Automated vs. Manual Underwriting for USDA Mortgages
Automated USDA Mortgage Approvals
Under the automated approval for USDA loan the borrower is required to have a present minimum credit score starting at 640. This type of automated approval for USDA gives the borrower the benefit to qualify for reduced documentation loan file which in turn can help in speeding up the processing time. These automated approvals provides for more flexibility in the USDA loan eligibility for issues like:
- Past negative or ‘spotty’ credit history
- Debt Ratio
- Verification process of rental history
However, when the borrower receives the GUS eligibility response that starts with ‘refer with caution’ or ‘refer’ than the loan file will receive a stringent review under the USDA manual underwriting guidelines.
Manual Underwriting for USDA Mortgages
As compared to automated approval, ,manual underwriting can feel more complex and thorough but there is no denying the fact this process offers a lot of benefits to the borrower. With manual underwriting currently work with credit scores as low as 620 which is great news for those applicants who have a low credit score. Also, those borrowers who have zero score with no credit standing can also take advantage of the flexibility offered by manual underwriting. However, the underwriter will require verification of rental history with the help of alternative credit like phone or water bills as well through cancelled checks.
Advantages of Automated vs. Manual Underwriting
Both automated approvals as well as manual underwriting come with their own set of advantages.
Where automated approvals provide the borrower with the advantage of reduced documentation loan file which speeds up the processing time, the manual underwriting works with credit score as low as 620 which is perfect for those who have zero score with no credit standing.
Moreover, automated approvals provide flexibility in issues concerning debt ratio, past adverse credit history as well as past rental verification history.