Minimum Credit Score requirements for USDA Loans 2015

Credit Score Requirements for USDA Loans 2015

USDA Loans are perfect for people who want a home in a little more rural area.  USDA Loans have no down payment requirement, and Sellers can pay closing costs… meaning you can buy a home with a USDA Loan with PENNIES out-of-pocket! The payments and Mortgage Rates for USDA Loans are some of the lowest available.  Because there’s no down payment, the Government does require a slightly higher credit score than some other mortgage programs.  However, minimum Credit Score requirements for USDA Loans 2015 can no longer go below 640.

The program’s full name is the USDA Rural Development Guaranteed Housing Loan program. Most people call them “USDA loans” or “USDA RD Loans”.  USDA home loans NC are insured by the U.S. Department of Agriculture.  Again, the USDA’s loan’s biggest feature is that it is a No Money Down Home Loan!

Is the USDA loan program limited to First Time Home Buyers?

No, the USDA RD Loan can be used by First Time Home Buyers and repeat buyers.  We’ve done several loans for folks who currently have a house (in Tennessee for instance) and get transferred to NC – meaning that when they buy in NC… they’ll have 2 houses.  There are some ways for this to work. (Call us 919 649 5058)

Minimum Credit Score Requirements for USDA Loans 2015

  • For an “Automated” (Automatic) Approval on a USDA Home Loan in NC, a minimum credit score of 640 is needed.  We will also need a 640 credit score if you are applying for the NCHFA Mortgage Credit Certificate / the 2015 Mortgage Tax Credit.  IF YOU ARE OVER THE 29/41 Ratio requirements for a USDA Home Loan, you might need a credit score as high as 680 for an “Automatic Approval.”  Without the Automatic (read:  An approval spit out by the Computer system they have) then you will get a MANUAL Underwrite for your USDA Home Loan.
  • We CAN do a Manual Underwriting of your USDA Loan if the Middle score of all applicants is at least 600. We need some strong Compensating Factors to ask for an approval on loans with middle credit scores between 609 and 640.  A college degree, or Job training that provides some potential for increased earnings MIGHT be considered a compensating factor.  There’s a pretty long list of USDA Loan compensating factors that we use to help borrowers with lower credit scores, having cash left over after closing (for instance) is a pretty good way to “beef up” your file and get approved.  Another factor we are seeing important for USDA Loan Manual Underwriting Approval is little to NO Payment Shock.
  • With a Manually Underwritten USDA Loan, the minimum credit score requirements are tied to over-all debt ratios.  Like Compensating Factors, we can ask for a Debt Waiver from the USDA Loan Underwriters, and we will go over all of your options if your scores are lower than USDA is looking for, or your ratios are higher.  We WILL work with folks who do not CURRENTLY meet the minimum credit scores requirements for a USDA Loan 2015, to help you get them higher so you can buy.  We can run “simulators” that tell us exactly what you need to do to get your scores higher. We are not a Credit “fixing” fill in the blank company.  We are not charging you for our time, or expertise – we just hope you WILL use us when you’ve gotten your credit fixed and you’re ready to buy a house :)  We are genuinely here to help!
  • No more than one payment in the last 12 months can show as having been more than 30 days late. In general though, minimum Credit Score requirements for USDA Loans 2015 mean that you need 12 months of “Clean Credit” with no bad information added to your credit file. “Clean Credit” is a slang term used OFTEN in mortgage lending. It refers most often to someone who has 12 months with no late payments.  But it’s not just late payments, it also refers to 12 months with no new collections filed against you.  12 months with no judgments of liens filed on your credit report. 12 months with no one writing anything to your credit report except GOOD STUFF.If you had some late payments on a couple of credit cards in the middle of 2006… and then you hit another rough patch in 2008, and then AGAIN in 2010 and 2011… we refer to that as “sloppy” credit.  You could still have a credit score of 620 – but it shows a history of not paying on time.  For THIS type of borrower – the underwriter might require us to have 18 to 24 months of CLEAN CREDIT!
  • Chapter 7 and 13 must be DISCHARGED for 3 yearsForeclosures must have been completed 3 years ago.  This is significantly more strict than FHA or VA loans, and while the Underwriting Manual says you can get an exception – we’ve had no luck getting one of their Underwriters to approve a loan with less than 3 full years.
  • Collections – Accounts cannot have been placed in collection status within the last 12-months.  So again, they want to see 12 months of good stuff being added to your credit report.  Collections May not need to be paid off. This is especially true for Medical Collections.  If the Collection accounts total (medical or not) less than $2000 then USDA No longer requires us to pay them off.
  • Judgements – Must should be paid off for at least 12 months.  Because Judgements can attach to the property you purchase and become a first lien, this can be kind of a big deal…  This requirement is non-negotiable, because you can not get Title Insurance if you have a Judgement or Lien against you. Remember, you can not dispute a Judgement or Lien.  A Judge had to see the documentation for that to be on your report, so you have the option of Settling it – or leaving it on the report until it ages off.  Unpaid Taxes (a tax lien) will stay on your credit report for 15 years.
  • If the applicant’s middle credit score is under 640 a written verification of rent is required for the most recent 12 months.
  • USDA Loan Underwriters no longer accept non-traditional credit.  Traditional Credit Scores are needed.  We need at least two trade lines.  We can no longer build credit, using your cell phone bill as proof that you make your payments on time.  If you are a first time home buyer, and you don’t have much credit  – or if most of the credit you do have is Student Loans, well then call us.   You can sometimes get added to a family member’s credit card, or you can get started with a couple of secured credit cards. The problem is that USDA Home Loan Underwriters (as of December 2014) require us to back out the credit you’ve gotten as an Authorized User.
  • You need at least TWO trade lines that are at least 12 months old.  Some loan officers reported that they need 2 years of credit history.  We don’t.  NC USDA Loan Underwriters will approve loans with a 12 month history of on time charges, payments on at least 2 accounts.  

