With many loan options available, USDA Loans rank as THE BEST for getting into your dream home. USDA Loans have many features that make them superior to home loans through a bank. Also known as Rural Development Loans, USDA Loans are insured and guaranteed through the USDA Rural Development Guaranteed Housing Loan Program.

To qualify for a USDA loan, you need to have a credit score of 620 or greater. Your USDA loan underwriter will review a copy of your credit report from each of the three credit bureaus (Transunion, Experian, Equifax) to determine your credit score. Each of the three bureaus will assign a credit score based off what is reporting on your credit. The underwriter will throw out the high and low scores and will use your middle score as your credit score.

If your credit score is between 620 and 639 your file will be manually underwritten, meaning that you will need compensating factors to help your loan get approved. If your score is below 640 you will need to provide proof of previous rental history. Also, the underwriter will want to see that you have three open credit accounts, things such as credit cards, car loans, student loans, or installment loans. Ideally, it would be best that your accounts have been open for at least 12 months and have no 30-day late payments. If you cannot supply three open credit accounts, it may be possible to use nontraditional credit accounts.

In general, if your credit score falls below 640 you should not have had any recent collection accounts (within the last 12 months) on your credit, you must have paid (or be ready to pay) any open collections on your credit report.

If your credit score is greater than 640 you are generally not required to show proof of rent. Additionally, smaller collections are not always required to be paid, as this is determined on a case-by-case basis by your USDA loan underwriter.

The benefit of dealing with BHS Mortgages Residential & Commercial is that we always work with multiple Lenders, and we have the flexibility to negotiate to get you the best rates and fees on the transaction.