Discovering the Incredible Advantages of USDA Home Loans

by on May 21, 2012Tim Houghten

No, USDA home loans aren’t for those who need to stock up their fridges with some extra beef or restricted to those who have decided to start their own organic farms.

So what are USDA home loans for, and how are they one of several great low down payment options available for low-income Americans?

USDA Home Loans the New Subprime Mortgage Option?

usda home loansWhile the USDA Rural Development Department offers a direct mortgage loan, they also offer a guaranteed loan, backed by the U.S. government, similar to FHA or VA loans.

Originally designed to help rural Americans realize the dream of homeownership, these mortgages can also be used to finance a wide array of properties from single-family homes to multifamily properties and even businesses. Plus, the USDA also provides grants for various development projects.

A USDA loan can be used to purchase, refinance, renovate, repair or even relocate a home. What many don’t realize is that these guaranteed loans offer 100 percent financing to income-qualified individuals, making them as close as you can get to a subprime loan, only with a safe, low fixed interest rate and payments! Be aware, however, that the USDA only guarantees 90 percent of the loan.

Why a USDA Home Loan Should be Your First Choice

There are many advantages to choosing a USDA backed mortgage.

One hundred percent financing makes these loans among the most desirable of loan programs still in existence. The only other programs out there that offer this today are VA loans and transactional funding for those flipping houses.

Even better than just no down payment, going this route means the possibility of rolling in closing costs or use grants and gift funds, something most other programs won’t allow borrowers to do.

Want more? You may even qualify using “non-traditional” credit and you don’t have to have amazing credit to get approved either. You should have at least a 620 to 640 credit score, but you may be able to use credit references like cell phone, insurance and utility bills to build out your credit if you don’t have very much of it.

Plus, USDA direct home loan interest rates are some of the best around and often better than conventional mortgage rates. The rates on guaranteed loans are determined by the individual lender.

The Perfect Loan to Address Current Trends

USDA-backed home loans are really designed to assist lower income borrowers, though who hasn’t found times a little more challenging lately? Well, unless you are Mark Zuckerberg, you have a gazillion shares of Google, or are next in line for promotion at Apple, you may have a good shot at getting approved. These incredibly attractive financing options are also ideal for those who want to take advantage of cheap land prices, buy foreclosures, fix up the home of their dreams or just move a little ways out of the city and grab a few acres for raising the kids with more room in a safer environment.

Who Doesn’t Stand a Chance of Getting a Loan Like This?

Of course, there are a couple of catches to getting a loan like this:

  • Income eligibility is capped at 115 percent of your median area income. To check your eligibility, use the income eligibility calculator at the USDA website.
  • These are strictly 30-year fixed rate loans.
  • You must be able to qualify with maximum debt-to-income ratios of 29/41. To determine if you qualify, add the loan principle, taxes, insurance and interest and divide the sum by your gross monthly income. If this calculates to 29 percent or lower, you qualify. Additionally, your total debt, divided by your gross monthly income must be equal to or less than 41 percent.
  • You must be at least two years out of a bankruptcy discharge and be “credit worthy.”
  • The property must be in an approved rural area.
  • You cannot own another home within commuting distance of the home you wish to purchase.

Comparing USDA Mortgages to Other Common Options

Unless you want to put down a lot of money on a home, USDA beats out conventional financing and even requires less money out of pocket than FHA.

You’ve got cash? Well, think again. There are still tax advantages to taking out a mortgage. Plus, you never know when the thing is going to get blown down and your insurance company is nowhere to be found. You’ll want that extra cash in your pocket then. Just don’t stash it under your mattress or exceed FDIC insured limits in any one banking institution. Who knows who is next to go under, and you may not even get as much as a Bernie Madoff victim if your bank tanks.

USDA may also be a great option for military veterans who have burnt their VA loan eligibility options, and it will be a lot safer taking out an institutional loan than gambling on shady seller financing.

So Where’s the Beef?

With 100 percent financing and easy qualifying, asking about USDA home loans is smart. Make sure you spread the word, too, because there are many others out there who are desperate to buy homes or refinance who don’t know that USDA loans even exist. Your tax dollars go to guarantee these programs, so isn’t it about time you got something back?

Low down payment mortgage loan programs for homebuyers

{ 214 comments… read them below or add one }

jordan February 15, 2015 at 12:14 am

My husband and I recently started the process of buying a home. We have amazing credit, steady jobs and the main home we fell in love with is definitely within the eligibility area for a USDA guaranteed rural housing loan. We’ve already been told by Wells Fargo that we can get a substantial loan from them to buy a home, but my boss suggested I check into the USDA loans to make sure we don’t have to worry about losing our home. All this is still really new to me and I’m just not sure what would be best for us. We don’t make a great deal of money, but our bills are always paid no matter what. I’m just a little lost lol.


brenda davenport January 30, 2015 at 7:32 pm

update, I have been sitting and waiting for over 2 weeks for an approval letter from usda in nc. I had my app. and all my paper work done thru a nonprofit. I turned in every piece of info. they requested. And I have been told not once but 3 times that my application had been turned in . I find out today thru persistence that my application was still sitting on the desk 0f the supervisor. I was furious , I picked up my packet and drove one hour and a half to the usda service center myself and turned it in. BEWARE OF WHO YOU DO BUSINESS WITH. I know they make $750. per loan they close. so I am shocked. Also I was called privately by anj employee who was upset about the way I was handled. Just Beware


Kelly January 29, 2015 at 7:41 am

I would like to know how long we have to stay in this house before we can sell it to move closer to family. We have a USDA Guaranteed loan in NJ. Thank you!


Susan Rogers January 24, 2015 at 2:02 pm

When I was a single mom, August of 2006 I purchased a home through usda, rural development, I then got married July 2008, the mortgage has always just been in my name alone, and I am the only one on the title as well. I am on full time disability, my husband is employed full time, they are re calculating the monthly payment , I have been paying only $712.00, now since my husband makes more money and has moved back in they are taking his income into account, so our payment is probably going to be around $1,200 , and I have $13,000 in subsidary on this loan, the principal balance is $147,000 however the house would probably only appraise at $130-$140, and I have 6.25% interest rate, my question is, can I sell this house to my husband? Usda people told me if I sell it and house does not appraise for what I owe on it then I would not owe the $13,000 subsidary amount it would be forgiven. So can I sell this house to my husband, and he can get a va loan and buy it from me?


Tasha February 4, 2015 at 11:32 am

I am also looking into the USDA loan but can I ask a crazy question. Do you have to report occupants of the home. How did they know you were now married?


Wendy January 18, 2015 at 9:06 pm

BEWARE!!!! I purchased my home in 2006 with a USDA direct loan. I am now stuck in this house for the rest of my life as the value is half what it was then and the USDA does not allow you to rent the house. I owe $40k in subsidy and because I went back to work recently we make too much money to ever get that amount waived. My payment has doubled and I now have 3 kids in 2 rooms the size of small offices. Do not buy a home with this type of loan cuz you will never truly own the home. You will always have extra debt on the house and you CANNOT walk away from these loans. My contract states that I expressly waive any state benefits (meaning they will use the federal laws to come after me for the deficiency in a foreclosure sale). They can garnish wages and take your tax refunds. PLEASE LISTEN TO THIS WARNING AND GET A REGULAR HOME LOAN OR JUST RENT!!!!!


brenda davenport January 16, 2015 at 5:05 pm

I just turned in my packet thru a nonprofit organization, what steps should I take now, do I need to find a lender or will usda do this for me? Also the lady said that I should know something in 2 weeks. I live in nc. thank you


Rachel January 8, 2015 at 10:01 am

Has anyone had a good experience with USDA loan. Im just starting the process and all these comments are a little scary.


DLFisher January 1, 2015 at 1:42 pm

Be aware that the USDA is brutal on foreclosure situations. They can garnish 15% of your Social Security income for any remaining debt after a foreclosure. They can also take your tax returns. The only way to get out of owing the money is to file bankruptcy. Period. So, consider it long and hard before you choose this loan.

Plus, in the past, the USDA did not charge PMI but now they do in order to finance the program. And, you cannot ever get this PMI charge waived no matter how long you own the home. It is .4 percent of the balance of the loan and is adjusted annually.

Also, it is questionable whether or not you can ever rent this property. The statement that I signed said that I must occupy for 12 months but does not state any further about the subject.


Peter Mehegan December 22, 2014 at 10:00 am

There is a lie that is not being addressed. We’ve had a USDA mortgage since 1990. The interest rate at that time was nine percent, which has been subsidized to make our net interest negligible…Now comes the time we desire to pay off the loan. The subsidy recovery is now one and one half times the value of the house. In other words, we owe more now than when we borrowed. Through the years, I wondered why the Feds didn’t take steps to refinance the loan for the interest’s sake…to save everyone money.

Now I know. That’s not their intent.

Homeowner beware…if you think you’re buying a house with this loan, you’re not! You’re giving benefiting the Real Estate agent, the Feds and the banks who love the high interest the Feds procured for them.

Get a loan any other way than through the USDA.