USDA Home Loan Requirements

To qualify for a USDA Loan, you must buy a house within the USDA Loan “Footprint.”  Every County in North Carolina has some portion that qualifies for the program. These mortgage loans are for owner occupied properties, and they are really not designed for a Horse Farm.  In fact Outbuildings can detract from the value USDA places on the home.

  • Non-occupant co-borrowers are not permitted
  • Generally, borrowers must sell their existing home – although, if it is a Company Directed Relocation, and you can not logically commute, you may be able to keep the existing home.

You must also be under the Household Income Limit for the County you are buying a home in.  The USDA Loan Underwriter looks at Income from two different perspectives:

  • Eligibility Income – Includes all income (salary, tips, bonus, overtime, alimony, child support, etc..) received by the applicant and co-applicant(s). This income is used to calculate qualifying ratios.
  • Adjusted Income – This is the applicant’s eligibility income less the total of any of the following deductions applicable to the loan. Income from all household members must be included in the total adjusted income. This adjusted income must not exceed 115% of the median household income for the area.

If you are considering a USDA Home Loan, and you have more questions about the Minimum Credit Score Requirements for USDA Loans 2015 –> please call Steve and Eleanor Thorne , 919-649-5058 Connect with us on Google Plus or Facebook


  1. Spikey says

    There is obviously a lot more to figure out about this issue, but you made some really good points. I will definitely be checking here more often. Thank you.

  2. Reece Khan says

    My credit score last year got lower because i have some unpaid bills on my credit card company and i also lost my job.;;;

  3. Molly Moore says

    in this times of economic recession, sometimes it is difficult to have a great credit score-*.

  4. says

    We still have USDA Home Loan available in NC – if you’ve been told there are no funds – you were miss lead. The “PMI” changes on 10/1 – but we are still closing these loans.

  5. Marianne says

    A few things… My husband’s Chapter 7 discharged in Jan. 2011, we’ve re-established credit & scores are: his-647-mine-658, we pay all utilities & rent on time. He’s been in same line of work for 20+ yrs. We have 401K savings & some cash reserves, too. We’re interested in qualifying for a USDA loan outside the Charlotte area & wanted to know what would be the earliest possible time to try & qualify? Additionally, his former FL primary residence (a conventional loan) was included in the BK & then months later, short sold in a lender approved sale in 10/2012 with no neg. info as it was included in the BK there’s nothing reporting but zero balance, incld. in BK Our rent is $1170 and we’d be seeking a PITI paym’t of about $700-800. BTW -We’re Charlotte transplants. Thx for your time & help.

