The USDA Guaranty Loan Program, like all loan programs, evaluates a borrower’s ability to repay the mortgage loan by analyzing the borrowers credit history. The most common source of credit management information can be derived from a borrower’s credit report, including the credit score. The credit score used is the middle of the three scores or if there are only two scores than the lower of the two scores. If there are two or more borrowers on the loan, the credit score used is the lower of the two middle credit scores.
While there are many variables that go into obtaining a USDA loan approval and determining the loan amount, there are three credit score levels that are relevant when evaluating the USDA Loan program. These credit score ranges are as follows:
680 and above. Borrowers with a 680 and above middle credit score can obtain:
- With a USDA “Refer” credit approval level the maximum debt-to-income ratio can be as high as 31.99% for the housing expense and 43.99% for the total housing expense
- With a USDA “Accept” credit approval level the maximum debt-to-income ratio can be as high as 33.99% for the housing expense and 45.99% for the total housing expense
- A waiver on documenting the rent history, if not needed to meet USDA tradeline requirements
640 to 679. Borrowers with a 640 to 679 above middle credit score can obtain:
- With a USDA “Refer” credit approval level the maximum debt-to-income ratio can be as high as 28.99% for the housing expense and 40.99% for the total housing expense
- With a USDA “Accept” credit approval level the maximum debt-to-income ratio can be as high as 33.99% for the housing expense and 45.99% for the total housing expense
580 to 639. Borrowers with a 580 to 639 and below middle credit score can obtain:
- With a USDA “Refer” credit approval level the maximum debt-to-income ratio can be as high as 28.99% for the housing expense and 40.99% for the total housing expense
579 and below. Based on our investor guidelines borrowers with a 579 and lower credit score will not be eligible for USDA Loan financing.
To learn more about the Virginia USDA Guaranteed Loan program please call (866) 747-2882.