USDA Rent to Own: Here is How to Buy the House you Rent with a USDA Loan
Can you buy the home you are renting with a USDA loan?
As more renters transition into homeownership, USDA rent to own opportunities are increasing for those homebuyers who want to purchase the home they are renting. This topic is especially important for property managers or landlords, listing agents with properties that have tenants, and for tenants who wish to purchase.
Today, I will review how it can be possible to buy the house you are renting with a USDA loan.
It is important to realize each step in the USDA process. That’s why we have a FREE USDA Blueprint for Success Guide. This complimentary download is designed to walk you through the USDA qualifying process. It’s ideal for homebuyers and realtors alike!
The nice part about trying to purchase the home you already live in is the focus can now be placed on qualifying. Here are the qualification steps for USDA rent to own.
1. Rental History
Let’s get started by reviewing rental history first.
Is your landlord a private owner, property management company, or Real Estate brokerage?
This is critical because verification of rental history is required. Documentation from a company managing the rent will customarily hold more weight and strength with the USDA approval process when compared to a private landlord verification.
Do you pay rent by check, cash, or money order?
I know you have heard me say this before, but paying by check is a far better form of rental verification. This is especially true when paying to a private landlord.
2. USDA Minimum Credit Qualifying Requirements
Additionally, USDA loans are known for their credit flexibility and although minimum credit conditions will be required, obtaining a certain credit score does not guarantee loan approval.
The credit history of an applicant must be sufficient to validate their credit score with USDA requiring at least two accounts on the credit report that have been or are currently open for 12 months based on the date the account was opened as stated on the credit report.
Remember, in cases where there is a lack of an established traditional credit history, USDA guidelines will also permit for the verification of non-traditional credit references such as Cable, Electric, Water, and Phone bills.
3. USDA Employment History Guidelines
USDA Guidelines will require earnings to be adequate, dependable, and documented through items such as pay stubs, W2 forms, tax returns, and verifications of employment.
Please remember that while at least 2 years on the same job is preferred, it is not a requirement.
USDA Rent to Own
While the three 3 qualifying steps above are not exhaustive, it is a great starting point to help you transition from renting your home to owning it with a USDA loan. As a USDA approved lender, our expertise and knowledge are here to help you each step of the way.
Plus, if you are ready to take the next step towards learning the USDA qualifying process, download our USDA Blueprint for Success FREE report which is designed to give you an overview of the USDA Home Loan process, eligibility requirements, and much more. Download it now!