topic Re: USDA vs FHA in Mortgage Loans

USDA vs FHA

jordanmedical — Mon, 28 May 2012 17:56:32 GMT

What is the difference in mortgage types? Are they the same qualifications, etc?

Re: USDA vs FHA

languedoctor — Tue, 29 May 2012 21:16:12 GMT

USDA has stricter criteria. You need to be purchasing in a USDA-eligible area, and your income has to be below a specific limit, according to the size of your family. See the rural development website for more. (rurdev.usda.gov)

In terms of qualifying credit scores, my mortgage broker explained it to me this way: There may be exceptions to minimum FICOs, but you want to avoid them if at all possible. It makes underwriting more difficult, and there's no guarantee of the mortgage going through. That said, you should be in good shape with:

620+ FHA (minimum 3.5% down payment)

640+ USDA* (no down payment, but a 2% guarantee fee that you can roll into principal)

660+ FHA 203(k), aka the home improvement mortgage. Borrow an amount based on house + repairs and finance renovations to a fixer-upper directly in mortgage. Also has 3.5% minimum down payment.

*This is for the usda guarantee mortgage (low-moderate income). There's also a usda direct mortgage program (w/ lower income limits). I don't qualify, so I didn't bother to learn much about it.

See also the stickied post by shane the mortgage man

Re: USDA vs FHA

tooleman694 — Wed, 30 May 2012 16:29:32 GMT

You can buy more house with USDA because their are no limits on how big the loan can be.

I ran into this, I cant go FHA because the home costs too much. But I earn just a tad under the income limits for USDA with my deductions.

If I had enough money down to get into the FHA limits I could go conventional. But I dont have enough down at the monent to go conventional lol.

Re: USDA vs FHA

Pesdaniel — Wed, 28 Nov 2012 12:08:04 GMT

Some credit specialists are saying that you can get a usda approved at 590, some are saying 620 and others 640. Who's telling the truth.

Let say I'm a first buyer buying a house for 220k, I'm making about 44k yearly with a score 590-592-631. Can I get approved?

Just tell me the way it is please.

Re: USDA vs FHA

Project17 — Thu, 29 Nov 2012 06:00:19 GMT

Keep in mind what lenders are telling for scores are usually the lenders min.. FHA for example is 580 with 3.5 % down and I believe even lower with more money down but most lenders won't go under 620 but a couple will so its not FHA or USDA..

Re: USDA vs FHA

hopefulKT — Thu, 29 Nov 2012 18:01:56 GMT

I'm going through USDA Guaranteed right now...it's much more difficult if you have below a 640.

Re: USDA vs FHA

Pesdaniel — Tue, 04 Dec 2012 14:56:30 GMT

Thanks now, in my situation, the house I want costs 220K. I have one card which I'm making payment on. I've never been late since I own this card but I've had a tons of collections in the past. My last late payment occurred 4 years ago. In my credit report only 2 collections are showing outstanding.

Brighthouse $312

Medical $368

both were assigned in 2008, do you think I should pay these two and forget about the rest.?

EX: 590

TU: 592

EQ: 631

One more thing, if i keep paying my only card and keep the balance as low as possible do you think in 4 months my credit score will reach 620 on EX and TU?

Re: USDA vs FHA

tooleman694 — Tue, 04 Dec 2012 15:27:11 GMT

I think you should get 2 more credits and not pay off the collections unless they will delete.

Re: USDA vs FHA

Pesdaniel — Tue, 04 Dec 2012 15:33:26 GMT

2 more credits? I'm not following

Re: USDA vs FHA

tooleman694 — Tue, 04 Dec 2012 16:01:18 GMT

Sorry typo, 2 more credit cards.

This will bring up your score the quickest. You need some tradelines reporting some good history to rebuild and get your scores moving.

After a good 6 months I think your score will move into the upper 600s, but only with the new credit cards.

Re: USDA vs FHA

jeffg330 — Tue, 04 Dec 2012 18:06:55 GMT

Even
tooleman694 wrote:
Sorry typo, 2 more credit cards.

This will bring up your score the quickest. You need some tradelines reporting some good history to rebuild and get your scores moving.

After a good 6 months I think your score will move into the upper 600s, but only with the new credit cards.

+1.

I would also recommend forgetting about trying to get approved with a 620 and waiI until you are over 640. my scores were real close to yours about 6 months ago and I was denied when I applied with a 629. From what I was told you need to be squeaky clean (no baddies) to get approved under 640 for USDA guaranteed.

Like toolman said though, you need one more CC minimum

Re: USDA vs FHA

Pesdaniel — Tue, 04 Dec 2012 18:34:11 GMT

Do I really need another card, if so does it have to be a store card like best buy, walmart, amazon or? I have a secured credit card, shouldn't it be enough?

Do you know how the score process is, like how many points for every move?

Re: USDA vs FHA

jeffg330 — Tue, 04 Dec 2012 20:08:17 GMT

One card might be enough, there's no set rules as to how many points your gonna get per crd ect... All I can tell you is that my score went up dramatically after I (reluctantly) opened my 2nd CC. With your scores you should get approvevenly an unsecured card. This sight is chock full of excellent advice on which to get. Make sure it reports to all 3 CRA (I unknowingly chose one that didn't report to EQ). A 3rd card might/might not help so much depending on AAOC. Do some research, all the answers are here already

again I'm no expert, just sharing my exp with similar credit profile

Re: USDA vs FHA

Pesdaniel — Tue, 04 Dec 2012 20:21:14 GMT

I agree and I appreciate your help. I'll do a bit of research and see which ones will do it