USDA Loan Requirements | USDA Guidelines for Home Loans
- The USDA loan minimum credit score depends on the lender, which some lenders have tougher USDA loan requirements.
- USDA loan income requirements are set by United States Department of Agriculture.
- There are USDA grants available to home buyers, which are sometimes not necessary because USDA loans and borrowers are eligible for 100% financing.
- Borrowers will have a higher chance of getting pre-approved for a loan when amortgage company goes by USDA guidelines for home loans.
USDA Loan Minimum Credit Score
- Minimum credit scores are set by the mortgage company and USDA guidelines for home loans.
- Some mortgage companies have an internal rule called an overlay that sets higher credit standards.
- For example, some lenders will require a 640, 620, or 600 credit score.
- The USDA minimum credit score for Nationwide Mortgage & Realty, LLC is 550 FICO.
- FICO’s under 640 require a manual underwrite.
- The maximum debt-to-income ratios are determined by the Guaranteed Underwriting System (GUS).
- Non-traditional credit is permitted when there is a lack of trade lines.
USDA Loan Income Requirements
- Two year history for employment is required.
- Maximum housing ratios are 29/41 and ratio waivers do not apply with a credit score under 640 FICO.
- With higher credit scores, the debt-to-income ratios are determined by GUS.
- USDA income limits must be met by the United State Department of Agriculture.
- Steps on how to use the USDA income eligibility tool:
- Ask a Loan Originator to help or click on the USDA income eligibility link.
- Pick a state.
- Pick a county.
- Fill in the following fields:
- Number of People in Household.
- Number of Residences Under 18 Years Old, Disabled or Full Time Students.
- Is Loan Applicant or Co-Applicant Age 62 or older?
- Are there any disabled Persons Living in the Household?
- Fill out income.
- Click finish to determine USDA loan income requirements and eligibility.
USDA Guidelines for Home Loans – Property Eligibility
- The United States Department of Agriculture’s website has a property eligibility section that determines if properties are located in an eligible rural area.
- The tool is as easy as putting in an address and finding out either:
- The address is not located in an eligible rural area.
- The address is located in an eligible area.
- See bankruptcy, foreclosure, short sale waiting periods.
USDA Grants for Home Loans
- USDA loans do not require a minimum borrower cash investment, but USDA grants can help pay for the down payment and closing costs.
- The USDA grants are 3% of the first total mortgage loan amount.
- Limited to 1 unit only.
- The minimum credit scores for the USDA grants is 640 FICO.
- Debt-to-income ratios are determined by GUS.