Liz October 30, 2014 at 9:12 pm

I recently found my dream home within USDA guidelines. First time homebuyer. Credit/income/history where it should be for a USDA loan but the broker dropped the ball and stopped communication when he said he couldn’t get the DTI ratio to work. My debt is low, car payment and $700 left of my student loans. Credit cards carry 0 balance. Should I pay off my student loan and call another broker? We’ve been looking at houses for three years before we even found one we liked in our budget. I don’t want to miss out on this opportunity but I’m feeling pretty frustrated! Any suggestions? Thanks!


Mary October 14, 2014 at 12:08 pm

I just purchased a house in Arkansas through an RD loan in February. I now have to relocate to Washington state for work. What are my options with this house?


DeeDee September 23, 2014 at 6:44 am

I have lived in my usda home for 8 years. I am getting ready to sell my home and I am very confused about the subsidy recapture fee. I am afraid to list it due to the fact I may have to pay back 30.000 in subsidy assistance. The service representatives that I have spoken with have been very little help. Please any information us greatly appreciated.


Kim dukes January 27, 2015 at 12:36 pm

Hi I just read yr comment on the USA LOAN. I am in the exact boat as you. I’ve had my house for 10 years and would like to move out of state. I owe $30,000 in subsidy. I paid $96,000 for the house and still owe $86,000. Is there anything I can do or am I stuck here forever? I have a sitting job but my patient is very ill and it looks as if I will be out of a job soon as well. ….feeling hopeless. Any advice would be great.


Tyler August 20, 2014 at 4:50 am

I have lived in my home for little over 2 years in missouri. It is a RHS Loan. We recently found out that that my wifes grandpa has been put in a nursing home and asked us if we would like to live in his farm house and take care of it for how ever long. So my question is am I allowed to rent my house out? Just enough to make the mortgage payment?


Leeanna August 2, 2014 at 8:11 pm

My mother and I have been living in our USDA home for 10 years now and I have recently had 2 children. My mother will be 61 this year and my children are both toddlers, our house currently has stairs and we want to try and move. Any idea how we would go about doing that? We do not make enough money to pay for a house ourselves so we would still need help from the USDA but we are unsure if they would allow us to move to another location if we still qualify for a loan.

Would we have to sell the current house we are living in, or would they just take it back and let us relocate?


Marvel swain July 26, 2014 at 10:34 pm

I am considering the purchase of a USDA guaranteed loan. In the event of a reduction in salary, can a guaranteed loan be refinanced to a direct loan? Also, Is one’s direct loan mortgage payments affected if there is an increase in saalary. Please explain the guidelines. Thank you,


Tara June 29, 2014 at 5:29 pm

If I have a usda loan and have lived in my house for 3 years am I able to rent it to a family member?


Lyle June 16, 2014 at 1:36 pm

Great information. Lucky me I found your blog by chance (stumbleupon).

I’ve book marked it for later!


Irma June 5, 2014 at 3:50 am

If I was approve for a direct loan to build I’m in the process of turning everything in to usda but I got a raise at work will that affect my approval? Worried ? Will at closing be denied! Because of the income decrease ? Confused


Irma June 5, 2014 at 3:51 am

I meant income increase not decrease.


KO June 4, 2014 at 9:02 pm

I currently have a USDA Section 502 loan which I just got 5 years ago. It’s the one where it subsidizes part of my mortgage. Live in CT. I need several $1000s of work done on it. Needs to to be leveled & would like to have a regular roof put on it, because currently it is a flat top and is causing damage to the corner of the home. The house is over 135 years old. I thought I read somewhere that they will help me if there are repairs that need to be done with the home to keep it in safe conditions. Is this true? Also does any money spent for major repairs on the home go towards the recapture fees, meaning less I would need to pay back in the end?

One other question; Can I rent out a room and consider this as income while I still live in the home?

I had really hoped to maybe refinance & change this to a 15 year mortgage by having a roommate. But after hearing the quote I got on the repairs needed, unsure what I am going to be able to do. Don’t want to have a mortgage when I’m 70. My head is in a bit of a tail spin, because I know at this point I’m not going to be able to sell it for what I owe on it.


Robin July 21, 2014 at 5:46 pm

They have a Section 504 Home Repair Loan. You can borrow up to $20,000 for 20 years at 1 percent interest. You can also get a home repair loan through your local housing authority for up to $25,000. Many of these are no interest at all and do not have to be paid back until you sell or when you die. Much better deal.
USDA will credit you for the cost of improvements made to the home when they recapture subsidy. This does not include costs for repairs, just if you do things that make the house nicer and worth more.
No, you cannot rent out a room. If you rent a room they will stop your subsidy.


Kate May 23, 2014 at 6:41 am

I currently have an FHA loan on which my father-in-law is the co-borrower. Given his advancing age, we want to take him off the mortgage and put my husband on. We have negative equity and now have a failing septic system. We are well within the income guidelines of USDA, but you can’t convert FHA to USDA on a refinance. Can I “sell” the house to my husband so he can get a USDA loan as a purchase? I don’t know what other options I have. We don’t have the $20k to get our septic fixed with the current mortgage payment we have.


Chris May 16, 2014 at 4:45 pm

I have 700 credit score and no collections,however I have a judgement that I am about to pay off. I have no credit card debt a good stable job. And a year and half of perfect credit reporting. How afterthe judjudgment is satisfied will I have to wait to qualify?


Relocating May 3, 2014 at 8:46 pm

I don’t have the 20% down to elongate PMI and go with Conventional. The home is located in a USDA approved. How long before I can refinance a USDA to conventional and eliminate PMI based on 20% equity value from appraisal?


Shawn June 3, 2014 at 7:05 am

I am working on a USDA purchase/loan right now. I am already approved for an FHA. The best part of the USDA vs FHA, is that USDA doesn’t have PMI. So, it save about $130-160 per month of Mortgage Insurance.

So, if I understand your question correctly, I’d say that the USDA would be much like the conventional loan you’d be seeking since their is no PMI. I’d say just get and stick with a USDA loan?? Just my best opinion to your question and believe it to be factual…


Nick Kermes April 26, 2014 at 7:59 pm

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Samantha Kershaw April 26, 2014 at 7:34 pm

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Nandan April 16, 2014 at 7:05 pm

I have the opportunity to purchase my stepfather’s property from his beneficiaries (I am not one), but they want cash out and I can’t do that. My credit score is in the low 600′s because of a bad relationship and taking care of my ailing mother before she and stepdad passed (I was not working a paying job at this time, but am working now). I’d contacted the USDA after finding out that they do rural loans for low income, but was told that they don’t do loans for properties with existing mobile homes because they are considered used, but will loan for stick built homes and for bare land which will have a brand new mobile home put on it. Is there any other way to accomplish a rural property loan while being low income with the existing mobile or is it beyond hope?


John Santose March 31, 2014 at 2:39 pm

My wife and I want to use USDA in AZ. We made 100,500 last year and less the year before. As far as having five people. It’s me, her, my 21 yr old daughter who doesn’t work, my 16 year old daughter who is a jr in high school and my 5 year old grand daughter. I don’t not claim my grand daughter on my taxes. Do we still qualify? Do I need to enroll my 21 yr old daughter in school as a full time student?


Brandi March 29, 2014 at 8:59 pm

Does anyone know the details of not being able to operate a family day care out of a home that is being financed through USDA?


Mae March 17, 2014 at 6:51 pm

I am buying a home with a pool. The appraiser included the pool and USDA requested the pool to be removed from appraisal. Now that the pool was removed the house is worth less than I have offered/loan and seller will not go down in price. They are saying if I can’t get it financed I will lose my earnest money. The seller knew my loan was USDA when we signed the contract. Why do I lose my earnest money? They are the one refusing to lower the price?


Denise March 23, 2014 at 10:37 am

Are you past your contingency period and have you removed all contingencies? Your loan officer should have advised you that USDA loans do not allow pools :-(


Rita May 12, 2014 at 10:04 am

RD does not allow the value of the pool so if the pool adds $5000 value to the appraisal, we have to deduct off that value. If property appraises at $155,000 with the pool then our max guarantee would be $150,000. Most sellers will drop the price but some won’t, buyers would have to come up with the $5000 if the seller won’t drop the price. It has always been this way with the guarantee.


Cee Miller March 13, 2014 at 2:41 pm

I purchased a home through a 502 USDA direct loan in 2009. I received a subsidy for it until around 2011. In 2012, my family had grown so I purchased another home and started renting the first home. Is this something I am able to do? Where are the guidelines stating this?


Rita May 12, 2014 at 10:06 am

you need to speak with the rd office in your area. USDA homes are NOT allowed to be rented out. You must occupy the home. the option would be to refinance the home and pay off the entire loan plus the recapture if you don’t want to sell.
you may be in danger of non monetary default foreclosure…


Greg March 4, 2014 at 3:23 pm

Does the RD home loan “guaranteed” program have any stipulations regarding property usage once the borrower has taken possession of the house? I’m not referring to zoning land use issues, but rather activities such as keeping farm animals.


