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My USDA Direct 502 Loan Story

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
Frequent Contributor

My USDA Direct 502 Loan Story

A little over six months ago I had no car, no bank account, no savings, no budget, no credit history (except for a few baddies,) no credit cards, and no hope to ever own a home. I had become complacement and just resigned myself to the fact that this was how my life was forever going to be. I even let my drivers license expire for so long that when I went to replace it, I had to retake the written and driving test.

Once I found myFICO, my whole outlook changed. I spent time in the Credit Rebuilding boards the way people spend time on Facebook - a ton. I started with my getting my DL taken care of, then replacing my SS card. (Yes, I was that irresponsible.) Armed with the required papers and a few bucks in my pocket, I opened a checking account at my local credit union. I even opened savings account for my two children. It felt good to start "adulting." The next step was to aquire some sort of credit so I started with the Fingerhut Fresh Start Program, graduated, and six months later I have a $700 CL with Web Bank. No big deal to some of you, but HUGE for me. I also got the Discover Secured card thanks to this forum. It was the most highly recommended. I was on a roll, so a month later I got the Cap One Secured card and did the SCT trick for an Overstock card. I even opened a secured loan through my CU so I would have a good credit "mix."

I've been careful with my cards. Keeping my utilization low, paying on time, requesting the 30 day CLI's. My Overstock is up to $1850 CL. Again, that is HUGE for me. I'm hoping both my secured cards will graduate soon. I get offers from sub-prime cards like Credit One, Milestone, Merrick, and that Horizon Gold thing now, but I never app. I decided to just keep doing what I'm doing and let my new accounts age. I got early exclusion for one baddie, PFD'ed another, and only have one medical collection as my sole derog across all 3 reports. Feeling good about my credit health, I jumped over to the Mortgage boards to see what I could do to start prepping for a home loan.

It was here that I first learned about USDA Direct. In two days time, I read every single thing on the internet about it, including the entire 800 page handbook. Every thread, every persons documented experience and timeline - all of it. I learned what the income limits were for my area, the loan cap for my county, and found the property eligibility map. I studied the calculations for subsidies for so long that I had nightmares about algebra.

Since I finally had six months of credit under my belt and my FICO 8's were starting to generate, I decided to take a leap, purchase my 3B Reports, and just see what my Mortgage Scores were like. My TU came back at 658 and I almost fell out of my chair. My EX was 629 and it felt like a gut punch. Knowing a 640 middle mortgage score was I needed for a Direct Loan, I held my breath and checked EQ...

...IT WAS 641! Oh my God, I couldn't believe it!

My best friend and office mate sealed the deal for me. She had to sit through six months of my relentless credit talk. She was there when I checked my scores. She leaned forward across our desks, looked me in the eye and said, "I have no doubt in my mind that you will get this, Liz. You've worked so hard. I am proud of you." That was it. I picked up the phone, called my local office, and asked for an application. The gal on the other end asked me a few pre-qualification questions, said I was a good candidate, and emailed me the app.
My timeline follows:

Friday May 11th - received application
Wednesday May 16th - turned in application, all requested paperwork, and $25 money order for credit pull. One hour later, my TU was hit.
Thursday May 17th - got my FICO alert that was EX was also pulled.
Monday May 21st - got an email from my rep asking for LOE of short credit history. I wrote something up and sent it back that day
Tuesday May 22nd - My employer receives VoE, fills it out, scans it, and sends it back. Progress.
Wednesday May 23rd - Email from rep asking for 3 alternate credit sources with a 12 month history. I could only come up with Netflix and Centerpoint Energy (natural gas) - ugh, grasping at straws...
Thursday May 24th - Email from rep asking about car insurance. Had to sadly explain that I had been without a car for five years.
<enter holiday weekend>

Well, that's where we are 10 days in to this thing. I understand I am in for the long haul and will update this thread as updates happen. If you've stuck with me this far, maybe you'll stick around until (hopefully) closing. I have a realtor friend with no USDA Direct experience, but he has agreed to help me. He read up on everything and understands the struggles we will deal with. I am grateful to have him and I am grateful for the help and support y'all have given me thus far.
Onward and upward, my friends.

Frequent Contributor

Re: My USDA Direct 502 Loan Story

Congrats! You must feel so proud! Heck, I'm proud of you and I don't even know you. 🎉

Message 2 of 5
New Visitor

Re: My USDA Direct 502 Loan Story

Hi I'm in the process of preparing to apply for USDA Direct, I've read your story and find it aspiring and I commend you for moving forward. I would like to hear about the rest of your experience with USDA can you provide update.
Message 3 of 5
Frequent Contributor

Re: My USDA Direct 502 Loan Story

I finally heard from my processor today. After sending a "Good Morning" email checking on things, I received the reply that he was just waiting on my landlord to return the verification that had been sent out on the same day as my VoE. Ughhh! I wish I had known, I would have contacted my landlord immediately and asked him to fill it out. My landlord is a crotchety old man that recently had a stroke and is now wheel chair bound, so he doesn't get around to doing much. I phoned my landlord's wife and asked her to take care of it. She didn't know anything about it and asked if the form could be re-sent. Grrr...
It looks like once the form is received I can be scheduled for my interview. I don't know how long that will be, but I will continue to update my journey.

Thank you all for your support!

Message 4 of 5

Re: My USDA Direct 502 Loan Story

This is such an inspiring story.  I am really pulling for you missliz!!  

Message 5 of 5