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


Take the FICO Fitness Challenge