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Old 10-16-2013, 06:53 AM
 
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Hello, my girlfriend and I are looking to buy a home. We are pre qualified for an FHA loan of up to $270,000. I have been reading about the USDA rural loans but it is tough to find information with the government shutdown. Our combined income is within the guidelines as far as I can tell and the home we are interested in is in an approved area for the rural loan. I am unclear about how much credit rating matters. My credit score is 720 where hers is maybe 600, because of a shared credit card with her ex which will soon be paid off. Will her credit score disqualify us from a rural loan?
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Old 10-16-2013, 08:31 AM
 
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There is no minimum credit score for a USDA loan imposed by the USDA. That said, lenders will overlay their own credit score requirements to a loan application, which they are permitted to do.

You're probably going to find that anything under 640, maybe 620 is going to be tough to find. It might be best to find lenders in your area who write USDA loans, then ask them what their requirements are.
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Old 10-16-2013, 11:17 AM
 
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Quote:
Originally Posted by willow wind View Post
There is no minimum credit score for a USDA loan imposed by the USDA. That said, lenders will overlay their own credit score requirements to a loan application, which they are permitted to do.

You're probably going to find that anything under 640, maybe 620 is going to be tough to find. It might be best to find lenders in your area who write USDA loans, then ask them what their requirements are.
This is correct. Sub-640 USDA loans take a little longer, with more hoops, but you are fine - excellent, in fact, especially with the shutdown (seemingly) coming to an end.

Count on a 30 day mortgage process, THEN a 4-8 week USDA review due to backlog.
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Old 10-17-2013, 03:26 PM
 
Location: Milwaukee
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Good questsion Jason, thankfully the government is back up and running (well, technically at least ) so the USDA site should be going full throttle soon.

Assuming you are in a qualified, lower density area, a USDA loan is a great choice with the 100% financing and is a great product for 1st time home buyers.

As Williow and Pfhtex attested, generally 640 is the score that most lenders will go with. Often times lenders also have outlets where they can broker the loan to a lower number.

In my professional opinion, you could get a second look at the application by another lender. A good lender will be able to formulate a plan to quickly boost your credit, I call it a rapid rescore. By doing this, the lender can formulate a way to get your girlfriend an efficient way to get up over the 640 mark (i.e. which credit card to pay off, something along those lines).

I would advise going against FHA, as your monthly payment is very likely going to be higher due to the higher mortgage insurance cost. Hope that helps!
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