3 Things That Lender Looks At When You Apply For a USDA Rural Development Loan
USDA Rural Development Loan
While USDA Rural Development loans have been around for quite awhile, many people still don’t even know about this great government loan opportunity. The USDA Rural Development loan is a government mortgage program specifically designed for homes in the rural community. This rural development loan program helps moderate to low income families buy homes in designated rural areas, or areas with a population of less than 20,000 residents. USDA rural development loans are guaranteed by the United States Government and are the only mortgages available to the general public that don’t require a down payment.
The purpose of the USDA rural development loan is to encourage growth in rural areas, as well as allowing moderate to low income families a chance to purchase a home with affordable monthly mortgage payments. USDA development loans also allow buyers with limited credit history to be eligible for a loan.
3 Things Lenders Look At Most
If you’re interested in applying for a USDA Rural Development loan, there are three different criteria that lenders look at most. These are income, work history and credit history. The most important thing lenders will look at is your income. Because USDA rural development loans are specifically designed for low to moderate income families, if your income is above the median income of the area, you may not be eligible for the loan. Also, your lender will need to see that you can adequately afford monthly mortgage payments and that you have a steady source of income.
The second thing that lenders will look at is your work history. While having an extensive work history is not a prerequisite for a USDA loan, lenders will want to look over your work history to make sure there are no discrepancies in your record. A discrepancy is a long, unexplained time with no employment or a series of jobs that only last a few weeks or months. Your lender will want to make sure that you can hold a job for longer than 6 months so that you can afford to pay back your loan. Even if your work history may be inconsistent, as long as your recent work history is good, and you can adequately afford monthly mortgage payments, you won’t have a problem.
And the final thing that is most important to lenders is your credit history. While USDA loans are known for their credit flexibility, this doesn’t mean that bad credit history is accepted. Generally, lenders will not go below a credit score of 600, which is low compared to most standard mortgages. However, the USDA will look at your total finances as a whole, and could look past a low credit score if you can show your making financial progress.