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Is USDA guaranteed approval for under 640 common or a stretch?

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New Contributor

Is USDA guaranteed approval for under 640 common or a stretch?

For a score hovering around 625... more than one risk layer (credit waiver for low score and payment shock - no previous housing pmts).  

 

I know there are "compensating factors" to consider - he's been at his job 8 years and has cash reserves. 

 

Technically yes, he could be approved but we're just wondering if it's really that common or if it's just a huge stretch?  LO thinks he should give it a shot.... just curious if anyone has opinions or similar experiences to share.

Message 1 of 5
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Contributor

Re: Is USDA guaranteed approval for under 640 common or a stretch?

I wasn't aware that this was even a possibilty.  Where did you hear of this waiver.  Please tell me more.  We've been deseprately trying to get my gf's score up so we can apply.

Message 2 of 5
New Contributor

Re: Is USDA guaranteed approval for under 640 common or a stretch?

Oh you gotta check out this document:  http://www.rurdev.usda.gov/SupportDocuments/CA-SFH-GRHUnderwritingGuide.pdf

 

GREAT info, all the details on what they will and won't accept.

 

They can submit a debt waiver (in case your DTI is over the 41%) and they can submit a credit waiver (explaining why they will give the loan even though credit scores are low).  I believe those are the 2 main things they can do to get USDA to approve an otherwise ineligible application.

 

I just wonder how common it is for lenders to do that. 

Message 3 of 5
Regular Contributor

Re: Is USDA guaranteed approval for under 640 common or a stretch?

Our lender required us to be at a 640, but it could be because USDA is a little less strict with a score abouve 640 I guess.


Starting Score: EQ: 540 TU: 606 EX: 605 (all from lender on 7/26/11)
Current Score: EQ: 601 TU: 648 EX: 642 (from lender on 8/4/11)
Closed on our home on 8/31/11!!!!
Goal Score: 620-650 to start

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Message 4 of 5
Contributor

Re: Is USDA guaranteed approval for under 640 common or a stretch?

You just made my day!  Read it and I think she will qualify now.  Thank you so much.  Now we can at least talk to a lender.  I didn't want to talk to anybody until we would actually qualify

Message 5 of 5