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advice wanted for USDA loans

Established Member

advice wanted for USDA loans

We are trying to up our fico's and clean up some baddies with the hopes of getting a home with a USDA loan. 


Can others that have used USDA share their experiences of good or bad with using USDA Direct or Guaranteed?  (And which program do you recommend, the direct or guaranteed?  We are considering direct, but have been told it is as slow as cold molasses to get through the process)


Our current ficos are 618 and 621 (up from 551 and 587 in March'12)


What minimum fico does USDA require?  And is it true that you can still have bad accounts showing as long as you owe nothing on them? 


The house we want is USDA eligible, and our income and last 2 year history qualifies us... we are working on (3-6 year old) 3 baddies and some lates..... 


Thanks for your input.

HuntingMama:  Dec 2012 = EQ scorewatch 649, TU myfico 649

HuntingPapa:  Dec 2012 = EQ scorewatch 625, TU myfico (Nov 2012) 604


Message 1 of 8
Valued Member

Re: advice wanted for USDA loans

Hi HuntingMama!


Well I am currently waiting on a response from USDA for our "Guaranteed Loan". We are in Central Florida. From our experience through a mortgage lender, even though USDA's websites states that a minimum required credit score is 620, it is best to get it at 640. Why? Because it would ease up on the questions regarding any derrogatory items on your credit report. Plus it helps with retaining a good interst rate. There are guidelines as to what to USDA requires to be qualified for their loans.


Now based on what I have read, "Direct Loans" are for low income families. It is based on income and you work directly with USDA as oppose to having a loan officer like we are currently doing. The "Guaranteed Loans" are for those with a little higher income, but of course there is a limit as to how much income the family brings in; in order to be qualified for the "Guaranteed Loans". What state are you in? I've noticed that not all the states have the same websites. Ohio for example, their website is a little uninformative and does not provide contact details. Ours for Florida is VERY informative and even provides email addresses and phone numbers to be able to make contact with them and check status on your loan application or on how to be able to apply directly with them for Direct Loans.


So far there has been issues with the turnaround time due to their office being understaffed and it has caused a lot of delays. For example, our file was submitted over to USDA on 10/9; however, based on their recording from this past Friday they are still reviewing files dated 10/1-10/5, so you see how delayed they are? I did find out from someone else via, that the USDA office out here will have temporary assistance beginning this Monday in the hopes of making the approval process faster, so that is great news for us in Florida waiting for our RD Commitment letter from them and hopefully be able to finally close on our homes!


Good luck to you! Where ever you are, search for a USDA RD website if you are not working with a loan officer. Hopefully you will find lots of information!! Smiley Happy



Message 2 of 8
Established Member

Re: advice wanted for USDA loans

Hi Emy,


Thanks for your reply.  As I was in the middle of reading your post, I got an email from Score Watch, and my fico just went to 642! 


We are in PA.  My main concern is our (DH's) credit and if it would stop us from getting approved.  (3 bad accounts from 3-4 years ago that still need paid.)  They are my main focus right now, selling anything I can get my hands on to settle it up.


The long delay would actually be in our favor.  Home we are interested in is empty, for sale to settle an estate.   We don't want to move before June 2013, because daughter finishes elementary school this year.  This house is in same district, but different elementary school.  The estimated mortgage for this house is HALF of what we currently pay for rent... Grrrr!



HuntingMama:  Dec 2012 = EQ scorewatch 649, TU myfico 649

HuntingPapa:  Dec 2012 = EQ scorewatch 625, TU myfico (Nov 2012) 604


Message 3 of 8
Established Member

Re: advice wanted for USDA loans

I'm in Ohio, and actually, our website does provide quite a bit of information, including contacts and regulations for both programs.  You do have to call one of the contacts to get the # for the status line, but it's no secret... it's 614.255.2571.  PA's site looks good too.  I'd encourage you to go to your state site and read all you can.


 Direct, like emy stated, is for low income households and there are rules and regulations that you have to follow.  For example, according to their guidelines, you are not supposed to be allowed to have a barn (or a pool) on the property.  I have read that sometimes you can get a waiver though, but I'm not sure how that works.


