USDA Credit Requirements

USDA Credit Requirements

While the USDA loan program itself does not have a minimum score requirement, it does have a minimum trade line requirement.

A USDA loan requires two trade lines that are either open for twelve months or a closed account with a twelve month pay history.

For borrowers that do not meet the minimum account requirement may substitute non-traditional sources to meet this account requirements.

Some examples of non-traditional credit are: rent, insurance, utilities etc… 

These may be used to satisfy the requirement. If there are two borrowers, only one applicant must meet the three trade line requirements.

USDA Minimum Credit Score

The USDA does not a minimum score per say however, most lenders require a 620 or above.

How does a USDA loan differ from a conventional mortgage loan?

USDA loans differ from conventional, or non government-backed, mortgages in important ways.

What are the fees and costs associated with USDA loans?

USDA-guaranteed 100% loans charge a 1% upfront fee and also charge a monthly 0.35% mortgage insurance fee that you’ll pay for the life of the loan. On a $100,000 loan, you’d have to pay a $1,000 initial fee and each month you’d pay $350, on top of your mortgage payment.

This funding fee is rolled into the loan, so the borrower doesn’t have to cover it in their closing costs.

USDA loan recap:

The USDA 100% loan is a great program for buyers that meet the USDA requirements.