USDA Loans in North Carolina: Eligibility Requirements, How to Apply, FAQs & More

Supplied by the U.S. Department of Agriculture through the USDA Rural Development Program, USDA loans are intended to help moderate-to-low-income buyers purchase property in rural areas. USDA loans offer 100% financing with no down payment required. Perhaps unsurprisingly, this makes them a popular option in NC, with over 47,000 active loans in the state, 81% of which went to first-time home buyers.³

Compared to other government-backed loan programs such as the FHA loan, USDA loans do not include mortgage insurance requirements; however, they do impose what’s known as a guarantee fee. The USDA loan guarantee fee is typically 1% upfront, followed by an annual fee of no more than 0.5% of the loan’s remaining balance. As of October 2025, the interest rate for a Single Family Housing Direct home loan is 5.125% for low-income and very low-income borrowers.⁴

For those interested in applying for a USDA loan in North Carolina, the most important requirements are income and property eligibility. The USDA income limit is based on the gross income of all household members, regardless of whether their name is on the loan. Earned income from a minor or an adult full-time student exceeding $480, earned income tax, lump sum additions to assets and housing assistance do not apply. To qualify for a USDA loan in NC, your gross household income must be less than 115% of your chosen country’s median income.

Although major metropolitan areas such as Charlotte and Raleigh don’t meet the USDA loan program’s property eligibility requirements, there are plenty of properties in rural areas that do.

USDA vs. FHA vs. VA Loans: What’s the Difference?

The U.S. government offers multiple government-backed home loan programs; the most noteworthy among these are USDA loans, FHA loans and VA loans. All three are available to home buyers in North Carolina, but serve different purposes and come with different requirements.

Here’s a quick overview to help you decide which option could be right for you:

* 2025 limits

The USDA offers several loan options to North Carolina residents:

• Single Family Housing Direct Home Loan: This program enables low- and very-low-income applicants to buy, build or repair a rural home as their primary residence.⁵ Fully funded, serviced, and insured by the USDA, the Single Family Housing Direct Loan has 33- and 38-year repayment terms depending on your income level.
• Single Family Housing Guaranteed Loan: This program helps approved lenders offer 100% financed, no-money-down loans to eligible low- and moderate-income borrowers looking to buy, build or repair a rural home as their primary residence.⁶ The Single Family Guaranteed loan is funded and serviced by private lenders but is partially insured against default by the USDA and comes with a 30-year fixed-rate repayment term.
• Multifamily Housing Direct Loan: This program, which is fully funded by the USDA, provides loans, loan guarantees and grants to eligible borrowers to support the development or preservation of affordable rural housing for low-income, elderly or disabled people.⁷ Although most applicants for Multifamily Housing Direct Loans are nonprofit organizations, public organizations and corporations, individuals are eligible to apply. Loan terms go up to 30 years, with amortization up to 50 years.

1. USDA Loans Don’t Have Minimum Credit Requirements

That’s right: There’s no minimum credit requirement or debt-to-income (DTI) limit for USDA loans. However, borrowers with a credit score of 640 or higher and a DTI of less than 41% are eligible for streamlined processing.

Borrowers with a credit score lower than 640 or a DTI of 41% or higher are still eligible — USDA loans are, in general, more forgiving of poor credit than most other loan products on the market — though they will be subject to the standard underwriting process.

2. USDA Loans Have No Lending Limits

Since USDA loans are intended for rural areas, which typically have lower property values, they come with no set lending limits. Instead, the USDA evaluates borrowers on an individual basis and determines their maximum loan amount based on factors such as their DTI ratio, monthly income, assets, credit score and mortgage payment history (if applicable).

