No Money Down Home Loan- USDA Rural Housing

Recently I have been writing a lot about the USDA Rural Housing Loan aka “No Money Down Home Loan” and wanted to take some time to go over some factors that are considered when we receive an application from a customer. The No Money Down Home Loan (USDA) is not as well-known as some of the other mortgage programs that are available today. I’d like to go over 3 things that an underwriter will be looking for when they review the loan application.

1) Credit

Credit is number 1 on the list and would be considered the most important aspect when determining if your loan is approved. This is something that you do have control over. USDA has the lowest ratio of defaulted loans so they do a great job in lending to qualified customers. We can break credit down into 3 categories:

1) Good ( 640 fico score and above )

2) Bad ( less then 640 middle fico score )

3) Thin ( no credit  history with out a score )

Within  the last month the No Money Down Home Loan has increased their minimum fico score to 640. If you are in need of assistance of getting to that point, please contact me directly for help. I can go into further detail of how we can get you there at  that point. It is important to review your report for accuracy with a experienced mortgage professional s some good advice may be all you need to get the needed points.

Collections and bankruptcies are issues that can cause some issues with getting approved. Depending on the age and the size of the collection will be a factor in if the collection needs to be paid off or not. Each lender will have their own requirements when deciding if they need to be paid off or not. This is also the same with bankruptcies. Most lenders now require the bankruptcy be discharged for 3 years before you can be considered for a No Money Down Home Loan.

2) Credit History

In today’s market most Lenders will require a credit history to have:

  • 3 trade lines ( credit cards, auto, etc. )
  • 12 month active history for each of those 3 trade lines

Here it is important to note that the 3 trade lines do not currently need to open or even active. This requirement helps to assure that the credit scores are indeed accurate

You’re thinking to yourself…What if I do not have a Credit History

There are many Americans with a “thin’ credit profile. Our No Money Down program does allow you to build an alternative credit profile.

What qualifies as Alternative Credit??

  • Local Stores ( department stores, furniture, etc. )
  • Utilities ( water, gas, cable, phone, etc )
  • Rent and Housing payments
  • Increasing consistent deposits to a savings account
  • Insurance ( medical, auto, life, renters, etc. )

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