USDA denied us :(

[Anonymous]

So.. I sent in my paperwork on the 20th of August.. and got the official word back this week- OCT 15th!! Man that took a long time and I was REALLY hopeful that everything was going to be fine. I called the office every 2.5 weeks... with updates.. ( do you need anything, what is the next step..etc)  We applied for the Direct loan directly through the RHA office and they made no mention on the phone of any hiccups that they were seeing. My husband Credit score is 725 and he is self employed. We don't have any overdue  balances, and we currently rent with a good rent history. The letter stated that we have " lack of repayment ability". Since the intial send in of paperwork- we have paid off my car in full.  Should I call the office back and update them with our current information and hope that they reconsider?? I don't know what to do from here... is the Guaranteed loan going to give us the same decision?

UGH!

Michele

[Anonymous]

was your credit low?  If you had bad credit/repayment history that is more than enough to kill the loan regardless of hubby's credit

Other possibility was that lack of repayment ability means DTI too high which is common with self employed because they count adjusted income, not revenue.  So if there were alot of writeoffs that hurts your income/DTI/file.  Also, if there has been fluctuating income (especially on s/e or 1099 income) they will average the last couple years so if income was low in 2008, OK in 2009, and better so far for 2010 (which is pretty common right now due to the economy), you will get a lower averaged income.

Your LO should be able to give you a bit more info, but I doubt switching programs will help.  I am not a USDA expert (or a mortgage expert to any degree), but I think the main thing the different programs address are income restrictions and such.  I doubt that the actual underwriting standards for repayment history are going to be any less.