Robert Long February 3, 2014 at 9:50 pm

An informative read. People should know their options when it comes to mortgages. It is quite easy to go through the usual options.


Stephanie C February 2, 2014 at 10:59 pm

Question: My husband and I are currently living in Washington state. I spoke with Sarah last week and would like to talk with Sarah and or someone that could help us with our dreams of owning a home in Tennessee for our family of 5. My husband and I have 3 children ages 15 soon to be 16, 10 and our youngest 7 which has special needs. We are hoping to move to Tennessee sometime between June and August give or take. We have been pre-approved for USDA housing here and have good credit. We have talked with a realitor there as well as started the financing process there and have been pre- approved to purchase a home there but got really disapointing news. The amount of which the loan can be approved for is much less than what we anticipated as when my huband which has worked for the same company for ten years transfers to the branch there is will be taking a substantial pay cut. We have both worked really hard and we have also saved money to move and get a home but still are finding that we may not be able to fulfil our dream for our family. The financial person that we are working with suggested that we give you a call to see if you had any ideas or if there is something that you could do to help with our dream.

Is there any ideas that you have? Is there anything that we can do? How does your program work? My husband will have a job as he is transfering and after a month or so of being there and getting settled in I am open to working also. I have a lot of experience with many different types of work so I do not believe that finding a job will be of much difficulty for me.

We are exploring all of our options and hoping that our dream for our family can come true..

Thank you for your time and I look forward to talking with you,

Stephanie Cross


Johnetta Leonard-Yaegel February 3, 2014 at 9:41 pm

Hello Stephanie.
I am a real estate agent with Keller Williams Realty in Nashville. I would love to help you and your family find a home here in Nashville. Feel free to email me and I will share with you the market information and link you to my web-site.


ashley January 23, 2014 at 12:07 am

I am trying to buy this home with a usda direct loan but I’m afraid that it will approve for more than my loan amount. Is there any way around this? Apparently they don’t want your home to be worth more than your loan amount. Why?


Trisha January 5, 2014 at 4:41 pm

I already have a usda 502 direct loan. Can that loan be refinanced using a 502 guaranteed under the refinance requirements of the direct loan? I live in NY


Trisha January 5, 2014 at 5:20 pm

I meant to say a 502 guaranteed loan


Rita May 12, 2014 at 10:09 am

you can refinance a direct loan to a guarantee loan. you need to talk to the lender. the guarantee loan is not a subsidized loan so you pay the note rate from day one.


sarah December 23, 2013 at 2:01 pm

Hello, will I get approved with a judgment on my credit file?


Sarah Schoup October 30, 2013 at 8:50 am

Hello I currently reside in Florida and have been looking into the USDA direct loan. My husband got offered a better paying job in Ohio would it be possible to use USDA loan to buy a home in another state?


Diana Goffredo November 22, 2013 at 6:54 pm

As long as it is in a covered usda area,yes,they may change the eligible area in september 2014 so do it asap


Diana Goffredo October 21, 2013 at 6:53 pm

Hi,i have a 725 credit score ,low ratio’s,and a chapter 7 discharged 26 months ago. I am hearing two different sides to getting approved for the guaranteed usda loan..,i have re established my credit and have not made any late payments. I was pre approved for usda and was wondering if it is written in stone that the waiting period must be over 3 years for a chapter 7 or do they take in account your past 26 months? I am working with a guy thay tells me it wont be a problem,,,what do you think?


Don October 18, 2013 at 2:09 pm

If I sell my current home and move into a rental until I find another home in the same area…how long until I could apply for RD loan? I see it says you can’t “currently” own a home in the same area. Thank you.


diana November 3, 2013 at 5:07 pm

I just locked in at 4% with no points 30 yr fixed on 10-31-13


Tyson September 27, 2013 at 10:32 pm

Just wondering what a typical interest rate people are getting because I was wondering if mine was high or normal, also when getting a loan will they include repair costs provided that the house is appraised for more than what we are buying it for?


K. T September 21, 2013 at 1:29 pm

I am wanting to move back to Washington State and have found a home that qualifies for a USDA loan however at the moment I am renting in Kansas. My question is can I go ahead and get prequalified for a loan now in the state I am in and then buy a home in another state?


Suzette September 3, 2014 at 6:41 pm

I do not know if all states are the same but I am currently renting in MS and am going through the prequalifing process for a home in LA so that I can be closer to my job. When I started the process I knew I wanted to move to LA so I contacted the USDA in LA and explained that I live in MS. It didn’t seem to be a problem. I would suggest that you contact the USDA in Washington State and go through the process there.


Lisa September 17, 2013 at 7:03 am

The USDA loan process is absolutely the most ridiculous thing I’ve ever experienced. I am very close to losing my dream home because of the wait we have had from our buyer through USDA. And now, there is a shortage of processors in my state which has again extended the time!!!!

I would NEVER recommend a USDA loan to anyone who doesn’t have 3 months to wait for the deal to close.


Gw September 17, 2013 at 10:44 pm

I def can feel your frustration. I found my dream home as well and had to go through so much stress and frustration..There were many times i just wanted to give up…. it was all worth it in the end tho. I invested a lot of money in my home even before it was mine just to make usda folks happy.


PAULA January 14, 2014 at 3:49 pm

Thank you for sharing that. I am feeling that right now. Started this process on Oct. 17th and it is now Jan. 14th. Was suppose to close on the 8th , we moved it up to the 17th and not sure if we will still close by then. I to have invested alot of money into this home before I even have it. Very stressed.


Kimberly January 26, 2014 at 6:45 am

I definitely understand the frustration of USDA loan I have been dealing with them since June and here it is January and I am still being asked for the same paperwork over and over and over and over again. everytime I think I have everything that I need they still me something else is not right or not matching up on my credit report. The sellers cannot close on the new home because I am still being jerked around with my loan. I am literally at the point of just saying forget it. Just like anything else with government they would
Help but you will be stressed out dealing with all of the circles and loops you have to jump through. I am so frustrated I have never been this frustrated in my life. Childbirth is less painful. I would not recommend this long for anybody who needs a place to stay And would like to be settled. I wish I would have just waited save my money and applied for FHA or conventional loan

ng stressed out


Rita May 12, 2014 at 10:12 am

It all depends on what state you are in. In the northeast (New England) our guarantee turn times are 24-48 hrs so most lenders have an answer pretty quick. I have heard that some states are taking 6 weeks from the time the package is received. I am the only specialist in Vermont and I usually turn these in less than 24 hrs.

Jami May 16, 2014 at 6:35 pm

Oh wow, this is scary to read. My lender is getting ready to submit my file to USDA on Monday. I live in California. Rita, do you know the turn around time for California?

SAM September 13, 2013 at 7:54 am

We have received a credit approval for for a USDA loan and have a question about income to debt ratios. While our salaries allow us to secure the USDA loan for the time being, we are wondering if we must always stay at the wage or salary that qualified us to get the loan in the first place? We aspire to make more money in the future, but will this compromise our home ownership?


Mary October 21, 2013 at 9:48 pm

Honestly, I don’t think it matters once you are approved and the papers are all signed, sealed, and delivered…it’s nearly impossible to always stay the same debt-income ratio for the next 30 years because life in general happens and things happen…your best bet is to while you can afford too now go ahead and put a little money aside in an account that does incurs interest on it every year just incase your debt becomes more than your income later on but try not to make this a long term thing because you don’t want to be one who ends of foreclosing on your home a lot sooner than ever expected…and if you do happen to use this saved money to help make ends meet and get back caught up to where you once were or better don’t forget to replace the money you “borrowed” from that account just in case it is needed again if ever.


Danielle August 22, 2013 at 3:57 pm


I have just been pre qualified for a USDA loan. I have been researching and have found a couple grants that I qualify for such as the Grants for Grads and the OHFA: Ohio First Time Homebuyers Program. Can you have a USDA loan and use the grant programs in conjunction? I’m new to all this and wondered if you could help me understand if this is possible??

Thanks so much!!!


Alex August 22, 2013 at 2:58 pm

TOO BAD the USDA in North Carolina is nearly 1 month behind in processing Guaranteed Loan Applications. The only update you get is from a recording, no other communication. Our closing has been rescheduled 3 times due to USDA delay. The USDA website says 24 to 48 hours for processing, not true. Luckily, our seller has been very patient and has not walked away from the deal. Very disappointing.


Tiffany December 23, 2014 at 6:43 pm

Was this after you received your certificate of eligibility???


Jamie August 14, 2013 at 7:42 am

Does anyone know if it possible to roll in landscaping/sod costs into your mortgage with an RD loan?


cory August 11, 2013 at 8:53 am

I purchased my first home this year using a USDA guaranteed loan. I couldn’t be happier. I found a beautiful home in a great location. I’m 26 in NY and I make a decent income and bought the house on my own credit and salary. I wouldn’t have been able to do it without the USDA. It’s an awesome opportunity. My suggestion is to choose a loan officer or bank to walk you through it who really knows what the usda requires as there can be alot of paperwork.


Suzette September 3, 2014 at 6:48 pm

At what point did you contact th bank/loan officer? So far I have been pre-qualified and selected for processing.


