What credit scores qualify for a USDA home loan?
What credit scores qualify for a USDA home loan and what are the minimum credit score requirements for a USDA mortgage?
When qualifying for a mortgage, everybody knows that your credit scores are critical, but depending on your credit, a certain bureau may not even be reporting a score!
In today’s short video we will discuss the USDA qualifying credit requirements along with what solutions are available when credit scores are not reporting.
It is important to remember that a certain credit score does not guarantee approval, but achieving a minimum score does open up the range of potential eligible loan programs with higher scores and stronger credit profiles contributing factors. USDA has the following credit score guidance:
- 640 and above required for automated underwriting eligibility
- Manual underwriting guidelines for scores of 581 and above provided a documented credit waiver is submitted when applicable.
- Loans with credit scores of 580 or below should not be approved
Also remember that depending on what credit is actually reporting, not all credit bureaus may even be generating a score. In this case, USDA guidelines state the following:
- If the applicant’s credit report has three scores, the middle score should be used as the representative score.
- If the applicant has two scores, the lower of the two should be used as the representative score.
- If the applicant has a repeating score, that score will be utilized.
- If the applicant has one score, a NTMCR must be developed for manually underwritten loans.
Non-Traditional Mortgage Credit Report (also known as Alternative Credit) would consist of verification for accounts such as water, electricity, phone, cable, etc. for at least the past 12 months with an on-time payment history.
While USDA loans offer high credit qualifying flexibility, a minimum credit reputation is required in order to determine eligibility.
Don’t let the details overwhelm you because that is what we are here for! As a USDA approved lender, we can walk you through the qualifying steps and explain the details from A to Z.
Whether it is the doctor or a mechanic, 2nd opinions are always great, and that goes the same with mortgages which is why we have a free 2nd opinion service dedicated to these requests.
800-806-9836 Ext. 280
Whether you are under contract or in the pre-qualification stage, just call or email with your scenario and take advantage of our lending expertise.
I want everyone to make it a great day, and look forward to seeing you right here for our next video quick tip.