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USDA Guaranteed Loan (automated approval vs manual underwriting) in MICHIGAN

Valued Member

USDA Guaranteed Loan (automated approval vs manual underwriting) in MICHIGAN

Question, because im a bit confused by the verbiage on the USDA website regarding minimum credit scores... it says that a minimium 640 is needed for "automated/automatic" approval and those words tend to be used interchangably... does that mean that as long as the property, your income and DTI all check out you WILL be "automatically" approved with a min 640? that seems to good to be true??

4 REPLIES
Frequent Contributor

Re: USDA Guaranteed Loan (automated approval vs manual underwriting) in MICHIGAN


kmmiller1986 wrote:

Question, because im a bit confused by the verbiage on the USDA website regarding minimum credit scores... it says that a minimium 640 is needed for "automated/automatic" approval and those words tend to be used interchangably... does that mean that as long as the property, your income and DTI all check out you WILL be "automatically" approved with a min 640? that seems to good to be true??


It means its put through an automated system and the computer spits out an approval or not.  If your score is lower than 640 then it requires a MANUAL review.

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Message 2 of 5
Frequent Contributor

Re: USDA Guaranteed Loan (automated approval vs manual underwriting) in MICHIGAN


juniebrunner wrote:

kmmiller1986 wrote:

Question, because im a bit confused by the verbiage on the USDA website regarding minimum credit scores... it says that a minimium 640 is needed for "automated/automatic" approval and those words tend to be used interchangably... does that mean that as long as the property, your income and DTI all check out you WILL be "automatically" approved with a min 640? that seems to good to be true??


It means its put through an automated system and the computer spits out an approval or not.  If your score is lower than 640 then it requires a MANUAL review. I don't know if this has changed in the last month, but you can still get a USDA loan with a 620 credit score as long as GUS(Guaranteed Underwriting System) says approve/eligible.


kmmiller1986,

 

640 or better credit score is a lender overlay. A 620 - 679 credit score will allow you to utilize maximum ratios for USDA Guaranteed loan which is 29% for your housing ratio and 41% for your total debt to income ratio. If it's over those ratios. the lender has to be able to prove that you are qualified for the house you are purchasing and ask for a ratio waiver. The ratio waiver needs three factors to be approvable and a credit score of 680 or better is one of those factors. Does this answer your question?

Mortgage Loan Officer in Greater Chicago area plus 47 states.
Message 3 of 5
Valued Member

Re: USDA Guaranteed Loan (automated approval vs manual underwriting) in MICHIGAN

I believe that answers it. so i guess specifically what im asking is if income/dti/property price etc is all in line, than you are basically guaranteed that approval with a score of 640 (or 620, whichever is accurate) For instance, i have an income of just under $60k, find a property priced at $110 in a approved area and my only debt is roughly $10k in student loans, which are being paid on.. does that mean if i get my score to 620/640 im good as far as an approval? or would my actual credit history (past lates, collections, etc still come in to play?) My plan is to get a solid 12 mos of positive credit utilization and on time payments under my belt before seriously pursuing purchase. just curious as to how much past baddies (specifically late SL payments) may hinder the process? 

Thanks!

Message 4 of 5
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Frequent Contributor

Re: USDA Guaranteed Loan (automated approval vs manual underwriting) in MICHIGAN


kmmiller1986 wrote:

I believe that answers it. so i guess specifically what im asking is if income/dti/property price etc is all in line, than you are basically guaranteed that approval with a score of 640 (or 620, whichever is accurate) For instance, i have an income of just under $60k, find a property priced at $110 in a approved area and my only debt is roughly $10k in student loans, which are being paid on.. does that mean if i get my score to 620/640 im good as far as an approval? or would my actual credit history (past lates, collections, etc still come in to play?) My plan is to get a solid 12 mos of positive credit utilization and on time payments under my belt before seriously pursuing purchase. just curious as to how much past baddies (specifically late SL payments) may hinder the process? 

Thanks!


Credit history has always a play in those. If there's an amount showing for collections on your credit report, we use 5% of the amount as payment and count it against your total debt to income.

Mortgage Loan Officer in Greater Chicago area plus 47 states.
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