STEP 3: USDA Mortgage Credit Guidelines


620 is the minimum credit score needed for the USDA Guaranteed Mortgage Program

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When obtaining a USDA Mortgage, there will a credit report pulled from the three credit burueas: Experian, Equifax, and TransUnion. Each of these bureaus will assigned you a credit score. The middle score of these three scores is what will be used for qualifying. For example, if you have a 658 score from Experian, a 649 score from Equifax, and a 655 score from TransUnion, then it is the 655 middle score that will be used for qualifying.

To qualify for a USDA Guaranteed Mortgage, you will need to have a middle score of at least 620. With a 620 credit score a borrower can possibly qualify for a USDA home loan provided they can document current housing history.  If they currently own a home this means having a clean 12 month mortgage payment history on the credit report.  If they are currently renting, this means documenting 12 months of timely rent payments with evidence of cancelled checks.  Just a verification from the landlord is not sufficient documentation. Borrowers with credit scores between 620 and 639 will also have to make sure they fit within debt ratios of 29/41, meaning that their new housing payment can not exceed 29% of the verified gross income and their total debts can not exceed 41% of the verified gross income.

Credit guidelines for USDA Mortgages with scores at or above 640 loosen up a bit more.  For credit scores of at least 640, verifying housing history not listed on the credit report (like rent) can be waived.  Credit scores at 640 or above can also allow a borrower to have minor collections overlooked and there is no need to verify any assets if the borrower is not bringing money to the closing table.  Debt ratios may be allowable up to 50% with a 640 score as long as the rest of the file is solid. The typical debt ratios of 29/41 can be exceeded if the file overall is strong. This exception is on a case by case basis and depends on the other strengths present in the file, such as employment history and credit history.

If you would like to see if your credit profile meets the requirements for the Pennsylvania USDA Mortgage Program feel free to contact us by phone: 717-745-8380 or email: USDA@keystonehomefinance.com to review.

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Minimum Credit Requirements to Qualify for a USDA Mortgage

  • 620 Credit Score

  • Borrowers without a credit score are not eligible.

  • At least 2 active credit accounts reporting to the credit bureau

  • Minimum 12 months of repayment history on at least one credit account

At this time, USDA Mortgage Credit Guidelines are more flexible than many other mortgage programs but there are some credit deficiencies that the USDA will not overlook no matter what the credit score. 

Credit Situations that will prevent a USDA Mortgage Approval

  • Late mortgage payments within the last year

  • Delinquencies on federal debt (IRS liens, student loans, Government mortgages such as VA, FHA, USDA)

  • Short sale within 3 years

  • Foreclosure within 3 years

  • Chapter 7 Bankruptcy within 3 years

  • Chapter 13 Bankruptcy completed and finished within the last year