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Established Contributor
jordanmedical
Posts: 1,011
Registered: ‎04-08-2012

USDA vs FHA

What is the difference in mortgage types? Are they the same qualifications, etc?
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Starting Score: 492-TU04, 480-EX FICO V2, 467-EQ Beacon 5 (Via Mortgage PreQual March '12)
Current Score: EX,EQ,TU (lender pull): 652, 659, 689, Walmart TU FICO: 691 (05/13)
Goal Score: 700

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Valued Member
languedoctor
Posts: 41
Registered: ‎04-23-2012

Re: USDA vs FHA

[ Edited ]

USDA has stricter criteria. You need to be purchasing in a USDA-eligible area, and your income has to be below a specific limit, according to the size of your family. See the rural development website for more. (rurdev.usda.gov)

 

In terms of qualifying credit scores, my mortgage broker explained it to me this way: There may be exceptions to minimum FICOs, but you want to avoid them if at all possible. It makes underwriting more difficult, and there's no guarantee of the mortgage going through. That said, you should be in good shape with:

 

620+ FHA (minimum 3.5% down payment)

640+ USDA* (no down payment, but a 2% guarantee fee that you can roll into principal)

660+ FHA 203(k), aka the home improvement mortgage. Borrow an amount based on house + repairs and finance renovations to a fixer-upper directly in mortgage. Also has 3.5% minimum down payment.

 

*This is for the usda guarantee mortgage (low-moderate income). There's also a usda direct mortgage program (w/ lower income limits). I don't qualify, so I didn't bother to learn much about it.

 

See also the stickied post by shane the mortgage man


Starting Score (4/2012): 593 EQ
Current Score (6/2012): 666 EQ, 661 TU04, 688 EX
Goal Score: 750


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Valued Contributor
tooleman694
Posts: 2,296
Registered: ‎08-25-2011

Re: USDA vs FHA

You can buy more house with USDA because their are no limits on how big the loan can be.

 

I ran into this, I cant go FHA because the home costs too much. But I earn just a tad under the income limits for USDA with my deductions.

 

If I had enough money down to get into the FHA limits I could go conventional. But I dont have enough down at the monent to go conventional lol.

Established Member
Pesdaniel
Posts: 12
Registered: ‎10-12-2012

Re: USDA vs FHA

Some credit specialists are saying that you can get a usda approved at 590, some are saying 620 and others 640. Who's telling the truth. 

Let say I'm a first buyer buying a house for 220k, I'm making about 44k yearly with a score 590-592-631. Can I get approved? 

 

Just tell me the way it is please. 

New Contributor
Project17
Posts: 137
Registered: ‎11-21-2012

Re: USDA vs FHA

Keep in mind what lenders are telling for scores are usually the lenders min.. FHA for example is 580 with 3.5 % down and I believe even lower with more money down but most lenders won't go under 620 but a couple will so its not FHA or USDA..

New Contributor
hopefulKT
Posts: 74
Registered: ‎06-11-2012

Re: USDA vs FHA

I'm going through USDA Guaranteed right now...it's much more difficult if you have below a 640.

Starting Score: EQ 559 (June12)
TU 651 (spouse) (June12)
November12 score (Equifax myfico):
Me: 646
Spouse: 691
Getting ready to close on our first home :smileyhappy:
Established Member
Pesdaniel
Posts: 12
Registered: ‎10-12-2012

Re: USDA vs FHA

Thanks now, in my situation, the house I want costs 220K. I have one card which I'm making payment on. I've never been late since I own this card but I've had a tons of collections in the past. My last late payment occurred 4 years ago. In my credit report only 2 collections are showing outstanding. 

Brighthouse $312

Medical $368

both were assigned in 2008, do you think I should pay these two and forget about the rest.?

 

EX: 590

TU: 592

EQ: 631

One more thing, if i keep paying my only card and keep the balance as low as possible do you think in 4 months my credit score will reach 620 on EX and TU?

Valued Contributor
tooleman694
Posts: 2,296
Registered: ‎08-25-2011

Re: USDA vs FHA

I think you should get 2 more credits and not pay off the collections unless they will delete.

Established Member
Pesdaniel
Posts: 12
Registered: ‎10-12-2012

Re: USDA vs FHA

2 more credits? I'm not following

Valued Contributor
tooleman694
Posts: 2,296
Registered: ‎08-25-2011

Re: USDA vs FHA

Sorry typo, 2 more credit cards.

 

This will bring up your score the quickest. You need some tradelines reporting some good history to rebuild and get your scores moving.

 

After a good 6 months I think your score will move into the upper 600s, but only with the new credit cards.


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