  6. says

    Please call us, we’ll be glad to help you. In general, it looks like you might be okay, but we would need to pull a MARI report, which we can do in a day.

  7. Serg Stojanovic says

    Hello, I have a question on the USDA purchase money loan (NC). My mid score is 684 and everything else is in line for an approval. The one thing in question is a $12,000 charge off account (2008) with Home Depot. There is a collection agency that has the account now and placed it on the report as a collection. There was a hardship regarding the account going to collection in the first place, but if it’s an account that won’t effect lien position on title, will we even need to address that with a 680+ score?

  8. says

    Thanks for asking the question! We would not necessarily have to count the 2008 against you, because it is more than 5 years old. In NC, that’s the statute of limitations for collections… having said that, it’s going to depend on the way the information is being reported. We would be glad to look at it for you – just call us 919 649 5058

  9. Jasmine says

    I’m looking to buy a house in South Carolina but I won’t be able to occupy the house for about a year at least. Can I still qualify for a usda loan?

  10. says

    USDA Home Loans are for Owner Occupied homes only – but every situation is unique. We do loans in South Carolina, so call us, and we’ll be glad to go over it with you. There’s no fee or obligation 919 649 5058

  11. Rob Troha says

    My credit score is 639 .I am on s.s.disability making 12,720 yearly .Can I get a fha or usda loan ? How much home would I qualify for? Thanks

  12. Matt says

    I had a bankruptcy that was discharged in 2010 and since then I have reestablished credit and looking to do a USDA loan, I had quicken run my credit and they said my score was like 704 and have never missed a payment or had a collection since the bankruptcy and have multiple trade lines (credit cards with zero balances) had 2 car loans and just paid one off in full and never late on anything since the bankruptcy. They told me I qualified for FHA but was wondering about USDA, but was curious if loan amounts were different and if you get approved for higher amounts with USDA. I think they said I qualified for like 180K with FHA but was curious if that amount would be higher with USDA since the PMI and other stuff is usually lower. Would I even qualify for the USDA because I know they are income stipulations. Thanks

  13. says

    Matt – Quicken doesn’t offer USDA Home Loans, best we can tell, based upon the fact that we’ve done several loans for their employees. With the profile you’ve given you would definitely qualify for a USDA Home Loan. Call us at 919 649 5058

  14. LaShaunda Garden says

    Hi! I have scores and the scores listed on the site are 613, 623, 632. What does this mean for me? I want a USDA loan. How can I get the ball rolling? Thank you!

  15. Cathy says

    I am in Mecklenburg County (Charlotte) and looking for a mortgage that can work with my low FICO (600). I have extenuating circumstances that I think they will accept. I have to move by May 1st, how quickly can I get qualified? Would you be able to help me find eligible housing in the Lake Norman area? Thank you!

  16. shonda says

    I am looking to ge into a home with a USDA loan. My credit score is a 590, however I have been at my current job for 7 years. I am a first time home buyer. Do you think it would be possible to get a USDA loan at this time or should I try to increase my credit score? The home I looking to purchase is $40,000.

  17. says

    Cathy – I think we’ve already spoken, but yes, we help people in the Charlotte area all the time. USDA Home Loans do have “waivers” that they will accept, but those normally work for high debt ratios, and folks with middle scores between 640 and 680. Having said that, we’ve seen folks improve their credit scores by 50 points or more pretty quickly! Give us a call, we’ll be glad to help!

  18. says

    LaShaunda, I think we’ve already spoken – but those are great scores! Congratulations! There are other programs that offer no down payment options, which is normally why folks are looking at USDA Home Loans. Most of the time, we see folks who can simply pay a credit card down, and get their scores to pop up 30 to 50 points! Call us, or complete the Application no the top right button, and we can give you a “thumprint” look at your credit scores, and what you need to do to meet the mortgage requirements. You are SOOOOOOOOOOOOOO close!

  19. Brittany says

    As of December 2014, USDA now has clear rules that state if your bankruptcy INCLUDED your home, the action of foreclosure (which usually takes place months or even years later) is an action against the property and NOT the person. For example, we had a bankruptcy discharge in January of 2012 and are three years out from the bankruptcy, but our home was just foreclosed in October of 2013. We are eligible for a USDA loan WITHOUT exceptions, because our home was included in the bankruptcy. Please update your information! I have a letter from Tony Hernandez, Administrator of the USDA Rural Development that this information is indeed true.

