Will I qualify for a USDA guaranteed rural housing loan?

[clmiles1]

My husband & I have been renting for several years (8 years with current landlord) but want to purchase our 1st home.  I am trying to rebuild my credit.  My husband has been out of work and just recently got a job.  His credit score is probably less than mine and his income is very low as he is currently employed part time.  I want to know based on the information below if I would qualify for a USDA guaranteed loan and if I should add my husband as a co-applicant?  I don't know if he would hurt or help me with qualifying.  I found online a copy of the USDA underwriting guidelines for the guaranteed loan and I don't understand the streamlined underwriting criteria section.  It sounds to me that if I have a credit score of 620+, lenders don't have to take any action for derogatory items on my credit report.  Help!!!!!  Thanks!

Credit.   

My credit score is 633 (Experian).  Per my 6/4 Score Watch report, I have total of 22 accounts on my credit report (16 with negative indicators; 8 of the 16 are collection accounts currently reporting with a combined total of $4,358 past due).  The negatives (other than the collection accounts) are as of 4/09 and older.  The collection accounts are for department store cards from 2008 & older.  I also have 1 public record for a tax lien on a previous student loan.  The lien was satified in 8/08.

Income. 

My gross monthly income is $42,202 + ~$2,000 overtime pay + ~$2,000 bonus pay + $2,400 in child support.  My husband’s gross income is ~$15,000 (part time pay w/varying hours).

Source of income. 
Both my husband and my income are from employment.  I am salaried but receive overtime pay.  My husband is hourly and receives overtime pay.

Monthly debt payments. 
Car - $294 per month.
Secured credit card - $25 per month.

Student loans - currently in deferment; have about $9000 total balance in student loans.

All other bills are utility, cell phone & other living expenses.

Employment (for those who are employed). 

I am employed full time and have been with my company for 11 years.  My husband is employed part time and has been with his current employer for approximately 2 months.  He was unemployed for almost 2 years but during his unemployment, he went to truck driving school. 

Assets/Reserves. 
We have no savings.  I have approximately $25k in my 401k. 

Location. 

We are looking to purchase in Blythewood or Columbia, SC. 

Property. 
Single family home.  We are interested in both the rural & urban area. 

Value. 

 We are looking for a home in the $100k - $150k price range. 

Occupancy. 

Primary residence.

Transaction Type. 
Purchase. 

[ShanetheMortgageMan]

Thanks for providing all of those details.

Your debt to income ratio certainly looks fine even without your husband, and that is good because part-time income needs 2 years at the same job to qualify (unless it's seasonal in nature, and that is how your husband usually makes money, working various seasonal part-time jobs, but it doesn't really sound like it is).  Deferred student loans are always included in the debt ratio for USDA, no matter how long it is until the first payment.  I figure the payment probably wouldn't be more than $100/mo or so.

Lender will question why you have just a little checking/savings, where does your disposable income go each month, and if your new payment will be higher than what you are currently paying in rent, that may pose an issue.

Collections may or may not be an issue, with USDA it's not a requirement to really document things or pay them off once you have a 640 score (to get that "credit waiver" waived the score increased in September 2010), which is why a majority of lenders make their USDA minimum score a 640 since they really don't want to bother with the credit waiver documentation.  Still, scores lower than 640 are OK with some USDA lenders these days, but the collections may have to be dealt with.  I wonder what would happen to your scores if you paid your CC to $0, and let it report that way, I suspect you may get a nice bump... not sure if they'd reach 640, but it could.

Columbia, SC isn't an eligible area for USDA, but Blythewood is (the first town north of Columbia which is).