FHA vs USDA 502 direct loan

[Anonymous]

I am trying to decide between the two.  Ideally of course I would get a USDA direct loan, because its cheaper no down payment ect.  I will say it is hard to find homes that I like in my price range that I could afford so the advantage to the FDA loan is it doesn't have to be outside of the city limits.  They also should accept my credit (636 TU 04 score and 620 BEACON) if I pay off my judgement ( I am currently trying to get a pay for vacate).  The USDA wont accept me until both of my scores are 640 BUT won't require me to pay off the judgement or put anything down in cash.  If I pay the 3.5% AND pay off the judgement I'm not going to have much, if anything left in savings.  I really need to get out of the rental situation I am in, and either way am sure I could buy a house that is at least as cheap as what I am currently paying.  Any thoughts?

[Anonymous]

I should say I work for a bank (although in the service center so I don't personally know any of the mortgage brokers) and they will pay the closing costs on a FHA loan, but not a USDA loan.

[Scope27]

You may be mixing up USDA products. I think you're looking at the USDA Guaranteed loan. The direct loan goes directly to the local USDA office and credit scores can be as low as 580. Here is a direct link to the USDA Direct loan program... http://www.rurdev.usda.gov/HAD-Direct_Housing_Loans.html ...also make sure you check if your income is eligibile for the direct loan program. I was $500 over the limit and had to go Guaranteed which is through a bank and insured by the USDA.

Also if your house appraises high enough you can roll closing costs into the mortgage.

[Anonymous]

I am applying for the direct loan.  They are telling me that my score is too low and my mid score needs to be a 640.  Now I will say I have other negetive info on my report, so that may be why?  I am well under the limits for the direct loan, and my application was sent to the local USDA office.

[Scope27]

Ok. Thx for clearing that up. Do you have any credit cards with balances and is there anything showing on you utilization when you pulled your reports?

[Anonymous]

When they pulled it my utilization was at 2% I think?