  20. Tiki says

    HI, I am looking for a USDA home loan. I am a first time home buyer. My FICO scores are 660,619,580. I have been at my current job for 9 years. The home I would like to purchase is 83,300. Is it possible to get approved with my scores?

  21. says

    Yes – it is possible. It is also VERY LIKELY that with 30 to 60 days worth of work, you can increase your credit scores to qualify for the BEST rates for a USDA Home Loan in NC. Call us please, it sounds like you’ve already had a lender pull your credit- and let us do a free analysis of where you are, and how we can help. 919 649 5058

  22. says

    Brittany – The USDA Home Loan Underwriting guidelines did change dramatically in December. I talked to a NC USDA RD Underwriter today, who thinks the way we are presenting it is correct, but a different opinion would help TONS OF PEOPLE who had the heartache of filing bankruptcy and went through foreclosure. I genuinely appreciate your feedback, and will continue to check and with our NC Office for clarification. I’ve also asked them to check with Mr. Hernandez. THANK YOU!

  23. tiffany says

    I have had everything approved with my mid score being 642, the problem is with fha they now want a verification of rent and the landlord refused to sign it. What can i do? Im told this will stop me from buying the home!

  24. says

    Tiffany, yes they have to verify your rent payments. Can you get copies of cancelled checks? They should be able to contact the landlord on the phone? They can have the credit bureau do that. Whoever your closing attorney is going to be might be able to convince them that this is part of their fiduciary responsibility as a landlord. If they give out false information, they can be in deep trouble. Call me later this afternoon if these remedies don’t work and I’ll see if I can give you some other ideas. It can work out. 919 649 5057

  25. tiffany says

    Thank you for your reply! I havent been on good terms with my landlord. He came to the property without permission and went looking thru my windows. I was babysitting my moms dog and he gave me a 15 day notice to leave the property. (I had paid the rent up for 3 months not making it due until june 2012) and this happened in april 2012. I called the landlord association board and they told me not to leave until he legally took me to court. I have not paid anything but instead have made major improvements to the property. I have not seen or heard from my landlord since the 15 day notice. Im currently still residing at the residence. I know this is very unusual and im just trying to get options. Again thank you for your help.

  26. says

    Tiffany that is an unusual case. If this has been your LEGAL residence, then I’m not sure what the answer is. The problem is that the Underwriter is required to calculate a “Payment Shock” and it sounds like yours would be close to 100%. I still think your best bet is going to be cancelled checks and some agreement showing where you had the OK to only pay for improvements to the house by the owner.

  27. Stacey says

    Hello, I’m wanting to buy a home so bad!! My credit score is 591, but I have 2 charge offs from several years back on my credit. I also have a few collections on my credit report that I recently paid off. Also theres like 2 that were paid off in a bankruptcy case years ago.Is there any hope???

  28. says

    Stacey! YES there’s hope! It sounds like you are working off of your credit report – and that’s always the best plan. You do NOT need to go to one of those Attorneys or Credit Companies who charge you, and then try to get items off your report. Don’t worry about the ones that were in the Bankruptcy. Just keep your paperwork.

    The most important thing to focus on now is GOOD CREDIT. Do you have any current revolving credit? If not, we always suggest that folks get a Secured Credit Card (or 2). You can get these at the Bank that is located in Walmart.

    You are on the right path! Congratulations! I believe you WILL be a home owner!
    You can always call us, we would love to be your lender 919 649 5058

  29. Stacey says

    I have tried getting a credit card recently to build my credit but I was denied! I have no revolving credit. Just good work history and 6yrs worth of faithful monthly rent payments! and always pay monthly bills on time.

  30. says

    Stacey! This is actually not as hard to fix as you might think. You are going to need to get a couple of Secured Credit Cards. Once you make payments for 4 to 6 months on time – you will get offers for other ones! When you get your “second round” of cards that have much better terms. Stop using the first set. That’s where folks get into trouble (been there, done that). ONLY use those credit cards to fill your car up once a month (for instance) and then pay them right back off.