Becky August 9, 2013 at 9:24 am

My husband and I are looking into various loans for buying a rural property in Pahrump, NV. I have been working at the same job for almost 3 years but my husband just graduated this summer and has not started working yet. My plan is to apply for a small loan (under $70,000) with just my income but with both my husband’s debt and mine combined. Even with our combined debt my debt to income ratio is well under the eligibility limits.
We currently live in Colorado and were wondering if we might be able to get a USDA rural loan for a home in Nevada before we move so that we can buy a house and move directly into it without having to spend excess time and finances renting an apartment, and waiting to establish jobs and residency? I am able to work part-time from home, but I may have to get a supplemental part-time job with a different employer (same job field though) when we move and I wouldn’t want that to effect our chances for securing a loan while I still have the same employer.

Would it be possible to get a loan for a home in Nevada while we live and work in Colorado? (we own a mobile home, but not the land on it – so we would be 1st time home owners)


Stephanie C February 1, 2014 at 9:11 pm

Becky, it sounds like we have simular situations. We are working on moving to Tn from Wa. we have heard various things regarding this. The last loan officer we talked with said they would have to go on the income that we would be getting once we move. My husband would actually be working for the same compnany but income would be less but we still more than qualify, however, our loan amount approved for is substanstially less based off of the income that he would be getting paid after we move and despite being able to still afford the payment having money in savings ect they will not make an exception.

What have you found out for your situation? I am not giving up hope but very frustrated that our loan amount that we have been approved for and then the adjusted amount is so much less making it very difficult for us to find a home that we want.


Haley Hooepr August 6, 2013 at 8:08 pm

I am wondering if you can use a co-signer with the guaranteed loan? Credit is fine, but my husband just got a job closer to home and he hasn’t been there long enough.


Rita May 12, 2014 at 10:13 am

no cosigners allowed witht he guarantee program


Michelle July 31, 2013 at 6:34 am

We are waiting on USDA to look at our loan. According to the 800# we are still 11 days away from them reviewing it. Is it true that once they look at it, it can still take another 30 days? We might lose our dream home if that is the case. Also, we locked in the rate for 45 days it may go over that time, do we need to re-lock in the rate? Thanks!


carmen August 2, 2013 at 7:26 am

I put an offer in on a house March 15th. The time it took from the bank approval to the rural development office is almost 5 months. I am closing on the 7th of this month


Alex August 22, 2013 at 2:59 pm

RIDICULOUS! To take so long.


Nicole September 11, 2013 at 12:00 pm

My husband and I began the process with a USDA loan on March 9, 2013. It is now September 11, 2013 and we have yet to close. The close was scheduled for today but cancelled because paperwork was still not complete. We need to sign redisclosure papers because the interest rate has increased and the interest rate has STILL NOT been locked in. Therefore, we are spending another $200 a month, if we decided to go through with this ridiculous nightmare, because interest has increased since the process began. I would not recommend doing this if you want to move anytime soon or if your dream home is up for grabs the entire time.


Brittney July 29, 2013 at 8:26 am

Any idea when the start receiving funds again? Ive applied and they said theyre out of funding. Also anyone self employed ever tried this option, I had to provide profit and loss sheets along with 2 consecutive tax returns….


terri July 23, 2013 at 3:03 pm

I would like to purchase a home using the usda guaranteed loan. I quality as far as area and finances, my question is can I purchase a home if I have a mortgage on a business property? We were able to get a home owner mortgage because the property has a structure on it but we have no running water and not convenient for every day commuting to work. It is a Mill (business) and that is what t is used for.


Chris July 22, 2013 at 8:17 am

When calculating income eligibility on the USDA website it asks how many people are in the household. My answer is 3. Myself, my girlfriend and her 8 year old son.
My girlfriend will not be a co applicant on the for the loan and is not currently putting any of her income towards monthly payments on our rental home. Do I need to include her income to check elligibility?


Connie August 19, 2013 at 12:17 pm

Yes you do Chris – it’s income for the whole house, not just for the one who is paying the bills.


chris July 19, 2013 at 4:54 pm

Why are sellers turned off by this loan? I lost two offers at asking price (and one higher) because the seller didn’t want to deal with this loan. It was so disappointing to lose my ideal home over this.


Em July 25, 2013 at 3:16 pm

One idea is because USDA loans take so long to process. Sometimes people don’t know a lot about these loans and they go with the traditional home loans for quick sale.


Alex August 22, 2013 at 3:06 pm

North Carolina USDA is nearly 1 month behind in the processing of Guaranteed Loan Applications. Sellers just do not want to wait for the USDA to get things done. VERY Disappointing.


Paula February 10, 2014 at 7:17 am

I’m a seller, lost a buyer due to their last minute credit score dropping. We’ve been waiting since Nov 2013. It’s now Feb 2014. We might have already sold if it wasn’t for usda dragging… but we don’t want to deal with usda again, because we are asked to pay all closing cost, 6% plus another 6% to the agent. Total of 12% off our asking price of 87k. I’m not giving my home away. I had to save to buy my first home and paid closing, so should others who have the means to save $$.


John July 11, 2013 at 1:16 pm

Does anyone have any experience with a USDA Direct Loan while living in a house included in bankruptcy? 6 years out from bankruptcy, resumed payments but did not reaffirm. 688 credit score.


NoCouth June 24, 2014 at 9:48 pm

John, we’re in exactly the same position, except we were shooting for a USDA guaranteed loan vs. direct loan. We’re 5 years out from filing bankruptcy, and 30 months out from being discharged, and we never stopped making our mortgage payments (we exempted the equity) but unintentionally did not reaffirm the loan (bankruptcy attorney was an idiot). Mortgage company SAYS they “can’t report the balance of the loan or whether or not we’re making payments” but they actually DO report the loan was “included in bankruptcy” and is “closed,” with a “$0 balance,” but with “most recent payment of $xxx” with a date of a month ago. Who makes payments on a closed, $0 balance loan?! Our credit scores are also very similar to yours. We want to move from the northwestern U.S. where we live now, to South Carolina, and rent out our current home, so I have no idea if we’ll qualify. Did you have any luck? Does anyone else have experience with the amount of wait time for USDA loans in South Carolina? Any advice will be MUCH appreciated, and I’ll return the favor and report back any tidbits we garner along the way!


Sheena July 8, 2013 at 2:47 pm

My fiance’ and I are trying to get pre qualified for a USDA or FHA loan. His credit score is 659 or credit karma mine is 601. we are working with one bank and she said we dont qualify for the gauranteed USDA loan, i’ve done all the research and i dont see why we dont qualify. Please someone help..


Jay July 8, 2013 at 7:46 pm

Could be any number of things but your median credit score has to be minimum of 640. Find out what your each of your 3 scores are and that’s where to start. The bank should send you a report of all 3 scores, if your middle number is below 640, then you won’t qualify. Also check your income to debt ratio, get it as low as possible.


Sheena July 10, 2013 at 6:35 am

What about an FHA loan..we can have the 3% or 3.5% down. Do you know the minimum score for that? Thanks


Jay July 15, 2013 at 9:49 am

It’s the same, 640 is the minimum for all of the government backed loans. Some websites will say less but there is not a mortagage lender on the planet that will underwrite it with a score lower that 640. Also, those credit websites are pretty worthless, you really need to just use the 3 scores you get from the lender and work on improving your credit from those.


n July 21, 2013 at 8:30 am

You need to go directly to the usda office and apply for their Direct Loan. It is financed by the government whereas the Guaranteed is financed through a bank. This is how we got our loan. We did not qualify for the guaranteed loan so I kept searching and I found you have to go directly to a usda office and apply. you can google it and find an office near you.

Jennifer March 2, 2014 at 11:06 am

FHA requirement is actually less than 640 minimum. It varies the lender you use and is a contributing factor on the amount of down payment required. Credit scores of 600 have been approved. Median score is used.


Suzette September 3, 2014 at 6:57 pm

My score was above 655 until they started checking my credit and each time that drags my score down, it is now under 600. Will this effect me being qualified in the end?

Rachel July 7, 2013 at 3:44 pm

I have a term mortgage with one of the big banks and my payments have increased. Is it possible to refinance to a USDA loan? My home and property would qualify for a USDA. Refinancing is the question.
Thank you,


Rita May 12, 2014 at 10:14 am

RD only refinances RD loans


Kwillia55 July 7, 2013 at 11:16 am

We own a home in USDA eligible area. It is an old farm house (over 100 years old). Is a USDA loan an option to remodel or build a new house? We currently have an FHA loan. My elderly mother and special needs brother moved in with us and wee need major renovations for them as well as to update the property.


RebelMan64 August 21, 2013 at 8:52 am

Kwillia55, USDA AKA FHA allowed you to buy a home over 100 years old with their loan? The reason I ask is I wanted to buy a 90 year old home and they would not allow me. They claimed the home could not be over 30 years old (Even though I bought one that is 44 years old & they approved it). I went to the agency director at the capitol. Had my Senators and Congressmen working on it and calling the director for months. They still would not do it. It is a historical stone house that will be around for another 200 years. Their reasoning was “We want something that will still be standing and worth it’s value at the end of the loan term”. Do you mind if I ask what state you are located in? I just re-read your questions. You stated that you had a FHA loan currently. Is it on the home you are currently living in?


