USDA Home Loan Question

[Anonymous]

I want to buy a house with my husband. I have credit scores of EX: 665 TU: 657 EQ: 654 my husband has worse scores of EX: 635 TU: 587, EQ: 585. My husband does have 1 outstanding collection account, we can pay it off. But everything else is over 4 years old and is paid off. He has no late payments for the last 15 months. We want to get a USDA loan. Their website says the minimum credit score is 580, but we spoke with a mortgage broker that said that we need a 640 for USDA or FHA but Wells Fargo said the minimum is 600 for FHA. 

We are trying to get his score up and save the 3.5% down. But we are renting a house with a relative on a month to month(we each pay half of rent and utilities) and it is MISERABLE and we want to get out of there, but we also don't want to sign a year lease at an apartment if we could buy something within the next year. So I am just wondering if anyone has been approved for a USDA loan and what requirements you were given.  

[Anonymous]

Your scores are fine but your husband will need to write a letter of explaination LOE regarding the negative items on his credit report.  The letter should be geared towards the temporary event that led to the delinquency; and how it is not an issue any longer.  Be sure to stress that he has not had any neg issues in awhile.  What the usda is looking at is repayment ability and intent to repay debt. If you repay the collection account be sure to get something in writing stating they will delete once it is paid. One of the indicators of unacceptable credit is a collection account that has been paid within the last 12 months. You should go through the pre-approval process with the usda before actually applying.  If you apply and are denied, some offices make you waid six months to reapply.