The US Department of Agriculture (USDA) Rural Development (RD) loan is ideal for potential homebuyers who have substandard credit histories. While other mortgage loan programs require borrowers to have a credit score of at least 640, the USDA RD loan accepts credit scores as low as 620. Bruised credit isn’t always the result of poor financial management and carelessness; job loss during the economy’s recession, rising healthcare costs, student loans, and unexpected medical expenses will force one to make difficult financial decisions that can affect credit. Fortunately, USDA understands such hardships, and even disregards bankruptcies after 2 years of discharge and forgives foreclosures after 3 years.
The USDA RD loan is also advantageous to homeowners wishing to strengthen their credit profiles. Borrowers without an extensive credit history can still get a loan if they have had two active positive tradelines on their credit report for at least 12 months. Acquiring and paying a mortgage on time has a great positive impact on credit profiles, so later it is easier for people to afford vehicles, appliances, and other necessities, and helps homebuyers look more appealing to potential future employers who may check credit histories.
The USDA RD mortgage loan program isn’t just beneficial to borrowers with lower credit scores, but also to lower-income citizens. Since the loan program doesn’t require a down payment, families who stretch every dollar can afford their own homes with less reserves than required of other popular mortgage loan programs. The most important requisite for a USDA RD loan preapproval is a reliable employment and pay history. If a borrower has been steadily employed for 2 years and can prove adequate income to cover their monthly mortgage payment, they will meet minimum standards for an RD loan. Another great aspect of the RD program is that it allows up to four borrowers on a loan which is helpful for households with blended incomes.
The USDA RD loan is affordable and preapproval is easy. Borrowers who have had credit mishaps or no credit until recently now have the ability to buy their own homes. USDA is committed to growing our economy and giving every deserving citizen the equal opportunity to achieve the American dream.