If you’re looking for USDA homes for sale you’re probably wondering what the requirements are, and where eligible homes are located in the greater Raleigh/Durham area. See below for more information and don't worry - you don’t have to work in agriculture to qualify!
The USDA Home Loan program originated to help finance homes in designated rural areas by providing guarantees to lenders to protect against buyer defaults. Standard 30-year mortgage rates and 100% financing make these homes accessible to low and moderate-income buyers who may not otherwise be able to purchase a home.
USDA loans are available for properties that meet specific requirements (rural location, safety and health standards) and buyers who fall within the guidelines for credit score and income. And although the “rural area” requirement excludes the metropolitan cities of the Triangle area - Raleigh, Durham, Chapel Hill - we do have semi-urban and rural areas close by that are eligible.
There are three different types of USDA loans available to homebuyers.
Homes eligible for USDA loans have stringent guidelines for eligibility. The homes must be geographically located within a Rural Development area and be owner-occupied and a private residence.
Based on verifiable income sources, loan amounts are determined on a case-by-case basis by the banks. For most USDA Guaranteed loans, there is no official upper limit on the loans. In some of the semi-rural areas near Raleigh, there are USDA-eligible homes being built and priced around $500k.
For USDA Direct loans, the limit on loans is $336,000 (2022) but the amount varies around the country in consideration of areas where home prices are substantially higher.
Applicants for USDA home loans must be a U.S. Citizen, U.S. non-citizen national, or qualified alien.
In addition to being within a specific “rural area,” the home must also be an owner-occupied private residence. Although the properties cannot be income-producing or second homes, they can be of varying types: new construction, manufactured homes, condos, townhomes, or modular homes.
This handy USDA calculator helps you pinpoint the upper-income limit for the state and county you’re considering.
Interest rates can be as low as 1% for these loans when supplemented with other payment assistance options. As of February 1, 2023, the current interest rate for USDA Direct loans is 4.00% for low-income and very low-income borrowers.
Closing costs for a USDA loan are typically 2% – 6% of the home’s purchase price, and USDA does allow seller concessions up to 6% of the sales price. Some lenders roll over closing costs into the overall loan, so no money is due at closing.
Beyond the standard 30-year loan, some provisions allow for a 33-year payback period, or even 38 years in certain circumstances.
You can find good information and specific details here on the USDA program in NC.
The top-level benefits of a USDA home loan are summarized above but include:
In addition to these benefits, here are a few other program benefits that many people don’t know.
There are USDA eligible homes for sale throughout the greater Raleigh area including some in Zebulon, Wendell, Clayton, Smithfield, Oxford, Louisburg and other surrounding towns. The USDA home loan program can be an excellent fit for you if you meet the qualifications. It can be complicated though, so it’s helpful to have an experienced realtor guide you through the process. We would be happy to help, and if you want to know how to find homes that qualify for USDA loans, check our listings below or contact us today!
For the homes below, please verify with us prior to placing a USDA financed offer.
Listings provided courtesy of Triangle MLS, Inc. of NC, Internet Data Exchange Database. Information deemed reliable but not guaranteed. © 2023 Triangle MLS, Inc. of North Carolina. Data last updated .