USDA loans
USDA loans — zero down, if the address cooperates.
The USDA Guaranteed Rural Housing program is the most underused loan in this market. Zero down payment, an annual fee well below FHA mortgage insurance, and competitive rates — with two conditions that have nothing to do with you personally. The property has to sit inside a USDA-eligible area, and your total household income has to fall under a county limit.
"Rural" is misleading. A great deal of ground within a forty-minute drive of uptown Charlotte is USDA-eligible, and essentially everything west toward Shelby and Kings Mountain is worth checking. The map is the first thing I look at when a buyer tells me where they are shopping, because if the address qualifies, the math frequently beats every other program.
Updated
USDA at a glance
- Down payment
- None required
- Upfront guarantee fee
- 1% of the loan, financeable
- Annual fee
- 0.35% of the balance
- Credit score, typical
- 640 for streamlined underwriting
- Income test
- Total household, against a county limit
- Property test
- Inside the USDA eligibility map
Right for you if
- Buyers with little or no down payment who are shopping outside city limits
- Households comfortably under the county income limit
- Anyone comparing against FHA, where the annual fee is materially higher
- Buyers west of Charlotte — Cleveland, Lincoln, Gaston and Rutherford counties are full of eligible ground
- Buyers who need the seller to cover closing costs, which USDA permits generously
Know before you commit
- Household income includes people who are not on the loan
- The eligibility map changes; verify the specific address, not the town
- Primary residence only, and the property has to be modest and non-income-producing
- Outbuildings, acreage and existing agricultural use can complicate eligibility
- USDA conditional commitment adds a step; build it into the closing timeline
The two tests
Everything about USDA eligibility comes down to a property test and an income test. The property has to be in an area USDA has designated as eligible, which you check address by address rather than by town — eligible and ineligible ground frequently sit on opposite sides of the same road. The income test looks at the total income of everyone living in the household, whether or not they are on the loan, against a limit set by county and household size.
Both tests are yes-or-no. There is no partial credit and no compensating factor that overcomes an ineligible address. Which is why I check the map before anything else — it takes about ninety seconds and it changes the whole conversation.
What USDA costs compared with FHA
| USDA Guaranteed | FHA | |
|---|---|---|
| Minimum down | None | 3.5% |
| Upfront fee | 1.00% | 1.75% |
| Annual fee, typical | 0.35% | 0.55% |
| Duration | Life of the loan | Life of loan above 90% LTV |
| Loan limit | None; income-limited instead | County limit |
Published agency guidelines. The annual fee difference is the reason USDA beats FHA on total cost whenever both are available.
Household income: the part that surprises people
USDA counts adjusted household income, not just the income you use to qualify. An adult child living at home with a job, a parent contributing Social Security — those get counted toward the eligibility limit even though they are not borrowers. There are deductions for dependents, childcare and certain medical expenses, so the calculation is not simply adding W-2s together.
The practical version: if your household is anywhere near the limit, let me run the actual worksheet rather than estimating. I have seen files that looked clearly over qualify comfortably once the deductions were applied, and files that looked fine come in over.
Where this actually applies around Charlotte
Broadly, the further you get from the Mecklenburg core the more likely the answer is yes. Large parts of Cleveland, Lincoln, Gaston, Rutherford, Stanly and Cabarrus counties contain eligible ground, and much of upstate South Carolina outside the Greenville and Anderson city limits does too. Towns like Vale, Cherryville, Bessemer City, Mooresboro and Kings Mountain have eligible areas. None of that is a substitute for pulling the specific parcel.
The extra step in the timeline
After our underwriting approves the file, it goes to USDA for a conditional commitment. That is normally days, not weeks, but it is a step conventional and FHA files do not have. It matters when you are negotiating a closing date, so we build it in from the start rather than discovering it at day 28.
USDA Guaranteed Rural Housing loans are guaranteed by the U.S. Department of Agriculture. Property and income eligibility are determined by USDA and are subject to change.
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Clients who used usda
Travis was always there with an answer and guiding me through the whole lending process! Very professional and friendly, feel like I've known him for years...would highly recommend Travis for anyone in the market!!!
Travis is an amazing lender! I always joke I’m going to buy him a cape to wear because he is forever saving a deal!! If you want a lender that’s reliable, PROMPT, knowledgeable and genuinely cares about his customers! I recommend all my buyer clients to Travis!
Questions
USDA, answered
It depends on the specific parcel, not the town — USDA draws eligibility by census geography, and neighboring properties sometimes get different answers. Send me the address and I will check it and tell you the same day.
Limits are set by county and household size, and they are based on adjusted household income — which includes people living in the home who are not on the loan, less deductions for dependents, childcare and certain medical expenses. If you are close to the line, the worksheet is worth running properly.
Not mortgage insurance as such, but it has two fees that behave similarly: a 1% upfront guarantee fee, normally financed, and a 0.35% annual fee collected monthly. Both are well below the FHA equivalents.
No. This program finances modest, non-income-producing single-family homes. Working agricultural operations are a different USDA program entirely. Acreage and outbuildings are not automatically disqualifying, but income-producing use is.
Comparable to other programs, plus the USDA conditional commitment step after our underwriting approval — normally a matter of days. We plan the closing date around it rather than hoping.
More in the full mortgage FAQ, or ask me directly.
Fairway Independent Mortgage Corporation is not affiliated with any government agencies. These materials are not from HUD, VA, USDA or FHA, and were not approved by HUD, VA, USDA or any other government agency. This is not an offer to enter into an agreement or a commitment to lend. Not all applicants will qualify. Information and rates are subject to change without notice. All loans are subject to credit review and approval. Program guidelines, fees and loan limits are set by the applicable agency or investor and are subject to change. Fairway Home Mortgage is a division of Fairway Independent Mortgage Corporation. NMLS Entity ID #2289.
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