USDA Loans are pretty much THE go to mortgage loans for first time home buyers, and those who don't have a TON of cash they want to part with to buy a house. Why is that? Because they do not require ANY MONEY for a down payment on a home. They are fairly easy to qualify for, and they are intended for folks who want to live in a less urban, more rural portion of North Carolina. They are not, however, really the loan you will need to buy a real working farm.

USDA Loans are provided in two very different ways. You can apply directly through USDA (ironically, this is referred to as a USDA Direct Loan) or you can apply through a Bank, and that program is called the USDA Loan Guaranteed Program. If you apply Directly through USDA, you are going to go through extreme delays, we understand it currently takes over 60 days to get an appointment to meet with them, and there are significantly lower income limits. If you apply through the Guaranteed Program, your loan will still be sent to USDA for formal underwriting.

USDA Guaranteed loans are not actually made by the U.S. Department of Agriculture - the Department is acting just like FHA, and insuring the Bank against loss due to Foreclosure. Because of that, USDA sets the underwriting guidelines by which they will insure the loan. Being backed by the Government means they have some of the lowest mortgage rates available.

USDA Loans are a GREAT program for First Time Home Buyers, although you don't have to be a first time home buyer to get a USDA Loan.

A USDA Loan also has some of the cheapest PMI rates you will find (especially when you compare them to FHA rates!). The upfront PMI Fee is usually added into the loan, and is 2%, and the annual fee is .4%. To calculate your USDA PMI payment let's use this scenario (cause it's easy for me to do) Sales Price is $100,000. You will then have a loan amount of $102,000. (So no down payment - add the 2% to the sales price, that's gonna be your initial loan amount). Multiply 102,000 by .4% you get $408. Divide $408 by 12 months, you will pay $34 a month for the USDA PMI payment.

Full disclosure here - this is probably the only page on the Internet where you will read about USDA PMI... because that is not the "correct" term for it. It's called a "Guarantee Fee" - but it's the same as PMI, so that's just what I call it.

Have questions about USDA Home Loans in NC? Here are some more USDA Home Loan program details

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