USDA Direct Pre Application Questions

[maluba]

Just adding that current TU score is a 640 and we just paid down our CC so it should be even higher by the time we get ready to submit. 

[DanTheMan77]

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@maluba wrote:

What is the USDA's stance on debts? Is it the same as the FHA's guidelines discussed here? I would have called back and asked but they were closed today

I feel so overwhelmed by the process. 

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@maluba wrote:

One from Midland at slightly below $4000 and another from Asset Acceptance for less than $1500. These are about four years old. 

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I don't think you mean "debts". These are collection accounts. Unfortunately I can't answer your question, but maybe that will help others help you better. I believe that someone else mentioned in a post that if your mid-score is above 640 and the accounts are more than a year old, you won't need to pay them - but I'm not certain.

[ShanetheMortgageMan]

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@DanTheMan77 wrote:

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@maluba wrote:

What is the USDA's stance on debts? Is it the same as the FHA's guidelines discussed here? I would have called back and asked but they were closed today

I feel so overwhelmed by the process. 

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@maluba wrote:

One from Midland at slightly below $4000 and another from Asset Acceptance for less than $1500. These are about four years old. 

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I don't think you mean "debts". These are collection accounts. Unfortunately I can't answer your question, but maybe that will help others help you better. I believe that someone else mentioned in a post that if your mid-score is above 640 and the accounts are more than a year old, you won't need to pay them - but I'm not certain.

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Yeah I am not certain either, as the Direct program has different guidelines than Guaranteed version.  For Guaranteed the credit score tiers are 580 & below shouldn't have any owing collections, 581-679 can have them but supporting documentation is needed, and 680+ just an explanation is needed.  From your score it looks like worst case is you'd have to pay them, but I'd really recommend you get the straight answer from USDA.

[J_G]

That is correct the higher your score the more they will overlook and let slide. That is the same with FHA as well. I was denied a couple of weeks ago with a 606 middle score and was pre approved yesterday with a 630 middle score. There is a underwriting paragraph on the USDA website that goes into detail but it pretty much says if your score is under 620 you will have a hard time getting approved with collections, judgments, etc. Good luck