Qualifying for a USDA Mortgage with a Low Credit Score

You can get approved with a 620 score. To obtain an “easier” USDA approval, you are going to need a credit score of at least 640.

640 is the minimum credit score needed to obtain an approval through the USDA’s Government Underwriting System. This Government Underwriting System, also known as GUS, is an automated underwriting system that is the “gatekeeper” to obtaining a full USDA Approval. The GUS system is run by the USDA and lenders use this system to determine if a loan is deliverable to the USDA. Lenders do not want to take the time to process a loan application, perform all of the inspections, and tie up their staff with a file if they do not think the loan will ultimately be Guaranteed by the USDA.

The USDA refers to their Rural Development Loan as the USDA Guaranteed Mortgage because after the lender approves the loan through their underwriting process, the lender then sends the loan to the local USDA office for their Guarantee. This Guarantee means that the USDA has agreed to back up the loan. Without this Guarantee, the lender would be completely responsible for the loan in the case of foreclosure. Lenders will not close USDA loans that do not receive this Guarantee.

It is possible to get approved for credit scores between 620-639, but at scores of 620-639, the applicant must be able to document 12 months of clean housing payment history. This housing history must be documented with cancelled checks or proof of electronic payment. A simple "yeah, they're good" written by the landlord will not work.

USDA does allow for lower credit scores but not quite as low as some other programs, such as FHA. FHA approvals with a 3.5% down payment are possible with scores as low as 580.

If you would like to apply for the No Down Payment USDA Mortgage Program, we will need to show at least a 620 score. If you think your score is lower than 620 there are some ways that we may be able to help you get the score up by analyzing the credit and addressing any weak spots.

Learn more about the USDA Mortgage Credit Guidelines

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Keith Landis