A first home in rural South Carolina: County First, USDA loans and the property rules that matter

Why rural buyers deserve their own guide

South Carolina's smaller counties have their own advantages: lower home prices in many areas, generous first-time buyer rules, and loan programs built for rural places. They also have their own pitfalls, especially around land, wells and septic systems, and manufactured homes. We hope this guide helps you avoid surprises.

The County First Initiative

SC Housing describes County First as a rural initiative with forgivable down payment assistance and special fixed-rate financing. Its program page lists 31 targeted counties:

Abbeville, Allendale, Bamberg, Barnwell, Beaufort, Calhoun, Cherokee, Chester, Chesterfield, Clarendon, Colleton, Darlington, Dillon, Edgefield, Fairfield, Florence, Georgetown, Hampton, Horry, Jasper, Kershaw, Laurens, Lee, Marion, Marlboro, McCormick, Newberry, Orangeburg, Saluda, Union and Williamsburg.

What the page states:

• Funding is available to both first-time and move-up buyers.
• Borrowers choose an FHA, USDA or VA loan.
• Income and home price limits are the same as SC Housing's Homebuyer Program, which means the statewide $450,000 price limit and county income limits.
• Eligible homes include single-family homes, condominiums, townhomes and modular homes.

The program page does not state the assistance amount or forgiveness term. An earlier SC Housing flyer described $10,000 in forgivable assistance, but please have your lender confirm the current figure.

Move-up buyers are welcome

Most of these counties are also "targeted" under SC Housing's first-time buyer rule. In those counties, you need only not own a home at closing; the three-year look-back used in places like Greenville and Charleston does not apply. A family that sold a home last year can still qualify. One detail from the program guide is worth noting: in targeted counties, a mobile home taxed as real property counts as an ownership interest, while unimproved land does not.

USDA guaranteed loans, explained

Much of rural South Carolina is eligible for USDA's Section 502 guaranteed loan, and County First offers it. Federal rules in 7 CFR Part 3555 set its features:

USDA's household income test counts everyone in the household, not only the borrowers, so a working adult child at home may matter. SC Housing's own income limit and 640 credit score also apply. Local USDA Rural Development offices can answer eligibility questions; the City of Florence lists one at 215 Third Loop Road in Florence.

Land, acreage and outbuildings

Here is where many rural purchases run into trouble. SC Housing's Homebuyer Program guide says properties cannot exceed five acres, and multi-parcel properties are not eligible. A farmhouse on twelve acres, or a home sold together with a separate lot next door, will not fit. If you love a larger property, ask whether the seller would subdivide before closing, and ask your lender early.

The guide also does not allow accessory dwelling units. A rental cottage on the land would also affect your property tax, because the 4% legal residence ratio does not apply to rented residences on the property.

Wells and septic systems

Many rural homes rely on a private well and septic system rather than city water and sewer. Ask your lender and inspector whether water testing or a septic inspection is required for your loan, and budget for them before closing.

Manufactured and modular homes

The terms are often confused, and the difference matters:

• Off-frame modular homes are listed as eligible in SC Housing's Homebuyer Program guide and on the County First page.
• Manufactured homes, built on a permanent chassis, are not listed as eligible property types in the Homebuyer Program guide.
• Palmetto Home Advantage, SC Housing's non-bond program, does include manufactured housing. It has no first-time buyer rule and no sales price limit, with a $140,000 income cap on the current limits chart and a 10-year forgivable assistance term.

Local programs differ too. Lexington County's assistance excludes manufactured homes, while Greenville County's program allows them with a lower $195,000 price limit.

County First or the regular Homebuyer Program?

If your county is on the County First list, you may be able to choose between County First and SC Housing's regular Homebuyer Program. They share income and price limits, but they are not identical. County First's page lists FHA, USDA and VA loans, while the Homebuyer Program also offers conventional loans that follow Fannie Mae HFA Preferred or Freddie Mac HFA Advantage rules. A buyer with strong credit and a modest down payment might prefer a conventional loan, whose private mortgage insurance can be cancelled later on request once the balance reaches 80% of the original value. A buyer with little cash may prefer USDA. We would ask your lender to quote both programs side by side.

Whichever you choose, SC Housing requires a homebuyer education course before approval, and its certificates stay valid for 12 months. Rural buyers often find the online option the most convenient.

Other rural help worth knowing

• Made It Home! includes participating new homes in Darlington and Sumter, among other places, with up to $25,000 in forgivable assistance for buyers earning $135,000 or less.
• City of Florence offers up to $20,000 in target areas and up to $30,000 for North Pointe homes.
• FHLBank Atlanta assistance is available statewide through member banks while funds last.

Our counsel for rural buyers

1. Confirm your county is on the County First list and note its income limit.
2. Check the acreage and parcel count before you fall in love with a property.
3. Know whether the home is modular or manufactured.
4. Budget for well and septic inspections.
5. Ask your lender to compare USDA, FHA and VA side by side.

To see which rural options fit your household, please check your eligibility.

Further questions