    KEEP SAVING for the other stuff. YOU GOT THIS! Buying a home will usually mean that you need 12 months (that’s ALL) of making payments on 2 cards for 12 months! Yippee!

  31. Pamela says

    My daughter and I recently got a prequal for a $100,000 FHA loan with 3.5% down payment requirement.
    Can we get approved for a USDA Loan ? Closing cost are expensive the down payment is not cheap either what about the grant for closing and down payment . What can you recommend?

  32. says

    Pamela! This is a great question. USDA Home Loans don’t have any down payment requirements, which makes them a bit cheaper. The closing costs can be paid by the Seller which also helps.

    FHA Loans and USDA Home Loans can qualify for the NC Mortgage Grant program, and that can also be used to cover closing costs. There are a NUMBER of ways to make this work. Because it is better for me to give you “specific” suggestions, based upon your situation – I suggest you call us at 919 649 5058

  33. Ray says

    My wife has good credit scores and she is going down as borrower and I have a 580 550 and 600 and im going down as co borrower and I was wondering if We still would have a chance of getting approved with a USDA home rural development loan? Everything else I think were ok, just my credit score might make it inpossible, any help would be great!! THANKS!1

  34. Monica says

    i was wondering if I am crap out of luck for this program. We filled bankruptcy in October 2014 and it discharged January 2015. We sold our previous company to a so called friend of ours and he ended up taking everything we have and not paying the IRS, nor our vendors or us. To top it all off after they fired my husband they put a non compete on him. He is back working and we are now living in our 5th wheel trailer in a trailer park with our 2 kids and 5 dogs:(. Is there any hope for us?

  35. says

    Monica – Unfortunately, USDA does have a pretty strong 3 year wait period. If you are in NC, you might want to contact NCHFA directly and see if they have suggestions. Good Luck! :) -E.

  36. nicole says

    hi my husband has a low credit score of 515 520 537 he also has been recently layed off. where he was making 18.00 an hour. my credit is 600 (620) 635 im a nurse i make 48,000 a year my husband also has a son with disabilty and tht income is 853 a month. since my husband is layed off with bad credit will it mess us up from getting a fha loan and possibly a usda loan and possibly any other loan for getting a new home. we really want to get a new home and a cheap mortgage we are paying 1500 in rent now. also i signed up and waiting for my capital one secured card now. we are wanting to get a house built which will take 4 months we were told. can this work for us please help!!! and what all do we need if so to have to get approved. to get the home built and close on it.

  37. yvette says

    Hello. im trying to buy a house got my preapproval letter. only thing im lacking for closing is canceled checks for rent i pay to an individual i payed with money orders and have some of those receipts and i pay in cash and get back receipts out of a receipt book. I asked my broker about a vor. he said the lenders will say no. i really want this house bad. will this stop me from closing on the house.

  38. Teresa says

    We have a judgement that is 2137.00 from 6 years ago. We applied for a USDA loan, and just recently was approved by the underwriters. It was sent to the USDA office for final approval. My question is, should I be worry about the judgement?

  39. says

    PROBABLY. Judgements can attach to a property, just like a Mortgage (lien). Your problem will also be in getting Title Insurance, which is REQUIRED for a USDA Home Loan.

  40. says

    My fiancé and I were wanting to get approved for a USDA loan, he has a score of 640 and low debt to income ratio. The only problem is that he has a collection of 1400 from 4 years ago and also a collection of 600 dollars from 4 years ago. My question is would it be better to try and set up payment plans or just leave it alone since its been 4 years, we live in Va. Also if we leave it alone will he be able to get approved with the collections against him or will they even show from 4 years back? Thanks

  41. Craig says

    I am on disability pay, but I do have money for a down payment on a house. $20,000 My question is, would I qualify for a loan having a 659 credit score. If not, what other options do I have in buying a home, if any.

  42. says

    It will depend on what the collections are for. If they are for medical related issues, probably not – but I’d have to see it. You can call us at 919 649 5058 and we will be glad to give you the scoop :)

  43. Kenny says

    I sent in.the 502 pre qualify. I.have a high DTI at the moment. Credit scores for my wife and I are around 590. We are about 30,000 in debt but have a family member giving us 20,000 to pay off debt which will make our DTI very low and increase our credit scores.
    I make about 45,000 a year and my wife just graduated college and started working in her field 3 weeks ago making roughly 1200 a month. What are our chances of qualifying.

