This BLOG covers USDA one credit score mortgage guidelines. We have recently gotten many inquiries on USDA One Credit Score Mortgage Guidelines. Several borrowers were told they could not qualify for USDA one credit score mortgage loan. They were told by other lenders they needed three credit scores. Gustan Cho Associates are lenders with no overlays on USDA loans. Whatever USDA one credit score mortgage guidelines are, we will abide by those requirements without any other additional lender overlays. We can offer USDA one credit score mortgage for borrowers with their credit score is over 680 FICO. USDA has different mortgage guidelines than FHA, VA, Fannie Mae, Freddie Mac. In this blog, we will discuss USDA One Credit Score Mortgage Guidelines and other requirements.
About USDA Home Loans
USDA Loans are offered by private lenders who are USDA Approved. USDA Loans offers 100% financing for qualified home buyers. In order to be eligible for USDA Home Loans, the borrower needs to qualify. Besides the borrower qualifying, the property needs to be in a USDA designated rural area. This loan program has no down payment requirements on home purchases. Most home buyers do not have to worry about closing costs. Closing costs can be covered with sellers concessions or lender credit.
With the no down payment requirement and getting seller concessions or a lender credit, home buyers can literally purchase a home with zero money out of pocket.
Lenders offer very low mortgage rates due to the government guarantee. Borrowers can qualify for USDA loans with 580 credit scores as long as they have 3 credit scores. Borrowers can qualify for USDA one credit score mortgage loans with at least a 680 FICO.
How Does The USDA One Credit Score Mortgage Guidelines Work
Rhe USDA (United States Department of Agriculture) does not have specific guidelines regarding credit scores for mortgages. However, USDA loans are generally known for being accessible to borrowers with lower credit scores compared to conventional loans. While the USDA itself doesn’t set a minimum credit score requirement, most lenders who offer USDA loans typically require a credit score of at least 640. However, some lenders may accept scores as low as 580 with compensating factors such as a low debt-to-income ratio or significant cash reserves.
USDA Credit Score Guidelines
It’s important to note that while credit score requirements may vary among lenders, USDA loans do have other eligibility criteria, such as income limits based on the area where the property is located and the borrower’s household size. Additionally, applicants must demonstrate a stable income and have a reasonable debt-to-income ratio. For the most accurate and up-to-date information regarding USDA loan eligibility and credit score requirements, it’s best to consult with a lender who offers USDA loans or directly contact the USDA Rural Development program. They can provide detailed information and guidance tailored to your specific situation.
Borrowers With One Credit Score and Low Scores
The Team at Gustan Cho Associates Mortgage Group are experts in helping borrowers boost their credit scores. There are quick fixes that can boost credit scores. It may take as little as a month to get three credit scores. Borrowers with no credit scores or one credit score can instantly get three credit scores by getting three credit trade lines.
The easiest and fastest way of getting three credit scores is by adding revolving credit card accounts. Those with no credit scores or one credit score should get themselves three secured credit cards.
This will instantly give them three credit scores. Or have a relative add you on a few credit card accounts as an authorized user. They do not have to give you the physical card and have full control over the credit card account.
NON-Traditional Credit Tradelines on USDA One Credit Score Mortgage
Borrowers without three credit scores and no active credit trade lines need to provide three seasoned non-traditional credit trade lines. Rental verification is considered a trade line. In order for verification of rent to count, the renter needs to have paid their rental payments by check and/or bank wire. 12 months of on-time payments to the landlord need to be provided to the lender via canceled checks and/or bank statements. Non-traditional trade lines can be the following:
- Utility payments
- Cell phone or landline phone payments
- Automobile insurance payments
- Cable payments
- Other payments to creditors that do not report on credit bureaus
12 months of canceled checks or bank statements need to be provided. Payments need to be on time for the past 12 months.
Outstanding Collections and Charged-Off Accounts
USDA requires all outstanding collections and charged off accounts to be paid as part of USDA Guidelines. HUD, the parent of FHA, does not require outstanding collections and charge-off accounts to be paid off. USDA even requires medical collections to be paid. To learn more about qualifying for USDA home loans with a lender with no lender overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at email@example.com. We are available 7 days a week, evenings, weekends, and holidays.