FHA vs USDA

[Anonymous]

I live in a rural area, and my area is just now getting a USDA loans, first what are the major differences? Which one would you reccomend over the other? Also, this is months out that I would apply for. Currently rebuilding credit of mine, DH is just establishing his. But if we don't have trade lines of credit, me specifically for atleast a 12 month period, is loan approval still likely. Like say in 6 months if we were to begin the loan process and say had 6 months of payments on a credit card each, and car loan for him would that be suffient? We have been late on bills in the past, I have had electric in my name for 2 years now, and I have been late before. Not 30 days, not even late enough for a disconnect notice. Which is now a non issue, due to it automatically coming out of our bank account. DH also has been paying car insurance for a little over a year as well, which also gets taken out of the account automatically as well. Would 6 months of traditional credit lines be enough, a long 12 months of non traditional credit lines on each of us get us approval. The income is their. Credit Scores are improving. Like I stated, this is atleast 6 months out. I am just wanting to prepare myself in the long run. Could we use paying off financing early as well? We had got financing in the past for a couple of big purchase items in our home and are going to pay those off before, we apply. Could proof of early payment help those odds?

[Anonymous]

I think the reason your post hasn't gotten any replies yet is because you're asking such broad, basic questions, it'd take too long for us to explain. Here are some links to help get you familiar with both programs. Once you've read them both, you'll have the answers to many of these questions & you'll be better prepared for the red tape of applying for government-backed loans. Please feel free to come back & ask more specific questions as they arise after you've read these guides. =)

The Handbook 4000.1, FHA Single Family Housing Policy Handbook, goes into effect June 15, 2015.

There are multiple loans available from the USDA & the list of all handbooks is available here. The Direct loan, which is money borrowed directly from the USDA without an outside lender, is the HB-1-3550 DLOS Field Office Handbook. The Guaranteed Loan, which is a loan through an outside lender & backed by the USDA, is the HB-1-3555 SFH Guaranteed Loan Program Technical Handbook. My family qualifies (just barely!) for the Direct program, so we're going with that since it's zero-down & has no private mortgage insurance requirements. The FHA requires 3.5% down & requires private mortgage insurance, so you'll get slightly less house for your money.

Of course, it'd be wise to check the income eligibility guidelines first to make sure you don't make too much for the USDA programs.

Good luck to you & don't forget to search the forums here for tons of great information regarding all the programs mentioned above. =)