Income and Credit Eligibility for USDA Home Loans

The United States Department of Agriculture (USDA) has created a program which delivers guaranteed home loans intended to help out individuals or families afford a home in a rural area that qualifies under the program guidelines.

How does one go about qualifying for one of the USDA loans? Just like with any other loan, the main premise is that you are willing and able to make payments on time and work towards paying back the loan. They will analyze your credit history to see the trend on how well you have been able to pay back loans or bills in the past. Also, you will need to prove that you have a steady income that is more than enough to meet the loan payment every month.

Credit Eligibility

The first step is finding a lender who is knowledgeable about USDA loans, and once you come across this lender they will begin the process by requesting your credit report and history.

This credit history will show the lender whether or not you typically pay the bills in a timely manner, so if you have any derogatory items on the report such as late payments, repossessions, foreclosures, or bankruptcies, be aware that they will show up.

If you are sure that you do not have too many blemishes on your credit report or perhaps none at all, then you are in a great position. Perhaps the best part of the USDA loan program is that there is no minimum credit score, so even if you do have a couple “bad spots” on your report, all is not lost because you still may be approved. The main thing the lender wants to know is whether or not you are able to repay the loan, so it might be worth it to put in the effort to repair your credit in the best way possible.

Typically, you need to have a pretty perfect report within the last year. This means that there should not be any late payments within the last 12 months, and if you have a bankruptcy in your history it needs to be at least two years old. You need to be able to show that you are financially stable and able to meet your required monthly bills.

Income Eligibility

The USDA loan program was structured to help out low income families with obtaining a home in a rural or low income area. The loan underwriter will take a detailed look at the gross income for the family, as well as any co-signers on the loan to determine what the income mark is. There is a maximum income level that will disqualify you from receiving the loan if you surpass it, but it is still possible to make adjustments to bring yourself below this level if need be.

The underwriter wants to know what your work history looks like. They want to know if you have been with the same employer for years and years or if you have hopped from job to job in your history. In order to show the underwriter this information they will require you to bring in at least two years of your IRS tax filings. You should also provide whatever kind of paystubs you have available, especially from your current job as this will be very important.

The USDA loan program makes it very possible to obtain a loan for that new house you have been dreaming about. Talk somebody today about making this dream a reality!