Guaranteed, which is what we have applied for, seems to take less time, but I really REALLY think it depends on how fast your LO can work (but I could be wrong).  So far, we have *kind-of-maybe* been told that our loan is out of underwriting, has been approved (no conditions) and that it went to the USDA.  Kind of maybe???  LOL I know it sounds weird, but our LO is making it seem like this is what has happened without actually DIRECTLY saying this is what is going on.  We were told that our app was on it's way to the USDA office about a week and a half ago (but not provided a date (after asking).  I do know that the appraisal came back last Wednesday (4 days ago).  And I spoke to a lady in our USDA office and she told me that the USDA has to have the appraisal w/ the app so either our app was submitted incomplete (I hope not... it delays the app) or it wasn't sent before Wednesday. 


Oh well, we aren't going to worry about it.  Just leaving it in God's hands.  Smiley Happy


As far as scores go.  It seems best, from what I've read, to have at least 640 (middle score).  Are you working with a free (click link if interested) CA to help with credit clean up?  If not,  I wouldn't do anything to try to up my credit scores before doing extensive research about what to do and what NOT to do.  If you make the wrong move (including paying certain things off that are on your credit) it could hurt you instead of help.  Closing accounts can also sometimes hurt you.  Just do some research (if you haven't already).


5-6 months could end up being plenty of time to clean up your credit.  One thing that our LO told us that can help up your score is to get a secured cc.  Do some research on that to find out how to use it to improve your score.


Lastly, your state also has a downpayment assistance program (click link if interested) so you could also possibly go FHA without actually having money for a downpayment. 

Hth's Smiley Happy


Message 4 of 8
New Member

Re: advice wanted for USDA loans

Hi! CONGRATS on your house!!! This is the most exciting, trying experience ever... You seem to know what you are doing, so I was just wondering if you could direct me to the phone number to call for the recorded updates about what dates they are working on. I'm in CF, outside Orlando. 

I don't know for sure if my loan was sent to USDA, I know it came back from the bank's underwriting with approval on the 20th. My LO seems pretty on the ball, so I'm hoping! Smiley Happy  Thanks in advance! Smiley Happy

Message 5 of 8
New Member

Re: advice wanted for USDA loans

Well, I happened to come across the number on one of your other posts, so I called and they are working on October something - November 6. Oh well! I'll keep waiting Smiley Happy
Message 6 of 8
New Visitor

Re: advice wanted for USDA loans

Hi PussnBoots. Have you closed on your home??

Message 7 of 8
New Visitor

Re: advice wanted for USDA loans

Hello HuntingMama,

I just went through the Guaranteed USDA process and here is what happened for us. We submitted our information to our loan officer and got pre-approved. My fiance used our credit card and it was required to be paid down and we had to do a rapid rescore because his mid score dropped below 640. They take the 3 scores and use your midscore, it'll have to be over 640 in most cases. I have heard them working with people with 620 scores but they scrutinize everything on your credit report. So his mid score was 664 and he had 3 items in collections. At first they wanted them paid in full before they would even consider offering the loan (underwriting) and then after the loan officer talked to the underwriter several times they had decided the collections were too old to cause a lein to go on the home. During this process it's important not to use credit cards or try to get any new lines of credit elsewhere, they check frequently to make sure nothing has changed. So we had to write letters of explanation about the collections accounts which included why they were not paid and what we would do in the future to make sure a new collection would not show up. Also, if you have any collections less than a year old they will not consider you for this kind of loan. I know lates are also an issue but it ultimately depends on the underwriter. So after everything was satisfied which took about a month and a half then the underwriter sent everything to the USDA where they did underwriting a second time. If you have a good underwriter the first time there should be no reason why the USDA will deny you. We literally had $2.00 in the bank and no savings and we were approved. Our process started in the beginning of November and we closed on our house January 1st. If you have any other questions please feel free to ask. I'm sure I've left things out.

Message 8 of 8