Best USDA Mortgage Lenders of April 2024 - NerdWallet (2024)

FAQs

For which buyer would a USDA loan be most appropriate? ›

The USDA mortgage program is intended for home buyers with low-to-average household incomes. In order to qualify, you must also purchase a home in a “rural area” as the USDA defines it.

How Much Can You Really Borrow? Even though the USDA Guaranteed Loan has no limit on the amount you can borrow, it's highly unlikely any borrower could get a USDA Loan for more than $300,000-$400,000. Since the USDA loan is geared towards low-to-moderate income families, they have strict income limits.

Approved USDA loan lenders typically require a minimum credit score of at least 620 to get a USDA home loan. However, the USDA doesn't have a minimum credit score, so borrowers with scores below 620 may still be eligible for a USDA-backed mortgage.

However, there are certain disadvantages to consider, such as income limits, property restrictions, occupancy requirements, USDA program fees and a potentially longer underwriting timeline.

Simply put, USDA Prime is the highest-quality beef available in the USA, making it perfect for high-heat grilling. It's always harvested from young, well-fed cattle with an abundance or slight abundance of marbling, and at most, only 5% of cattle harvested in America meet Prime grading requirements.

What is the DTI limit for USDA loans? The borrower's proposed monthly housing expenses (top ratio) for USDA loans may not exceed 29% of their repayment income. Additionally, their overall monthly debts may not surpass 41% of their repayment income.

Whether it's easier to get a USDA or an FHA loan varies based on the borrower. If your goal is to buy a home in a rural or suburban area, your income isn't more than 115% of the median in the area and you meet other requirements, a USDA loan is going to be easier to apply and get approval for.

USDA loans are an affordable mortgage option that it come with low interest rates compared to common conventional loans. The guarantee secures USDA-sponsored lenders, allowing them to offer much lower rates.

The current standard USDA loan income limit for 1-4 member households is $112,450, up from $110,650 in early 2024. The 2024 limit for 5-8 member households is $148,450, up from $146,050. USDA loan limits by county may be higher to account for cost of living.

Can our payment change? Annually, the amount paid by you and Rural Development is reviewed. Your payments can change based on changes in your total household income. Usually, if your income increases, your mortgage payments will increase.

What is the DTI limit for USDA loan? ›

USDA Loan Eligibility

A minimum credit score of around 620 (credit score requirements might vary per borrower) A debt-to-income (DTI) ratio of 41% or less. Have an income no higher than 115% of the median household income in your area.

According to the U.S. Department of Agriculture, the most common reasons for a failed USDA loan application include insufficient income, debt-to-income ratios that are too high, and credit history or score issues. A study conducted in 2020 found that 24% of USDA loan applications were denied due to credit score issues.

The applicant must: Have the legal capacity to enter into a loan agreement; • Have the financial resources to repay the loan; • Have an acceptable credit history; and • Meet the specific requirements for participation in the program, such as eligibility based on income and citizenship status.

What credit score is needed to buy a $300K house? The required credit score to buy a $300K house typically ranges from 580 to 720 or higher, depending on the type of loan. For an FHA loan, the minimum credit score is usually around 580.

Along with no need for a down payment, USDA loans have another advantage: You could qualify for a modest, fixed interest rate if you have low income. Some drawbacks, though, are that the property must be located in a USDA-approved area, and borrowers cannot earn more than a certain amount.

Guaranteed loans are made by private lenders such as banks, whereas direct loans are made by USDA. Borrowers with incomes up to 115% of U.S. median income can qualify for guaranteed loans, while direct borrowers have incomes not more than 80% of area median.

With BofA no longer approving and funding USDA loan in California, there will be some sort of impact on home buyers in counties or areas eligible for USDA financing.