USDA Loan Process
The process of getting a USDA guaranteed loan can be broken down into a few simple steps. The first step is to see if you qualify for a USDA loan. You can learn more about the requirements on our website, or you can apply to see if you qualify.
Step 1: Get Pre-Approved / Are You Eligible?
If you would like to get pre-approved for a USDA loan right away, please submit a request to apply.
The primary USDA loan requirements are related to your income, credit history, and property eligibility. If you would like to get an idea if you will qualify for a USDA guaranteed loan, please review the current requirements.
- Income – USDA loans have strict income requirements, including limitations to have you total household income you may have. The USDA income limits are based on the county you want to purchase a home in. You can learn more about USDA income limits and requirements here.
- Credit – Our credit score guidelines for the USDA guaranteed loan require a minimum FICO score of 620. If you have two scores, it is the lower of the two. If you have 3 scores on your credit report, the middle score is used. You can learn about the USDA guaranteed loan credit score and credit history requirements on this page. Some USDA lenders allow under a 620, but that is our minimum score allowed.
- Property – USDA loans are only available for properties located in eligible areas. You may view the eligible zones on the USDA website. We also have written out a detailed list of current USDA property requirements. This includes how to determine if a property is located in an eligible area, as well as other property guidelines, which you can learn more about here.
It is important to keep in mind that regardless of the type of home loan you want to get, you should always get pre-approved before making an offer on a property. At the very least, it is advised to get prequalified which will give you an accurate idea of what you can qualify for once you officially apply. This recommendation is especially needed for a USDA loan, in which case a borrower must ensure income and property eligibility.
Step 2: Receive Approval / Conditions to Close
This usually consists of some basics “requirements to close” such as submitting an appraisal and income documentation. Depending on the individual borrower, oftentimes other conditions must be met such as providing additional documentation.
As a quick overview of what conditions are needed to be met, you can be certain that all USDA loans will require the following:
- Credit check
- Most recent pay stubs
- Two years tax returns
Some possibly required documents/conditions are:
- Rental history (such as copy of lease or letter verifying your recent rental agreement)
- Bank statements
- Asset information – assets are not required for a USDA loan, but if you need to get an exception for having to high of debt ratios, assets (cash reserves in savings for instance) can serve as a compensating factor.
Step 3: Send in All Conditions to Close
After receiving all necessary conditions that are needed to close, send them in as soon as you are able to. We underwrite mortgage loans fast, so documentation, appraisals, and other conditions that are sent in for review are cleared quickly.
Step 4: Final USDA Approval and Loan Closing
Once your loan has been processed, it must have a final approval from a USDA underwriter. This is nothing to fret over. We underwrite loans precisely to the USDA loan requirements. Therefore, when the loan is submitted for a final approval by the Department of Agriculture, it is a quick and easy final review just to ensure that everything meets their guidelines. Fortunately, this final underwriting step has become more efficient which should not delay the closing by very long (usually just a few days). Once they give the “go ahead” we can move towards closing your loan, and you can then move into your new home!
Would you like to take the first step and get approved for a USDA loan now?
It is easy to get a quote for your USDA home loan!