Tracy January 15, 2014 at 9:57 am

Just so you know, USDA is not AKA FHA. Two totally difference programs.


greg dennis July 6, 2013 at 10:16 am

I currently have a usda loan and was wondering how long i have to wait before I can sell it or get a debt consolidation loan?


Em July 25, 2013 at 3:19 pm

My broker said I had to live in the home for 1 year.


milagros July 4, 2013 at 12:09 am

This is my scenario
Income 2012 $100,000 (together husband and wife)
Family size “5″ husband, wife, grandmother and two children
me(wife): bankruptcy in 2010 (owning two houses at the time of bankruptcy)
The bank do not take the houses yet, waiting for time in the court.
I had the discharge in about January 2012, including the houses.
On April 2012 credit score 625-604-593
Today July 3, the score of 625 is now 638
husband: bankruptcy in 2008 (owning one house at the time of bankruptcy, and discharged)
credit score as May 2013 , 575-584-589
Today July 3, the score of 575 is now 582
We have a mortgage note for a business that does not appear on our credit, because we pay directly to the old owner of the property, but the taxes for this building appears in our names.

The house we want is on an approval rural zone.

Do we qualify for this loan?

Thank you for your help.


milagros July 4, 2013 at 12:23 am

I forgot to say that I owe about 61,000 for college. I do not have to start paying yet, because I just finished my career, but maybe about December I will have to start paying my school loans.


Kfly-4 July 10, 2013 at 8:49 am

You sound like you don’t need any more debt! Pay off what you owe first!!!!


Jen July 2, 2013 at 3:41 pm

Im looking in to getting a Usda loan i just paid my credit cards below 10% my spouse owe some $ on his credit cards we both have good credit scores not sure if his is 640 but it must be close and I know mine credit score is 640+ Does his have to be a 640 ?I want his income on the loan. Second the house I was looking at had a broken sliding glass door that was boarded up. Can that house qualify?


Connie August 19, 2013 at 12:25 pm

My house that I am waiting for USDA guarantee failed for unpainted surfaces. My husband and I had to paint those surfaces before the appraiser would say the house met the HUD/FHA minimum allowable for standards. We did this work on a bank owned property.

So I would say that the broken sliding door would have to be fixed before the house would qualify.


Brenda June 24, 2013 at 7:16 pm

I have found a house but I own a mobile home that has blocks around it but it is not permanently secured. The property it is on belongs to me. Will this disqualify me for a USDA loan.


Em July 25, 2013 at 3:09 pm

Owning a manufactured home will not disqualify you. I had the same scenerio. I went thru an awesome broker he explained everything to me, left & right.


Abbie June 22, 2013 at 8:14 pm

We are currently considering using USDA as our loan however there are a few questions I had.

First the income qualifications. We qualify right now but say in a year from now after purchasing the home we have a promotion or pay raise that puts our annual income more then it should be….will this affect our payments??

Second say we purchase a home and would like to rent out the basement while living there. Is this allowed?


Cody Velkovich July 3, 2013 at 11:07 am

The income qualifications only apply during the process of acquring the home. After that, you can make as much or as little as you want, as long as the house note gets paid on time.

As for your second question, the USDAD requires the house to be your primary residence at the time of purchase. After the loan has closed and funded, you can do whatever you’d like in regards to a rental agreement.


Alex June 18, 2013 at 5:09 pm

Seems like this message board has been abandoned. There has not been any responses for quite some time. Too bad…


Shannon O'Brien June 21, 2013 at 9:48 am

Hi Alex,

I think they have someone new in charge because they haven’t been asking us to respond. Glad I checked in here today and I apologize that it’s been a ghost town!


jennifer June 18, 2013 at 5:59 am

I currently have a usda loan and I’m wondering how long until I’m allowed to sell the property to move out of state?
Thank you,
jennifer in fl


Shannon O'Brien June 21, 2013 at 9:52 am

Hi Jennifer,

USDA loans have no pre-payment penalties.

Happy moving!


Em July 25, 2013 at 3:12 pm

Hi. I was told I had to live in the home for 1 year. After that, I could rent, sell or what not.


Tamia June 13, 2013 at 3:29 pm

I recently applied for a loan with the USDA program. About two weeks later I was told that the guidelines changed and USDA required a 680 score and 29/41 ratios and I would have to go FHA. I was baffled in regards to USDA changing the program because from my research the ratios were always 29/41 is this true? Does USDA count money in your savings account as income because if so my ratios should be ok. I also read that a debt ratio waiver can be submitted based on certain circumstances and I meet one of those circumstances. So I am really confused at this point as to why I am denied. Also does the seller get more profit of a FHA deal vs. USDA.


Cody Velkovich July 3, 2013 at 11:11 am

The research you have done is mostly correct. The correct ratios for a USDA loan are 29/41, but they will actually consider credit scores down to a 620. However, between 620-639, there are a plethora of restrictions to get qualified. If you have a 680 and your ratios are in line, then automated approval through GUS is going to be your next step. If your lender is telling you that you are not being approved, it’s more than likely based on either a) payment shock or; b) asset reserves. You are also correct that on a manual underwrite, the lender may submit a Debt Ratio Waiver with compensating factors as to why you should be approved.


Ann June 11, 2013 at 11:30 am

If I get a USDA loan, can my live in boyfriend (who is not on the loan) pay me rent as long as I’m living there with him?


Emmy June 7, 2013 at 9:58 pm

My wife and I are interested in the USDA loan and wondering if the following criteria below will qualify us.

She is a stay at home Mom and have no income except some selling from Mary Kay and which i believe it is not more than 5k. I am (husband) is the one that works and without good credits (few collections while back in school:)). We’re planning to apply using her alone on the application based on her credit too (above 740) and using my own side as income base. Would this work for the eligibility/qualifies us? Please advise on the right direction to follow?


Kendra June 11, 2013 at 3:01 am

In order for your income to be counted you have to be on the loan.


Katrina February 18, 2014 at 1:15 am

Yeah, that won’t work at all. She has no real income so she can’t be the main loan holder. It has to be you the husband.


jenn June 4, 2013 at 9:08 am

Will it matter if my husband hasn’t paid on his Louisiana taxes from last year? He filed, but didn’t send a payment, yet. We’re trying to use usda guaranteed loan. Also, I applied on my own. Everything else checked out; income, credit, dti ratios, etc. I’m just concerned about his taxes. We file separate all the time.


Alex June 3, 2013 at 6:27 pm

Please explain the USDA Guarantee fee.
Is it a one time fee or monthly payments like PMI?
How is the fee calculated?
Thank you


Cody Velkovich July 3, 2013 at 10:56 am

The USDA Guarantee Fee is the same thing as mortgage insurance, only under a different name. Currently, it is a one-time 2% upfront (which can be rolled into the loan regardless of appraisal) and 0.40% monthly. Considering the monthly amount for both FHA and Conventional mortgages are higher than that, it is still much less expensive in the long run.


Tony September 6, 2013 at 9:35 pm

I heard if USDA had to payout. They will use the IRS to collect from the borrower.


ashley June 2, 2013 at 5:07 am

Just wondering I have a perfect credit score and I own my land. Im wanting to put a manufactured home on it in sc. Will the guaranteed loan work for me? I have over a 700 credit score and a stable work history. I am wanting to do something like a home only loan


n July 21, 2013 at 8:34 am

in Missouri the only rule to that is, the home must be brand new. It cannot be used.


Rebecca May 11, 2013 at 4:36 pm

I have a collection that is on my credit report that I have repeatedly asked for verification. The collection agency has not been cooperative in sending me the verification so I am uncomfortable paying a collection that does not belong to me. My score is over 640, and all my open credit cards (2) are at $0 balances with no late payment history.
Will this collection affect my eligibility to obtain a USDA loan? Should I deal with it and try to negotiate a settlement to get it off my report before I apply for the loan?
Any insight or advice would be extremely helpful.


Chris September 15, 2013 at 7:25 pm

Yes. USDA wants all collections to be paid in full, and technically paid off for twelve months with no late payments in that time period. I have seen them be a little flexible in the 12 month seasoning, but I wouldn’t count on that.


Candace April 27, 2013 at 6:55 am

Hi! I am interested in a USDA loan. I am ss disability since 2011 and prior to was on ltd due to uychronic disease. As a result, I do not have any credit…let me explain. Bad credit is all from lots of doc bills and i don’t have any positive credit on record. I have no late payments on rent, utilt, ins for since Jan 2011. I was dumb and pd cash back in 2009 for my car, so i have no trad. credit. I know usda will use non traditional credit. My first question is will I be turned down due to med bills; second is will non trad. be enough to build up my credit score for cosideration of loan? My current score is 553, 647, 535. I am a first time buyer so i just am lost as to what to do first. I do know I qualify income requirements except for guarenteed. Thanks so much and thanks for the great info on this site!


