USDA Credit Score Guidelines For Borrowers With Bad Credit


This BLOG On USDA Credit Score Guidelines For Borrowers With Bad Credit Was PUBLISHED On February 5th, 2019

USDA Loans is one of two government loan program that offer 100% financing on home purchases.

  • VA and USDA Loans are the only owner occupant mortgage programs that offer zero down payment, 100% financing
  • Need to be a veteran of the U.S. Military to qualify for VA Loans
  • USDA Loans are limited to home buyers who want to purchase homes in USDA Rural Development Areas
  • The areas that qualify are assigned by the U.S. Department of Agriculture Rural Development
  • Borrowers also need to qualify
  • Besides credit scores and debt to income ratios, borrowers cannot exceed a certain amount of household income
  • USDA Credit Score Guidelines does not specify a specific credit score requirement
  • Most lenders have their own lender overlays on credit score requirements
  • Many home buyers often get confused when shopping for mortgage
  • One lender tells them that USDA Credit Score Guidelines is 640 while another says it 660. Other lenders require a 620

All borrowers need to meet USDA Mortgage Agency Guidelines. However, each individual lender can have their own credit score requirements. The higher mortgage requirements imposed by lenders is called overlays.

Income And Credit Lending Guidelines On USDA Loans

Credit scores and debt to income ratios are two of the most important factors when qualifying for mortgage loans. Every lender may have different credit score requirements. Just because borrowers do not qualify for a USDA Loan with one lender does not mean they cannot qualify with a different lender.

  • USDA credit score requirements are depend on individual lenders and not USDA
  • Borrowers credit and income profile is determined by automated underwriting system
  • If AUS determines borrowers are credit worthy, AUS on USDA is GUS
  • If GUS determines an approve/eligible, Gustan Cho Associates at Loan Cabin Inc. will approve and fund the USDA Loans
  • Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no overlays on USDA Loans
  • We just go off AUS GUS Findings

USDA DTI And Credit Guidelines

USDA has a limit on household income caps:

How To Qualify For USDA Loans And See If Borrowers & Property Qualify

Both borrowers and property need to qualify in order to be eligible for USDA Loans:

  • Check the USDA income eligibility link
  • Choose state
  • Complete the following information:
    • Total members in the household who are 18 years and younger
    • Borrowers and Spouse’s income information
    • State whether or not borrower and/or co-borrowers are 62 years of age or older
    • Any disabled members in household
  • Check to see if the property is eligible by being located in an eligible rural area

How Much Do I Need To Purchase USDA Home

Home buyers can purchase a home with a USDA Loan with zero down payment and zero closing costs. Closing costs can be covered with sellers concessions and/or lender credit. For more information in buying a home with USDA Loans with no down payment and no closing costs, please contact us at Gustan Cho Associates at Loan Cabin Inc. at 262-716-8151 or text us for faster response. Or email us at We are available 7 days a week, evenings, weekends, and holidays.

This BLOG On USDA Credit Score Guidelines Was Written and PUBLISHED By Gustan Cho National Managing Director of Loan Cabin Inc.

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