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USDA Guaranteed loan

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USDA Guaranteed loan

I'm needing a little advice on a USDA Guaranteed Loan.  My SO and I recently met with a mortgage broker in our area (Cape Cod, MA) and were advised that we should do a little work to our credit.  I, unfortunately, have a $1800 charge-off on my report from 2016 following CH7 BK discharge in 2014 (I know, I know.)  I was advised that we won't know whether this will need to be paid off unless both of our scores are over 640.  So, my middle mortgage score at the time of our meeting was a 629, SO at 638.  Since then, SO is at a 649 and I am at a 639.  We were advised to get limit increases on any and all credit cards to help boost our scores.  I was able to increase one of my cards by $1700 which helped a little.  We also took what we had in savings and paid down 2 credit cards with higher balances to decrease our utilization.  So we've successfully raised our scores around 10 points in just over a month.

 

Anyways, a house that we really like just hit the market.  It's everything that we are looking for...location, price, size.  I'm thinking of contacting the broker again to see if there is anything that can be done.  I've read a bit about manual underwriting but he hasn't really suggested that option.  I'm looking for any insight on whether it seems possible with our current scores and my charge-off after BK.  I've read the guidelines but I'm hoping to hear from someone who has gone through it!  Thank you :-)

Message 1 of 8
7 REPLIES 7
Established Contributor

Re: USDA Guaranteed loan

Definitely check with a trusted lender in your area that has experience with the USDA Guaranteed Loan program.

 

This isn't the best time of year though because the USDA typically closes the books on fiscal 2019 and needs Congress to pass the budget in order to begin funding loans for FY 2020.   Not saying there's any reason to think Congress won't agree on a budget this year because they're all working so well together,  (:rolleyes and :sarcasm) but just check with your trusted lender.   

 

Some lenders don't stop funding during this time period and some do---you don't want to be "stuck" where you can't close until Congress appropriates funds for the FY 2020. 

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 2 of 8
Established Contributor

Re: USDA Guaranteed loan

I suggest you find a new lender. For example,  my company doesn't require that any charged off account be paid off. In addition we go down to 580 on USDA RDL's which are Manual Underwritten loan files. I strongly suggest that look around for another lender.

 

Best of luck to you

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
Message 3 of 8
New Member

Re: USDA Guaranteed loan

What state is your mortgage lending company? I’m looking in to USDA loan direct and guarantee in the state of Georgia and need an experienced lender to help me as well
Message 4 of 8
Member

Re: USDA Guaranteed loan

I too am looking for a USDA guaranteed loan in GA, let me know if you find a trusted lender 

Message 5 of 8
Valued Contributor

Re: USDA Guaranteed loan


@pa_pooshi wrote:
What state is your mortgage lending company? I’m looking in to USDA loan direct and guarantee in the state of Georgia and need an experienced lender to help me as well

A mortgage lender will not be able to help you with a USDA direct loan outside of pointing you to the local USDA office.

For the USDA guaranteed loan, I can do them in all 50 states & I have a lot of experience with them.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 6 of 8
Valued Contributor

Re: USDA Guaranteed loan


@capewaves114 wrote:

I'm needing a little advice on a USDA Guaranteed Loan.  My SO and I recently met with a mortgage broker in our area (Cape Cod, MA) and were advised that we should do a little work to our credit.  I, unfortunately, have a $1800 charge-off on my report from 2016 following CH7 BK discharge in 2014 (I know, I know.)  I was advised that we won't know whether this will need to be paid off unless both of our scores are over 640.  So, my middle mortgage score at the time of our meeting was a 629, SO at 638.  Since then, SO is at a 649 and I am at a 639.  We were advised to get limit increases on any and all credit cards to help boost our scores.  I was able to increase one of my cards by $1700 which helped a little.  We also took what we had in savings and paid down 2 credit cards with higher balances to decrease our utilization.  So we've successfully raised our scores around 10 points in just over a month.

 

Anyways, a house that we really like just hit the market.  It's everything that we are looking for...location, price, size.  I'm thinking of contacting the broker again to see if there is anything that can be done.  I've read a bit about manual underwriting but he hasn't really suggested that option.  I'm looking for any insight on whether it seems possible with our current scores and my charge-off after BK.  I've read the guidelines but I'm hoping to hear from someone who has gone through it!  Thank you :-)


Hi Capewaves114,

Did your broker tell you why they wanted you to get your scores up to 640?

The USDA automated underwriting system (GUS) will not approve a loan with a score under 640 which means it has to be manually underwritten. A lot of lenders will not do manual underwrites on USDA so they set their minimum credit score requirement to 640 or better.

 

This brings up the main issue in my opinion.

If your file has to be manually underwritten, it's than likely going to get denied because you had a charge off after a bankruptcy.

Unfortunately most underwriters deem any derogatory hits after a bk as a huge red flag. They may overlook it if you have a really strong letter of explanation.

There are 2 possible options.

1) Try to get an approval through GUS.

2) Have an underwriter review your file upfront to see if they think it will fly as a manual.

 

The down side to working with a broker is #2 is pretty much impossible but it's something I do all the time.

 

 

 

 

 

 

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 7 of 8

Re: USDA Guaranteed loan

I'm working with American Financial Network here in GA on a GL and it's going smoothly right now. The 'approved lender' list avaliable on the USDA website is not accurate at all - a good number of banks actually offer the program.

Message 8 of 8
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