Candace April 27, 2013 at 7:23 am

Sorry, I meant to say I qualify for a guarenteed usda loan but not a direct. Thanks again! Candace


coco April 26, 2013 at 2:21 am

So what is the difference between the two USDA loans


Shannon O'Brien June 21, 2013 at 10:20 am

The lender for the guaranteed loan is a private savings and loan institution, bank, or mortgage company which also handles all the loan servicing, much like the FHA loan. The lender and servicer for the direct loan program is USDA Rural Development.


Hana April 23, 2013 at 4:33 pm

I have already found a home I am wanting to buy but I have no credit would I even be able to get a Usda loan im on disability and have no way to really make and credit also I have no idea how to build my credit


Jeremy April 18, 2013 at 4:34 pm

I am looking at buying a home, possibly with a USDA loan. Question I have is that I know in several years I’ll be moving elsewhere as there are no other jobs in my field in the small city where I live. I know there is a stipulation that a USDA loan can only be for primary residence. Am I allowed to rent the property if the day comes that I get a new job and move elsewhere if I don’t want to sell it immediately?


J May 5, 2013 at 8:50 pm

You have to live in the home. You absolutely can’t rent it. Just read over their whole contract right now.


n July 21, 2013 at 8:36 am

in Missouri you have to live in the home at least 5 years before you can sell it AND you cannot rent it at all the whole loan duration


Kathy April 16, 2013 at 8:22 pm

I am just starting to look at homes and the one I am most interested in qualifies for the USDA Rdev loan. My credit is bad, but I am looking at a home that is well within my income limits. With the mortgage payment calculator I would be paying half of what I am paying in rent now and it comes out to about 1/7 of my monthly income. Do I even have a prayer or should I start looking at apartments to rent?


Shannon O'Brien June 21, 2013 at 10:21 am

What is your credit score?


Pam April 8, 2013 at 5:28 pm

We are trying to sell our on-frame modular home. A potential buyer got preapproved for a usda loan through a local bank. When the bank found out it was an on frame modular they said they would not be able to do the loan. Can the buyer go directly through usda for the loan and will they still do the loan 100% for 30 years since it is an on-frame modular?


J May 5, 2013 at 8:51 pm

They won’t finance any modular/manufactured homes.


Shannon O'Brien June 21, 2013 at 10:27 am

The guaranteed loan may be the one for you. Rural Development claims that eligible property types for this loan include “existing homes, new construction, modular homes, Planned Unit Developments (PUD’s), eligible condominiums and new manufactured homes.”

Hope this helps!


n July 21, 2013 at 8:38 am

If the usda will finance a modular home or mobile home they have to be new not used. so that’s why they didn’t finance to the people.


Pam April 6, 2013 at 5:01 pm

I’m trying to buy a home that’s has a USDA from the sellers however the foundation is buckling and the main beam is split I really want this home but these repairs would need to be done promptly could the repairs be added on to a USDA loa or just find a different house???


Shannon O'Brien June 21, 2013 at 10:23 am

Ask your lender about the direct loan program.


Nakia April 5, 2013 at 9:11 am

Is it possible to use a USDA loan for purchase and repair at the same time? we were approved for 250k and want to purchase a foreclosure for about 220k, can we use the remaining approved amount to make repairs on the home?


Cody Velkovich July 3, 2013 at 11:00 am

The USDA used to offer a “Rehab” loan, where you could use a portion of the loan to make repairs. That product has been discontinued. Your best bet is to either use the FHA 203(k) loan or find private financing for repairs.


Kevin April 2, 2013 at 8:10 pm

I totally disagree. For many reasons a USDA Loan should be the last choice for a Loan.

USDA Is a Tough Collector When Mortgages Go Bad –

“Unlike private firms, the USDA doesn’t need permission from a court to start collecting on unpaid debts. It can in some cases seize government benefits and tax refunds before a foreclosure is completed. After foreclosure, the USDA can go after unpaid balances, even in states that limit such actions by private lenders.”


Angel Collins April 16, 2013 at 11:12 am

….And why are you assuming future failure? I know the economy can affect your money for your payments, but why shouldn’t USDA try to get their payments back anyway they can? You can’t live rent free, and if someone wants to do that then maybe they should get a housing project.


Tony September 6, 2013 at 9:38 pm

did you think that medical reasons may spring up or other things out of your control.


Scott March 22, 2013 at 9:48 am

Question: My children receive Social Security Death Benefits every month; my boys are 6 and 15. Does the Social Security count as income, since it goes directly to my sons and paid to them directly?


frankie March 27, 2013 at 1:21 pm



Patty March 21, 2013 at 6:49 am

My husband and I are starting the process of getting a USDA loan for our first home in FL. I am worried about our income. Which does USDA consider, your net or gross income? We hover around the income limit and if they use our gross income, I’m afraid we won’t qualify. Thanks!


Shannon O'Brien March 21, 2013 at 10:35 am

Hi Patty,

According to the USDA, “A family’s income includes the total gross income of the applicant, co-applicant and any other adults in the household. Applicants may be eligible to make certain adjustments to gross income – such as annual child care expenses and $480 for each minor child – in order to qualify.”

Remember, these loans are typically for very low income to low income people. The USDA has a calculator on their website that will tell you which programs, if any, you qualify for:

Good luck!


Nick N March 18, 2013 at 5:55 pm


My wife, and I have just been denied a home loan through USDA. Our lender Idaho housing, approved the loan, and when it went to USDA it was denied. We have had credit problems in the past, but all of our collections have been paid off, and we have never been late, one of our major trade lines ( toyota financial, usbank, and cap one). Our score are (wife 634,600,678) (mine 578,624,655) , it went into manual UW, and USDA denied us because we had a tax lien last year (which is paid off). Our broker did a rapid refund, and got us above 640 she now wants us to resubmit thru a different lender.

What do you think our chances are once we get up to 640 ?


Joel Lobb (@kentuckyloan) March 19, 2013 at 12:09 pm

Typically if you are below 640, and have lates on credit in last 12-24 months, they will turn it down.


Heather B March 14, 2013 at 8:53 pm

My husband and I are very interested in this program and think we fit all of the criteria…we are in FL and we just aren’t sure where to start – do we get a pre-approval from a bank, private mortgage company or do we do it all through the real estate agent? Also do we have to have a home we want to purchase before we apply or can we get approved then shop? I also see a few have built using this program – did you do that through the builder and the builders lender/bank?


S March 1, 2013 at 11:30 pm

Our family has relocated to SC from FL. We have leased out our home in FL since last September. Both our fico are excellent and we do fall within the income requirement (he’s a teacher and I’m a hair stylist).
Although I’m very grateful to have a roof over our heads, our goal is to build a home. We’re in the Rural area of SC and fit those requirements too. How long do we have to rent the FL home out before we can apply? There is a signed lease one year lease and all of our payments are current.
Thanks for any advice.


Shannon O'Brien March 2, 2013 at 11:58 am

I am not aware of any requirement that states you must lease the other home for a certain time period. Then again, I’m not a mortgage broker. I strongly suggest you speak with a USDA representative. The rep for South Carolina is Loretta Friday (803)253-3094.

Good luck!


Rita February 26, 2013 at 2:00 pm

Hello, I was approved for a $140,000 loan for a home about 3 months ago and I found a home and signed the paperwork to get everything started only to find that my loan was no longer being approved. Upon further inspection it turns out a missed bill had not gotten paid ($200) which I had no idea of bc I had moved recently and never got the bill or email and simply forgot to check on my part. Anyway all my bills (excluding that one) have always been paid every month and have no outstanding debt. My credit scored has dipped down to 615 bc of this incident which has been resolved but will take 2 months according to them to clear. I don’t want to lose the perfect home I have found after so long. What can I do?


Shannon O'Brien February 27, 2013 at 2:23 pm

Hi Rita,

Sorry this is happening to you. Try another lender or two, otherwise, wait it out.

Good luck!


Marquya Crawford April 15, 2013 at 1:45 pm

Hi Rita,

I had the happen to me as well. Try to get a letter showing your debt has been paid from the creditor. If you are working with a mortgage broker the company should be able to submit your letter to update your credit report and score.

Good Luck!


Karen June 20, 2013 at 8:30 pm

We have a chapter 13 bankruptcy that was just discharged. We made payments to the trustee on time for 55 months. Can we get approved?


J February 25, 2013 at 6:46 am

I have a current usda contract to buy a home in South Carolina the fiscal cliff has effected the process, will the usda uphold the contract with the builder?


Shannon O'Brien February 25, 2013 at 2:04 pm

I’m sorry, J, I need a bit more information. How has the fiscal cliff affected it?

Also, I think if you call your lender you’ll get better information.

Thanks for the question!


Jamie Schull February 18, 2013 at 3:24 pm

We own a home with a USDA loan, we had to move 3 1/2 years ago because of a job relocation. We have been renting that home to the same people since then and have never had a late payment. We are currently renting another home in another state. Can we refinance this rental home we own with the USDA pilot refinance program to get a lower rate? This home is not an income source for us, we rented it so we could pay the mortgage and we actually lose money on it. Is it possible to refinance this under a USDA program or not if it is considered an investment property because we had to rent it out?


