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Can you get a USDA loan while in Consumer Credit Counseling?

September 26th, 2014 by usdaadmin

How does Consumer Credit Counseling affect your USDA home loan application?

Due to the economic downturn which has affected many, credit standing has also suffered. Because of this, some potential homebuyers have enrolled into Consumer Credit Counseling programs as an effort to help reduce their debt.

However, when attempting to qualify for a USDA loan while in Consumer Credit Counseling additional guidelines will apply.

Now, just so we all begin on the same page, let’s first review what Consumer Credit Counseling is and how it affects USDA Home Loan qualifying.

According to InvestorWords.com, consumer credit counseling is a “Non-profit service provided to consumers that need assistance either reducing or eliminating debt and improving their credit scores.”

In short, it is an educational service for those who need help with managing their finances.

So the question remains – can you qualify for a USDA loan while in Conumer Credit Counseling? As we all know, USDA loans offer flexible credit qualifying and it can also be acceptable for an applicant who is participating in consumer credit counseling provided the following:

  • The lender must document that at least one year of the pay-out period has elapsed under the plan and the applicant’s payment performance has been satisfactory with all required payments made on time.
  • It is common for some creditors to still report the consumer credit applicant as delinquent, even though they have agreed to a lesser payment. This situation must be considered in the overall analysis of the credit profile.
  • In addition, written permission from the consumer credit counseling agency to enter into a mortgage transaction is required along with a counselor recommendation of the applicant.
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