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I'm looking to make a future home purchase via USDA- Can you tell me what the process is, and if there are special guidelines I need to follow?

Please note, my credit was somewhat mediocre, but with a divorce and some recent credit issues as a result of the divorce, and child support, my credit worthiness may have tanked.

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  Answers  |  2

January 21, 2015


USDA loans are a great option especially because you can obtain 100% financing, but here's the catch (and the critical guideline) - The property must be within the "eligible" USDA zone in order to purchase using USDA. For your information, here is the portal where you can check this (though it may be easier to have a lender work this out for you as I do with my clients) -

There will be a "Guarantee Fee" as part of this loan that goes to USDA as well as mortgage insurance monthly on the loan. The mortgage insurance will be there for the life of the loan.

Underwriting guidelines are more flexible than conventional loans and your credit score, though it is always important, will not have as much effect on the interest rate as on a conventional loan.

$commenter.renderDisplayableName() | 09.29.20 @ 13:27


February 02, 2015

Correct, USDA loans are a great option, under the right circumstances. As Chad noted, the home must be in an eligible area, In addition, the total HOUSEHOLD income cannot exceed limits, which vary by area (since USDA funding targets lower income households), and debt to income ratios can't be too high. The credit requirements for USDA loans are tougher than FHA, in my experience. The monthly mortgage insurance is quite reasonable ,compared with FHA loans. Hope this helps, and if you have further questions, feel free to contact me through my profile.

$commenter.renderDisplayableName() | 09.29.20 @ 13:27