3. There Are a Few Requirements You Need to Meet to Qualify

To qualify for a USDA loan in North Carolina, you must:

• Have a U.S. citizenship or permanent residency
• Agree to use the property as your primary residence
• Provide documentation demonstrating a dependable income for a minimum of 24 months
• Be able to make a monthly payment, which includes principal, interest, insurance and taxes, that is 29% or less of your monthly income
• Have an acceptable credit history, with no accounts converted to collections within the past 12 months

4. USDA Loans Come With Strict Income Limits

The USDA Guaranteed Housing Loan program imposes strict income eligibility limits, which vary from state to state, county to county and even income bracket. According to the USDA’s Guaranteed Housing Program Income Limits for 2025, the maximum allowance for a 1–4-person household anywhere in North Carolina is $119,850, while the maximum for a 5–8-person household is $158,250.⁸

You can see whether you qualify using the USDA’s income eligibility calculator.

5. USDA Loans Also Have Strict Property Eligibility Limits

The USDA home loan program began in the 1940s as part of a larger government initiative to build up rural communities. To this day, USDA loans are specifically designed for use in rural areas, and impose fairly strict property eligibility limits as a result. For example, properties in the most populous counties in North Carolina — including Wake County and Mecklenburg County — are not eligible for USDA loans.

To see which areas are eligible for a USDA loan in NC, refer to the USDA’s mapping tool.

6. There Are So Many Ways to Use a USDA Loan

If you’re approved for a USDA loan in NC, the sky’s the limit! Here are just a few of the expenses you can apply your loan to:

• Purchasing a new or existing property to use as a primary residence
• Refinancing your current home
• Special design features or permanently installed equipment to accommodate disabilities
• Special design features or permanently installed equipment to accommodate disabilities
• Reasonable and customary connection fees, assessments or the pro rata installment costs for utilities
• A pro rata share of real estate taxes
• Essential household equipment (e.g., carpeting, ovens, refrigerators, washers, dryers, etc.)
• Energy efficiency installations (e.g., insulation, solar panels, double-paned glass, etc.)
• Installing fixed broadband service
• Site preparation costs

Before deciding whether a USDA loan is the right fit for you, it helps to weigh the pros and cons. While this program can open the door to homeownership, it comes with limitations you want to know upfront.

Here’s a quick look at the benefits and potential drawbacks of a USDA loan in North Carolina:

The process for applying for a USDA loan in NC is pretty straightforward once you know what to expect. Here’s how to go from a prospective buyer to a happy homeowner, step by step:

1. Confirm your eligibility. Make sure that the area where you intend to buy meets the USDA’s definition of a “rural” area (the good news is that many parts of North Carolina qualify), and that you fall within the income limits for that respective county.
2. Find a USDA-approved lender. Not every lender offers USDA loans, so look for one that specializes in them. Not sure where to start your search? A qualified mortgage broker can be especially helpful here — they can compare rates and programs across multiple lenders to help you find the best fit.
3. Get prequalified. Before you fall in love with a home, talk to your lender about prequalification. They’ll review your income, debts and credit profile to give you an idea of how much you can afford to borrow, so you can shop with confidence and show sellers you’re serious.
4. Shop for a home in an eligible area. It’s time for the fun part: finding your ideal home! It’s best to work with a real estate agent who’s familiar with your chosen area — together with your mortgage broker, they’ll make the perfect house hunting team.
5. Submit your loan application. Once you’ve found “the one,” your lender will guide you through the full loan application. You’ll provide documentation, including pay stubs, W-2s and bank statements. Again, a mortgage broker is a valuable asset here; they can streamline this stage by ensuring your paperwork is complete and accurate before it’s sent out for review by an underwriter.
6. Get USDA approval. All applications must receive final approval from the USDA; this step can add a few days to the process.
7. Close on your new home. With the USDA’s green light, you’re ready to move to closing, sign your documents and get the keys to your new home.

Have any questions about this process, or about USDA loans in North Carolina in general? Talk to our team of experienced mortgage brokers today! With 150+ years of combined experience helping clients like you find the best mortgage solution for your needs, we can make the process of qualifying and applying for USDA loan in NC fast and stress-free, so you can get into your dream home that much sooner.