Shannon O'Brien February 19, 2013 at 12:27 pm

Hi Jamie,

To qualify for the USDA Streamline and non-streamline refinance, the home must be your primary residence.

Hope this helps. . .


craig February 13, 2013 at 9:02 pm

if i have one home loan can i apply for another home loan on a home 100 miles away?


Pam February 7, 2013 at 5:23 pm

I have a conventional loan, but we are looking to refinance with a USDA loan. Is that possible? Most of the information I’m finding on USDA refinance loans is for those who already have a USDA loan.


Shannon O'Brien February 8, 2013 at 11:50 am

Hi Pam,

Unfortunately, the USDA only allows refinances of current USDA Guaranteed or USDA Direct Mortgages.


Cydney January 31, 2013 at 8:08 am

I am 2 1/2 yeard discharged from Chapter 7. I was told to open up credit cards and pay on time which I have and I cannot get approved for a home equity loan. I have tried everything. Any suggestions?


Shannon O'Brien February 1, 2013 at 5:25 pm


Although your question doesn’t have to do with USDA loans, I’ll take a stab at answering it.

Bankruptcy stays on your credit for seven years. Fannie and Freddie say you may get credit after four years, but it depends on other factors.

Just keep using the card and paying it off every month to build up your credit.

Good luck!


Carmen January 29, 2013 at 12:16 pm

My husband is on monthly installments playing of back taxes. He’s never been late and he’s been paying the IRS since 2010. We put a contract on a house and were denied fha financing. Is there something we can do. He makes very good income but doesn’t have the money to pay off the IRS at the moment.


Michelle January 29, 2013 at 6:41 am


I am considering applying to get a USDA loan. My husband is self employed and has a new business that he just started 6 months ago, so I will be applying alone. I make 30,000 a year and have a student loan that totals $27,000. My payments are $90 a month, and I have no other debts. No credit cards, no bills in my name. When they calculate my debt to income ratio, will they use the $90 a month payment only to figure in the ratio?


Joe January 25, 2013 at 11:53 am

Any idea how long it takes USDA to approve the loan once they have the complete loan package? (State of Florida) Thanks


John February 26, 2013 at 2:47 pm

My wife & I applied for a USDA direct loan in October of 2011 the package was completed in May 2012 and we closed on our new house in July 2012, state of Indiana.


Alex January 22, 2013 at 5:07 pm

We want to apply for a guaranteed USDA loan. We gave up our house in chapter 7 bankruptcy discharged Jan.2010, 3 years ago as of Jan.2013. Foreclosure on the house was completed July 2010. We meet all income and credit guidelines. With these events in mind, when are we eligible for this loan? Have we waited long enough or are we close enough to whatever the required waiting period is to be approved for this loan? Thank you.


Shannon O'Brien January 22, 2013 at 8:30 pm

Alex, I believe that July of 2013 will be the date you want, as that’s three years from the date the foreclosure was complete.

Hope it works out for you!


Rebecca Ryland January 17, 2013 at 10:48 am

Shame on you! USDA loans were intended to assist people who did not have access to adequate housing. Just because you have found that there is little or no oversight with the Guaranteed Loans (as opposed to the Direct Loans who include questions regarding adequate housing on the application), your lack of concern on the impact these loans are having on depleting agricultural land and contributing to urban sprawl is appalling.


Brandi January 9, 2013 at 9:42 pm

My husband and I have been trying to get the direct loan since April. Our realtor kept messing everything up for us and delaying our process. Now we are waiting on the funding to be available. We’ve already been approved for the max amount and have a builder set up to build our house.. Any ideas on when the funding will be available? Of corse I know we’re all waiting on the president & congress to finalize the budget.. But how long after that does it generally take to have the funding? This has been the absolute biggest stress in our family. We’ve been waiting almost a year! Keep that in mind when applying for these loans. They get in no hurry lol


Kay January 14, 2013 at 1:10 pm

The budget year runs Oct-Oct. We first applied last March, were told funding had run out in June then were re-alerted of funding in October. We made an offer on a house in November and just got our commitment of funding on Friday. We were told early in January that funding was low again so unless you were already under contract nothing could happen until funding became available again. You really have to be ready to move when you get your approval.


John February 26, 2013 at 2:55 pm

I guess we were lucky. We applied for a USDA direct loan in October 2011 and moved into our newly built home in January 2012. But we paid rent to the builder until the funding was approved and we closed on the house in July 2012. We found a good builder who allowed us to rent till we closed however the rent we paid was not deducted from price of the home, a USDA rule.


Rachel January 8, 2013 at 10:21 am

What is the wait time if you have a foreclosure but not a bankruptcy on your credit? Is it from the time the house went to the sheriff sale or from when the house actually sold?


Shannon O'Brien January 8, 2013 at 12:57 pm

Hi Rachel,

Three years from date the foreclosure was completed and transferred back to the lender. If the foreclosure was the result of an “acceptable” extenuating circumstance (you’d have to speak with a USDA rep to find out what they consider acceptable) and if you re-establish credit and pay your debts on time, you may qualify sooner.


Lori December 22, 2012 at 8:36 pm

My husband completed a DIL in Feb 2010.. He has a stable job, good income and good credit scores. My credit us great but I do not work. Has anyone ever been approved for USDA loan before the general 3 year waiting period after a foreclosure? I list my job in 2009, therefor causing financial hardship (my name was also not in the house). Thanks! Hoping for some possibly good news!


essie December 18, 2012 at 3:26 am

Hi , I was wondering what and how the interest rates are for USDA rural home loans. How are they determined and how can you find out the latest present going rate?

Thank you


Shannon O'Brien December 18, 2012 at 11:28 am

Hi Essie,

The rates are determined by the individual lender. According to the USDA website, “Fixed 30-year interest rates apply. Lenders and applicants agree upon interest rates.”

Hope that helps!


M November 29, 2012 at 9:04 am

My wife and I are interested in this program. We have not talked to a lender yet, and they could possibly answer this question rather easily. We are currently living off of a single income and renting. My wife just received a job offer that would have her starting in 1.5 months. Her taking the job would require us to move since it is not within commuting distance for her. Right now we are living in an apartment and we don’t have a lot that we can put as a down payment at this time, and really don’t want to move to another apartment (although it is an option at this point). Once she starts working, our income will be higher than the limits for a USDA loan. If we were to go forward with a USDA loan, would it still be possible for us to qualify for this program?


Shannon O'Brien November 29, 2012 at 12:05 pm

Hi M,

First, congratulations on the additional income your wife will be bringing in.

I believe you answered your own question: her income will disqualify you for the USDA program, according to your estimation.

I would speak with a lender and get his or her take on the situation.

Best of luck to you both!


erica November 18, 2012 at 8:20 pm

If I already have a USDA home loan. Can I purchase an additional property utlizing USDA again? I would like to find a farm (approx. 45 miles from my current location)and utilize that as a source of income, however, It would be used as a secondary home.


Shannon O'Brien November 20, 2012 at 7:47 pm


My dream as well is to have a farm. . .hope you can make it come true. I just pulled up the latest USDA Guidelines and there are PAGES of changes just in the past few months.

Do you have the number of the Rural Development office in your region? If not, scroll down this page to my answer to Chimey’s question. In it you’ll see how to find it online. Your best bet is to call the rep and get the most up-to-date info.

Do me a favor? Come back and let us know about the farm. . .please?


Dan November 18, 2012 at 4:08 am

Tim and/or Shannon:

Both of you are knowledgeable about these programs, and have offered valuable advice. Is there a way to contact either of you directly for other questions?


erin November 14, 2012 at 10:17 am

how long do you have to live in the home if through this loan program? Are you able to sell or rent out after a certain amount of time?


Shannon O'Brien November 20, 2012 at 7:54 pm

Hi Erin,

Great question. From what I understand the USDA program is for low to moderate income folks who plan to live in the home, not rent it out. That said, your question is “how long do I have to live in it?” I’m almost positive you can sell it sooner than you can rent it.

Your best bet is to go to the source: the Rural Development office in your region. I talk to ours here in Vegas all the time. . .really nice people that tend to put the rules, etc. in plain english! To find the one near you, scroll down until you find my answer to Chimey’s question. You’ll see how to find the rep in your area.

Good luck!


