USDA - A Deeper Dive

LTV's

USDA loans allow non-veterans to borrower 100% of the home's value. However they do not offer cash-out options.

DTI's

Because of their flexibilty with equity, USDA loans carry the firmest debt ratios, allowing a DTI of only 41% of your gross monthly income. 

FICO's

USDA typically requires credit scores above 600 to issue a loan approval, but high liquid assets can help offset lower FICOs.

Bankruptcy

A minimum of twelve months must pass from a chapter 13 discharge to be eligible for USDA financing. Discharged chapter 7's and dismissed chapter 13's require a three year wait.

Foreclosure

Once a borrower forecloses on a home, they will not be able to obtain USDA financing for a minimum of three years.

Mortgage Lates

The USDA does not allow any late payments to a mortgage or a landlord within the last 12 months.

Understanding Guarantee Fees

Upfront and Monthly

Similar to FHA, the USDA guarantee fee is charged as a split premium. A portion is paid upfront (1% is financed into your new loan) and there is a monthly amount included in your mortgage payment. 

Breaking down your payment

See the guarantee fee breakdown chart to understand how the charges affect your monthly payments. Notice the calculation is much simpler than FHA, given that USDA loans typically do not see much variance in their LTVs and only offer 30 year terms.

Where do they Guarantee?

It is commonly thought that USDA guaranteed homes are only located in the "middle of nowhere" - on the contrary, all the green on the map is eligible for USDA financing.  As you can see, only truly metropolis areas are deemed ineligible.


For a closer look, use the button below to be taken directly to the USDA's eligibility sight. Once arrived, click on "Single Family Housing Guaranteed" in the top left.