  44. Michelle says

    I’m interested in the guaranteed loan program. We applied for the other program in March and were approved for a lower amount than we had hoped for. notes from the underwriter were free up some income and we can lend more. My husband also is connected to an eviction judgment from a home he lived in with his parents when he was 19,over 15 years ago. Which we were unaware of until this acceptance. The eviction notice does not show up on his credit report but can be found on circuit court. We were approved before I found and accepted a new job in my same career field that put us over the income limit for the first loan we were approved for. My questions are will we still be aproved for the guaranteed loan and since we freed up over $390 income will me most likely get a higher approval amount and will the judgement he is linked to need to be paid before we can get the loan? Nothing was mentioned about paying it before hand and if it does need to be paid do we have to wait a certain amount of time before we will be approved.

  45. says

    The Guaranteed USDA Loan is not offered via mortgage lenders by me – however, any approval that is more than 120 days old, and you now have changed circumstances, will not be valid. The eviction notice likely showed up with a title search was done – I would contact the attorney or title company that did the search, and ask for help getting it taken off.

  46. says

    There are some slight differences about how items “age” off your file based upon the state the judgement was filed, however, 15 years is normally over the limit. I’m not in Wisconsin, so as I said in my other comment, you will need to contact an attorney or title agent to be certain what the rules are in Wisconsin.

  47. says

    I assume from this that you are applying for a USDA Direct Loan (which is sometimes referred to as a 502). Based upon what you are telling me – I suspect you are telling me – my guess is that you are about 6 months away from buying a house. I would counsel you to use that $20,000 wisely, and to add credit as quickly as possible to raise your wife’s score. Sometimes a secured credit card will help. USDA Loan Underwriters will no longer allow us to add her as an authorized used to bring her credit up. If you are in NC, we would be glad to help, you can call us at 919 649 5058

  48. Kenny says

    My wife just received a Capital One Quicksilver card and a Target store card wich we do not plan on using. What would you suggest be the best way to use the money and what and how much debt should I pay off first. Thank you for your time. We are interested in buying the house that we currently rent.

  49. says

    You will need to use the Target card at least once every 3 months. I would say like $50 – just to show some activity. I would charge a tank of gas on the Capital One card every month (so $50 or so) and then pay it down to around $20 dollars each month. Paying that little bit of interest will help her score build faster. I don’t know why – I just know it works !

  50. Doug says

    I have a question. My co-borrower (who lives with me now and will do so when we buy another home) has a home she uses as a rental property. She will have 2 yrs of proof (claims on taxes) by the time we are looking to buy another home. Is this going to be an issue with her on the loan for the new home?. I am sure everything else will be fine (scores are 690-730) . Thanks!

  51. laura says

    Your blog is incredibly helpful, thank you for sharing your expertise! My husband and I have been renting for 14 years, paying off school loans, and growing our family. We love out neighborhood and a house a few doors down will go up for auction ( not foreclosed just liquidating deceased family’s property). Our credit is in the 815 range, no outstanding debt, only 2 credit cards that we pay off monthly. When we went to see a loan specialist he was concerned we didn’t have more open lines of credit. Our other problem is that a 10% buyers premium is due the day of the auction. We know the house is in excellent condition and could possibly be purchased at a bargain. Can we take out a personal loan for the auction and then what are our chances of being approved for an USDA RD loan? We don’t have any savings in the bank or 401k, and gifts from family isn’t an option. Any advice would be helpful.

  52. Anthea O'Brien says

    I am in the market to purchase a home in MS. I do have a judgement which I will be clearing up in September. My scores have improved 605 634 640. Looking to purchase a USDA home. Is there an income requirement? and what is my next step to get the process started?


  53. Josh says

    We are 26 months removed from a short sale in Califronia. We moved to NC the day after the short sale was completed. Credit scores in mid 600s. Current on rent for 26 months. Found a home with USDA eligibility in Wake County, but we are being told that we are not eligible until 36 months removed from short sale.

    Is that completely accurate? I know the guidelines changed last December. Is there any chnace they change back anytime soon?

    Thanks! You are a wealth of information.


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