Chimey Nangchen October 13, 2012 at 8:24 am

I am not sure about the difference between the USDA “Single Family Direct Homeownership Loans,” or “Single Family Guaranteed Homeownership Loans”. What are the basic differences between the two? Also is this process a little difference than the regular process of purchasing a home in that in a conventional process you are approved for a particular dollar amount without a particular home in mind and then you look with your realtor for a home that fits those finacial limits. It seems that in the USDA process you first find a home and then see if it qualfies for the USDA program and that you qualify for the dollar amount of the home? How does one begin the process and what are the steps going through it…in order? Sorry for such a long question, but our realtor is pushing us to consider this program and I am having trouble convincing my husband or explaining it to him. We like the no down payment option and the option to roll over the closing costs in the loan. Of the houses we have been looking at the down payment (we have qualified for an FHA loan with a 3.5% down option) and the closing costs (which seem huge here in NJ mainly because of the rule that a lawyer needs to be involved in the process and the inspectors charge so much), in comparison to our previous residence in Oregon…suck up a lot of our cash savings. My husband is not willing to put most of our cash into buying a home which would leave us without any cash reserve in case of an emergency. We would also like to only use his credit and income (which qualifies us for the FHA process) and leave me and my retirement income out of it. I love your advice…it’s the first time I have been able to even find the USDA site! The phone number our realtor gave us directed us to a firm called Evolve Bank & Trust. That was a little confusing for me…….


Shannon O'Brien October 13, 2012 at 5:30 pm

Chimey, it appears as if your real estate agent isn’t doing his or her job. That you have all these questions and that your agent gave you a phone number instead of providing you with the answers to your questions should be a red flag. FIRE THIS AGENT and find another one that will do his or her job.

That said, let’s look at the major difference between the two programs: A Section 502 guaranteed loan is provided and serviced by a traditional lender, but guaranteed by the USDA (much like HUD guarantees the FHA loan). The lender for the Section 502 direct loan is the FDA’s Rural Housing Service and Rural Development handles the servicing.

Yes, the process is a bit different from the typical home buying process in that the lender, if you choose the guaranteed loan, must be approved by the Rural Housing Service (RHS) and the home must meet approval as well. My suggestion is to contact the RHS rep in your area before house hunting to ensure you qualify. The representative will tell you how to proceed from there.

I am amazed that your “Realtor is pushing you” to go through with this process yet doesn’t seem to be lifting a hand to answer all of your questions. Again, I would seriously consider getting rid of this agent and finding a better one. New Jersey is loaded with competent, government loan savvy Realtors who would love to provide you and your husband with excellent customer service.

Here’s how to find the Rural Development office in your area:

Go to

In the top navigation bar click on “Programs and Services,” and you’ll see a dropdown menu. Click on “Grants and Loans.”

On the new page, click on “Rural Development Loan Assistance.”

Under the first subhead, “Housing for Individuals,” click on “Rural Housing Guaranteed Loan.” The person you contact can help you with information about both the direct and the guaranteed loan.

Scroll to the bottom of this new page and, under the Basic Instruction heading, look for the “Rural Development” text link and click on it.

A new page opens with a map. Click on New Jersey. On the next page, click on your county. This will open a new page with the contact information for the Rural Development offices in your area.

Call the representatives and they will answer any questions you may have.

I do hope this works out for you and thanks for the thoughtful questions!


Pat September 27, 2012 at 5:33 pm

So, if my husband and I have our current house on the market but have not sold it yet, will we be able to apply for a usda loan?


Shannon O'Brien September 27, 2012 at 7:16 pm

Hi Pat,

It depends (don’t you hate that?). Typically, your current home needs to be under contract with a definite closing date. There are exceptions, however. One of these is if you are forced to move to accept a new job. When this happens, the old home is no longer considered to be “within the local commuting area” of your new job.

Don’t forget: the USDA loan has income requirements. Some of these include:

Not having sufficient resources to get conventional credit without a rural development loan guarantee
Your income cannot exceed the moderate income limits

Your best source of information on these programs is the USDA website.

Thanks for the question, by the way!


Catherine September 27, 2012 at 4:56 pm

Hi there. I have looked into the qualifications needed for this loan and haven’t seen (until today) that you cannot own a home within commuting distance of the home you wish to purchase. I live in NJ and my boyfriend and I were going to tryto qualify for a USDA loan but my BF owns a home in the town in which we wish to buy (the current home does not suit our future needs size wise). Is that stipilation true? We were hoping to list the house he owns and buy a larger home in our same neighborhood.


Shannon O'Brien September 27, 2012 at 7:20 pm

Yes, it is true. Qualifications for this loan include that the applicant must

This is in addition to the income requirements and property eligibility requirements. Perhaps your best bet is to wait until after your boyfriend’s home sells to apply for a USDA loan, provided you meet the income requirements and the house you want to purchase is in an eligible area.

Best of luck!


Mohan September 26, 2012 at 4:57 pm

According to the USDA ‘Eligible Areas’ map East windsor in NJ qualifies as a eligible area.

Does this mean any ‘single family’ house in East Windsor qualifies for a USDA ‘Guaranteed Loan’ scheme.
Or do we have to first find out if a given house is qualified ..although it is in a qualifying area.

Please advise.




Shannon O'Brien September 26, 2012 at 10:45 pm

Hi Mohan,

The USDA website has a section in which you can enter the address of the property and they’ll let you know if it’s eligible. Follow these instructions to get to the web page:

Go to

In the top navigation bar click on “Programs and Services,” and you’ll see a dropdown menu. Click on “Grants and Loans.”

On the new page, click on “Housing Assistance.”

Under the first subhead, “Housing for Individuals,” click on either the first or second link: “Single Family Direct Homeownership Loans,” or “Single Family Guaranteed Homeownership Loans,” depending on the program you’re interested in.

On the new page, look at the right side and click on the link named “Find Income & Housing eligibility.”

On the new page you’ll find the navigation bar on the left side of the page. Near the top, under “Property Eligibility” and “Programs,” click on “Single Family Housing.”

On the new page, click the “Accept” button.

In the top search box, just above the map, enter the address of the home you wish to purchase. A new page will appear telling you whether or not that home is eligible for the USDA loan.

Hope it works out for you!


Ross Bellavia August 31, 2012 at 4:01 pm

I have one of these loans, and over the last 2 years have not been able to find any refinancing options available, due to the type of loan this is. do you know of any options out there? I work for one of the largest financial institutions in the world, and still I cannot find any refinancing options. Thank you.


Shannon O'Brien September 1, 2012 at 10:08 pm

Hi Ross,

The USDA has a 2-year pilot program for refinancing USDA rural loans, but only in select states. Since you don’t mention where you are, you’ll need to check to see if it’s available in your state: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina and Tennessee.

Then go to the USDA rural development website to find the phone number of the office in your state.

Hope it works out for you!


Eric Trissel August 12, 2012 at 5:42 pm


There are some lenders that will allow you to get money for needed repairs, as long as the home appraises for enough. No extras though just enough to get the home up to minimum HUD handbook guidelines.


click here August 9, 2012 at 6:14 pm

You don’t want to buy a house with no down payment. I made that mistake two years ago, and barely avoided foreclosure. Just wait until you’ve paid down your student loans and you have at least 20 – 30% for your down payment. Besides given the current financial market, you’ll be hard pressed to find a lender willing to give you a loan without a significant down payment.. . When buying a house make sure the mortgage payment, insurance, taxes, and HOA is no more than rent for a comparable place. that way in case you want to move you can “ladder” the property. meaning you can rent it out and move elsewhere. The rent will cover the monthly expenses and you’ll benefit from any appreciation.


Eva August 9, 2012 at 2:52 am

what credit score qualifies you for this program?


Brandi January 9, 2013 at 9:38 pm

620-640 and you may be able to use non traditional credit such as cell phone bills, car payments, insurance, rent etc as long as you’ve been making the payments in good standing for over a year


Pat June 27, 2012 at 8:09 pm

I got approve for a usda home loan and i was told that the house has to be in good shape like walls, floors, no wood frame, and it takes a long time for usda to approve it is that true


Marianasliving June 13, 2012 at 8:01 am

I love this post! it’s so great. I learned a lot. I am interested in no money down loan. Thanks for finding this program.


Anjelina June 10, 2012 at 12:53 am

I am wondering the same thing Sharon, if your approved for more than you actually paid for the house, can you use the difference, up to the amount approved, to fix the home up. Because, most foreclosed homes require new carpet and repairs.


Tim June 5, 2012 at 6:00 pm


You may also want to look into FHA 203k loans which provide funds for repairs and upgrades. Your state and city may also offer grants or assistance for updating your home or assisting with down payment and closing costs depending on your situation. When it comes to appliances you may also find it wiser to obtain financing elsewhere so that the debt is not tied to your home. Home Depot and other stores frequently provide no interest financing type deals on these items. However, be wary of having your credit pulled again or too many times before you close on your home or you could jeopardize your closing as your lender may check your credit score again.


sharon June 5, 2012 at 5:43 am

i have a question, if i get a usda loan and purchase a forclosed home that needs new flooring and appliances, can i get a usda grant also to help with my cost of purchasing these items. i am on a fixed income and have been approved for this particular loan. thank you


Charlene February 20, 2013 at 11:33 am

I see this is from last June. Did you get an answer? I also am wanting to know.


Shannon O'Brien February 20, 2013 at 2:33 pm

Hi Sharon and Charlene,

Your best bet here is to contact your lender with the question. Or, you can also contact the USDA Rural Development Area Office serving your county. Either of these sources should be able to give you a more definitive answer, based on the location of the home and your particular circumstances.

Good luck!


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