USDA Loan Credit Requirements

The following general guidelines were provided by USDA Rural Development and are not meant to give the entire USDA loan guideline package – just the highlights of what it takes to qualify for a USDA loan.

If you are applying for a USDA rural housing loan, you must show a history of meeting your financial obligations in a reasonable manner. Knowing the USDA loan requirements as well as having an acceptable credit history is important in getting a USDA housing loan.

Lenders can be fairly lenient when looking at credit histories for a USDA loan. There may be some circumstances that are beyond the borrower’s control. Lenders can give poor credit history waivers if  circumstances are documented and temporary in nature. These circumstances include increased expenses due to illness or medical expenses, injury, a death in the family, etc.

Credit scores of 620 or more

If your credit score is 620 or higher, lenders use streamlined underwriting guidelines. You can get away with a few bad marks on your credit.

  • Lenders are not required to document adverse credit history except for delinquent federal debt.
  • Lenders are not required to get a rental history rating
  • No letters of explanation will be needed for less than satisfactory credit items.
  • Credit score of the primary wage earner is given the most weight, but credit scores of all applicants will be included.

Credit scores between 619 and 580

If your credit score is between 619 and 580, lenders will look carefully at your loan application. If you are requesting a poor credit history waiver, you usually have to document that the circumstances were temporary, beyond your control, and that the situation has been removed.

Credit scores below 580

If your credit score is below 580, your loan will probably not be approved if any of the following applies.

  • More than one 30-day late payment in the past 12 months.
  • A bankruptcy or foreclosure discharged within the past 36 months.
  • An outstanding judgment within the past 12 months.
  • Two or more rent payments that are 30 days late within the past 3 years.
  • Outstanding collection accounts without payment arrangements.
  • An outstanding tax lien or federal debt without payment arrangements.
  • Accounts converted to collections in the past 12 months.

No credit or non-traditional credit

Some people have no credit score or non-traditional credit. You still may qualify for a USDA rural housing loan if you have at least 4 non-traditional credit sources for the past 12 months. These credit sources can consist of the following:

  • Rental or housing payments.
  • Utility payments (electric, gas, water, phone).
  • Insurance payments (auto, life, renter’s, medical).
  • Retail store credit (department store, furniture store).
  • Consistent deposits to a savings account.

No matter what your credit score, you may be able to qualify for a USDA Rural Home Loan. Apply on this site today for a free quote and your desire to own a home may become a reality.

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