we want to see no more than $1160 going towards the principal, interest, taxes and insurance on the loan (or 29%).  The other thing we consider is what percent of your paycheck is getting spent on ALL of your bills (including the house payment).  This should be no more than 41%. (Here's a link to check your household income against the USDA limits for your area)
  • Childcare is considered in qualifying for a USDA loan. But it is kinda' complicated... it affects the income used for qualiying and it might mean that if you are over the income limits in your area, but you are paying child care expense - you could still qualify!
  • These loans are fully documented... bring every document you think we might need to loan application!  Because some folks have tried to get these loans without disclosing the spouses income (for instance  - trying to "cheat the system") we normally ask for 2 years of tax returns.

To look at a map that shows all of the counties that qualify for USDA Mortgage loan financing, click here.  If you want to see some of the homes in the Triangle that Qualify For USDA Financing click here!

For more information about USDA Mortgages, please contact Steve and Eleanor Thorne,USDA Home Loan Experts 919-649-5058

Comment balloon 28 commentsEleanor Thorne • September 09 2008 03:01PM


Thank you for making a little-known program much clearer!  Anyone looking for a USDA loan (or any other kind!) is in great hands with you...

Posted by Stanton Homes, Design/Build Custom Home Builder in North Carolina (Stanton Homes - New Home Builder) over 11 years ago

Hey mi amiga, USDA in Western Colorado is a 620 score and they are rather flexible on ratios if you can show good cause why.  Like the new mortgage payment is equal to the rent they have been paying

Posted by Joe Adams (Major Mortgage USA/Branch Manager) over 11 years ago

Wow - this is great to know and you made it really easy for me to understand.  Thanks so much!

Posted by Leesa Finley, RED Properties - Raleigh NC Real Estate (RED Properties) over 11 years ago

Hi, Eleanor,

Thanks very much for the detailed post on this product.  I've been finding it's successful even in areas you wouldn't consider to be rural, so difinitely worth a look in almost all cases!


Posted by Dan Hartman (Province Mortgage Associates - NMLS #2861) over 11 years ago

good information.  I have used this program many times.  I have heard the credit requirement have gottne tighter on this program.  Is this true?  I also heard that the DPA programs may be making a come back in the next two-three weeks. Any news on this as well?  Thanks!

Posted by Brian Wray (Wray Realty) over 11 years ago

THey have gotten tighter!  That's why I tried so hard to say - well we can do it BUT, if you have anything squirrely - it's going to be ruogh going.  I know that several of the members of the House were trying to get DAPs back, but I don't think they've made much progress... at least that's what I heard!  Guess we can keep our fingers crossed!

Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) over 11 years ago

Steve and Eleanor,

Congrats on the inclusion to the mortgage pro week in review, and on the great post! I also wanted to invite you to repost it at the RD loan group:

RD loans haven't really gotten any tighter yet in FL at least, but I can see it coming down the road. A recent release here stated they are essentially setting a credit score floor of 580. I never had much success with them at that level though so I hesitate to say it's tightening.

Gerry Suarez, Jr.

Your HUD Loan Pro!

Posted by Gerry Suarez Jr., FL Mortgage Guru (Jet Home Loans NMLS 1660135) over 11 years ago

We were supposed to close on a house Dec 22,2008 and it has been going-- next week,next week and so on-- Well as of Jan 26,2009 we will LOSE the house if the money from USDA has not been received.  We have been told everything is in order BUT when it comes time for USDA to send the $ to the underwriters -- they arent.  So now the closing is set yet again for the 26th and if the $ is not there--- we will lose the house and our earnest money and all the time we have put into this and waiting patiently since November 19,2008 when the process started.  And I was told there is NOTHING I can do but wait.  Does anyone have any ideas?

Posted by JENNIE in NC about 11 years ago

Jennie!  Yes - here's what you need to do.  Contact your lender.  If you are using Suntrust (for instance) you need to request to have your loan transferred.  If you are working with a company that CAN NOT currently close USDA loans, again, you need to transfer your loan. The reason for this is because USDA has run out of money.  Some lenders (like us) are still able to close USDA loans - however, some companies (like Suntrust, although they are not the only ones) can not expose their company to the risk of making a loan that needs USDA guarantees, when USDA is out of money.  This happened last fall, and we continued to do USDA loans. 

Find a lender in your area that is still offering USDA home loans while they are having problems with funds.  I would suggest that you engage with that lender, then contact your agent, and have your new lender contact the sellers agent to let them know the details of what is going on.  I understand why a loan officer at a bank would say that you have no options... they don't have any... but they might not know that there are still folks out there continuing to make USDA loans.  If it would help - have your lender contact us directly, and I'll be glad to let them know where (and how) we are placing these loans.

IF the problem is because of a backup in the underwriting system... and if your loan is going to Chase, this could be the issue, then there is a back up.  More people are trying to get loans than the system has the capacity to handle.  We don't send loans there... because of the backups.  Again, my suggestion is to have your lender contact the sellers agent directly to explain the problem.  IF this is your problem (meaning that the system is just taking so darn long to underwrite your loan and get closing papers out), you should also check on the lock in period for your loan.

I'm so sorry you are having this problem... but homeownership is still a great investment here in NC, and I encourage you to continue down this path!

Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) about 11 years ago

Thanks for the info. I see that my families income is around $3500. to much to qualify for this type of loan. Is there any other zero down loans available or are you hearing of any DAPs being available later this year? Thanks

Posted by Dale Brown almost 11 years ago

I am stage turning in my $25 for my credit report and other info.  Got a 598, residentail credit is excellent.  Still waiting back from a charge off account that I settled with a few weeks ago.  I have student loans for about 35K that will be rolled into a IBR. Need to know, will I get approved? If I do get approved, I would like to move closer to another county where my loan would not cover because it would have to be transfered.  2nd  question is how strenuous is this task?

Posted by Miss K over 10 years ago

Dale Brown - Are you SUUUURE you are too high for USDA Home Loan?  Let us help you qualify for that.  And yes, there are some interesting opportunites coming about with the new Homebuyer Tax Credit legislature!

Miss K - We can definately help you with this task, to make it less difficult.  Give us a call!  919-649-5058

Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) over 10 years ago

Great article! Very informative and easy to understand. Please let me know of any updates or changes to the USDA program. Thanks again for a great article

Posted by Edward L Turner over 10 years ago


My husband and I are trying to buy a home. He wants to go the USDA route. my credit score is 619 and his is 593. We are 1st time buyers. We were told we needed a 620 score to qualify for USDA by a lender in Iredell county. Is this true? We would much rather keep our down payment money for a nest egg and emergency fund and go the route of USDA.



Posted by Nicole about 10 years ago

Nicole - USDA will allow folks to have less than perfect credit - some BANKS however will not. I suspect you were talking to a loan officer who works with an Institution that will not go below 620.  Please call us at 919-649-5058.  USDA goes to 580

Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) about 10 years ago
Does USDA finance construction loans?
Posted by Julie, Iredell County, NC almost 9 years ago

Julie - USDA does not do Construction loans.  There are other options, if you want to give us a call 919-649-5058

Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) almost 9 years ago

Hi Ms. Thorne,


I appreciate the posted information.  I do not see any recent posts.  I am wanting to verify the actual credit score required for the USDA ?  What are lenders looking at specifically?  


Thank you!


Anita Daley

Posted by Anita Daley over 8 years ago

Anita - Depending on what bank you talk to - that's a pretty interesting question.  USDA actually sets the credit score "bar" at 580, and we do have investors that will go down to that number - but to actually get a loan with that score is pretty darn DIFFICULT.  The reality is that most lenders will approve a USDA Home Loan with a minimum of 620 credit score.  SOME Banks, however, will not do ANY loans for borrowers with less than a 640 credit score.

In NC - we have the ability (for those who qualify) to do the USDA Home Loan Program with a NC Housing Finance Agency Program.  The NCHFA program also allows for the 580 score (meaning if you qualify, it's easier for us to do loans for folks with credit scores under 620 with the State of NC helping insure the deal).

I hope this answers your questions - if there's a specific question we can answer, please contact us directly at 919-649-5058


Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) over 8 years ago

Eleanor -- Do you have any suggestions for refinancing a USDA loan? My husband & I have owned our home for over 3 years and are rate is over 5.25% ( I think I have to pull out the paperwork)-- I have called around and no one seems able or willing to refinance this kind of loan.  Is there some kinda regualtion etc that makes this so hard to do? Thanks Jen -- I think we really can save a bundle. 

Posted by Jennifer almost 8 years ago

Jennifer, the USDA started a program in February that would make these really easy to do (without an appraisal).  Unfortunately, NO BANK is offering the program!  We are offering a USDA Home Loan Refinance, and if your home has not lost a ton of value, it's a pretty easy process - you are right, it will save you a ton of money!

Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) almost 8 years ago

Our loan has gone through the bank underwriters and was sent to the USDA for "manual" underwriting.  My husband is in construction.  Instead of using his w-2's for his annual income they are uing his recent check stubs that shows him making alot more than he averages for the year.  He has good paying months and months with no work at all.  Using his recent check stubs put us over the income limit by over $6000.  We have a letter from the owner of the company saying what i just said.  Do you think they will approve the "overage"?

Posted by Tish almost 8 years ago

Tish - it's May.  If they took his year to date income (which would be the most recent paystubs) and they show a significant "upward trend" it's likely to negatively impact your eligibility. 

Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) almost 8 years ago

As an update to the April 10 comment about the USDA Home Loan Refinance Program in NC - it is being offered now, it just took a little time to get it started!

Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) almost 8 years ago
Eleanor about how long is it taking usda to approve a loan. the underwriter said it left her hand on Monday 3/24/14 and didn't know how long it should take
Posted by Amanda about 6 years ago

I live in onslow county in the southwest area ,could you please gv me a person to contact, about USDA,thanks z

Posted by angela whaley over 4 years ago

Angela, we do loans in Onslow County and Jacksonville. you can call us at 919 649 5058 . 

Posted by Eleanor Thorne, Equity Resources 919-649-5058 (Equity Resources) over 4 years ago

Hello, my name is Lee & initially I planned to use NACA to purchase a home b/c my score is 587, however their process is a very long one. I would like to purchase in Johnston or Wake county within the next 6 months, & would like to know if I may be a candidate.

Posted by Leetrice Lynn almost 4 years ago