You can use ungraded lumber for your house so long as that specific lumber came from that specific land.
Here are the restrictions:
Lumber must be from that land
It must be for your residence and you must occupy for a minimum of 1 year
Lumber must be 19%MC max when framed
Must contact your local inspections dept to get an inspector to walk the property to verify source of lumber.
The NCDOI has issued an interpretation of using ungraded lumber under section 105 of the NC state building code.
19% is pretty easy to achieve on dimensional lumber without a kiln. Most of the time by the time you are ready to cover with drywall, it’s air dried enough and meets max MC.