What is the difference between a USDA loan and an FHA loan?

Both USDA and FHA loans are government-backed loan programs, but that’s where their similarities end.

USDA loans impose income limits — the limit in North Carolina in 2025 for a 1–4-person household is $119,850, while the maximum for a 5–8-person household is $158,250 — and are only available for designated rural areas. FHA loans are available more broadly and have no income ceiling. USDA loans allow for 100% financing (which means no down payment), while FHA loans require a 3.5% down payment. Both programs require either guarantee fees or mortgage insurance, but USDA’s costs tend to be lower.

I don’t live in a rural area. Can I still qualify for a USDA loan?

Possibly! As a rule, properties in metropolitan areas, such as Charlotte, Raleigh or Greensboro, don’t qualify, but some suburban areas do fall within the USDA’s eligibility zones. It’s best to use the USDA’s mapping tool to check a specific address.

Do USDA loans have lower interest rates than other types of loans?

Often, yes. Because USDA home loans are government-backed programs, many USDA lenders offer interest rates that are somewhat below what comparable conventional or FHA loans might. However, your actual rate will depend on your credit history, debt-to-income ratio and market conditions, so it’s wise to compare offers.

What are the benefits of applying for a USDA loan in NC?

Some of the biggest benefits to applying for a USDA loan in North Carolina (or anywhere else) are:

• No down payment requirement
• No minimum credit requirements
• No lending limits
• Lower guarantee costs (compared to some alternatives)
• The ability to roll certain closing costs into the loan

These advantages make USDA loans appealing for low- and moderate-income buyers who might not have large savings or ideal credit.

Do you need to be a first-time home buyer to qualify for a USDA loan?

While certain home loan programs, such as FHA loans, are designated for first-time home buyers, the USDA loan program is not. Anyone can qualify, so long as they meet the USDA’s income and property eligibility criteria and intend to use the property as their primary residence.

How does the USDA define “adequate property”?

To be considered “adequate,” a property must meet the USDA’s Minimum Property Requirements (MPRs) and be safe, structurally sound and functional. That means it must pass an appraisal and inspection that checks for things such as foundation condition, roofing, electrical and plumbing systems, and be suitable for residential use.

Do USDA loans have an occupancy requirement?

Yes, any property you purchase with a USDA loan must be your primary residence — no investment properties or vacation homes allowed. You’re often expected to move in within 60 days of closing and to maintain occupancy for the life of the loan.

What does the USDA loan application process look like?

At a high level, the USDA loan application process looks something like this:

1. Confirm your eligibility with USDA home loan requirements, including income limits and property location.
2. Find a USDA-approved lender.
3. Apply for prequalification (optional, but very helpful!)
4. Shop for a home in an eligible area.
5. Submit a full application with appropriate documentation, including pay stubs, W-2s, tax returns and bank statements.
6. Get an appraisal and inspection to verify that the property meets the USDA’s MPRs.
7. Receive final approval from the USDA, close on the loan, sign documents and move in.

What is a mortgage broker, and how can they help me apply for a USDA loan in NC?

A mortgage broker works as a sort matchmaker between you and multiple lenders to help you find the one that will offer you the best terms. They’ll also provide support throughout the house hunting and application processes, working with your real estate agent and with you directly to ensure you have all the proper documentation and don’t miss any steps. Ultimately, your broker’s role is to serve as a trusted advisor who makes the loan application process as stress-free as possible.

Do USDA loans allow for co-borrowers?

Yes, but with restrictions. All borrowers must intend to occupy the home — non-occupant co-signers who do not live in the property are generally not allowed. You can have multiple occupant co-borrowers but understand that their incomes will be counted toward the gross household income and must fall within the USDA’s income limits.

How much do I have to put down on a USDA loan?

Nothing! USDA home loans allow for 100% financing and no down payment. That said, you’ll still need to cover the guarantee fees (both upfront and annual) and closing costs (unless those are rolled into the loan or covered by the seller).

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