When you think of the USDA, most people think of meat or agriculture. In addition to meat and agriculture, the USDA also has a rural development program which allows buyers that meet certain criteria to purchase a home in a USDA-eligible area with no down payment. Before the recession, 100% loan-to-value programs were fairly commonplace and allowed many first time home buyers experience the opportunity of homeownership. As the housing market began to collapse, many pointed to no-money-down programs as a root cause and so the vast majority of the programs went away. One that didn’t was the USDA Rural Development Program.
With up-to 100% loan-to-value financing and lower monthly mortgage insurance, the USDA mortgage is a viable option for Buyers looking for a home in many suburban areas of the Charlotte area. One requirement of obtaining a USDA loan is that the house must be located in a USDA eligible area, which can be determined by entering the home address on their eligibility map. Currently, many well populated areas like Mooresville, Fort Mill, Belmont, and Mount Holly are eligible for USDA financing. However, due to the census of 2010, the USDA has updated their eligibility maps and as a result, many popular areas are no longer eligible for USDA financing.
The good news is that there is still time to find a property eligible for USDA financing, negotiate a contract, and have file approved by the October 1 deadline. With that being said, there will likely be a backlog at the regional USDA underwriting offices and since the USDA is a government program, it could run out of money (like what happened during the race to meet the first time home buyer tax credit deadline) in advance of the map changing.
After consulting with a number of loan officers that originate USDA loans, my recommendation would be to have the file locally under written and to the USDA no later than September 1, 2013. Which means, if you are a home buyer that had considered obtaining a USDA loan, it is recommended that you take action now as opposed to later. Also, when seeking your mortgage pre-approval from your lender, inquire as to the time it will take their company to deliver the package to the USDA.