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USDA Rural Home Loans - Credit Score Requirements There is no written minimum credit score requirement to qualify for a USDA Rural Home Loan. However, many investors who fund the USDA Rural Home Loans have a minimum requirement of 620 middle credit score. This simply means that the USDA Rural Home Loan allows for a little variance in the credit score to qualify. The USDA Rural Home Loan will require that any borrower with less than a 620 middle credit score undergo a stringent credit screening. USDA Rural Home Loans will look at the most recent 12 months of rental history and with a lower credit score the USDA Rural Home Loan will definitely require you to write some detail credit letters of explanation. The good news is that a credit score of 620 or higher may allow you to get away with some pretty significant credit dings.
So What Is A USDA Rural Home Loan?
 When you think of USDA I know the first thing you think is USDA HOME LOAN FINANCING! Right? Actually, if you’re like most Americans you probably think of Milk, Cows, Pigs, Corn, Farms and a beautiful farm house. Anything but mortgages.
Rural, really isn’t all that rural. Here is a picture of a farm, and you’d have to go to Farmer Mac to finance it.
A USDA Rural Home Loan is designed to help families in areas that are “designated” as rural to get into a home with zero money down! In Louisiana the average cash out of pocket to buy a home is “currently” $158.70 and USDA Rural Home Loan demand has BOOMED upward by 475% over the last 12 months.
Here are a couple of hot buttons for those considering financing a home:
- You can buy a home without a down payment
- You don’t get charged an expensive (or any) monthly mortgage insurance payment
- Credit requirements are VERY FLEXIBLE
- A Rural designation may may look and feel like the burbs.
Stay tuned for maps of rural designated areas!
As always, if you are thinking of USDA Home Loan financing a home for any reason give me a call.
What Qualifies As USDA Rural?
The USDA Rural designation might surprise you. The USDA says that the property must be designated as rural by the Rural Housing Service (RHS) and some designated rural areas actually look and feel more like the suburbs. In Louisiana, parts of Louisiana area in Louisiana has the coveted USDA Rural designation, some of Louisiana's Towns are Rural areas. If the home you are interested in buying has the USDA Rural designation, you have a terrific opportunity to obtaining the most cost efficient, lowest payment home loan available.
To see if a property is eligible you can call or our office at (225) 924-2715. If you don't yet have a specific property in mind, just print out the map for the area. Or you can search the USDA Rural Property Eligibility Database for the property address.
How Much Will I Need Down For A Rural Real Estate Loan?
One of the best things about the UDSA Rural Real Estate Loan is that it allows people with low to moderate income to qualify to buy real estate in a rural designated area for zero down payment.
Nothing Down...
No money out of pocket at all to get a USDA Rural Real Estate Loan... well, almost no money out of pocket!
You see, the average out of pocket to buy rural real estate in Louisiana with the USDA Loan program is $158.70.
You really can buy Real Estate in Louisiana with No Money Down, you just have to find the right property!
So if you are thinking of buying a home in Louisiana and have $160 laying around, the USDA Rural Home Loan may be just what you are looking for. Take a look at the Maps in this site to see if the property you are looking at qualifies. If you can't tell, just contact me and I'll check it out for you or you can look into the USDA Eligible Properties database.
How Much Can I Borrow WIth A USDA Rural Home Loan?
I am often asked "Melanie, how much can I borrow with a USDA Rural Home Loan here in Louisiana?"
The answer for home buyers is "It Depends".
For a USDA Rural Home Loan it depends on your repayment ability and the appraised value of the home you are buying. We'll look at the ratio of your Pre-Tax Net Income to your new monthly USDA Rural Home Loan payment. We call that the Front End Ratio and generally like it to be around 29%. It can go higher if there are compensating factors like a great credit score or extra savings. There are a lot of things that can qualify as a compensating factor for the USDA Rural Home Loan.
We'll also take a look at the ratio of your total Pre-Tax Net Income to your total monthly expenses including your new USDA Rural Home Loan payment. The back end ratio should be around 41%, but also can go higher with compensating factors.
We'll use these ratios to determine the maximum USDA Rural Home Loan amount that you can qualify for.
Contact me and I'll show you not only how much you can qualify for, but also how much cheaper the USDA Rural Home Loan is than FHA or Conventional financing.
Loan or FHA Home Loan - Which Has The Lowest Cost?
Our USDA Rural Home Loan will save you a truck load of cash and help you keep your money in your own bank account after closing…
Here’s a quick comparison.
How Much Can Be Financed?
- 102% of the APPRAISED value! (finance up to $153,000 in this example)
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Appraised Value |
$150,000 |
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Purchase Price |
$145,000 |
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Closing Costs & Prepaids |
$5,000 |
FHA, Conventional or our Rural Home Loan? Which is better for YOU?
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FHA |
Conv. |
RHL |
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Purchase Price |
200,000 |
200,000 |
200,000 |
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Loan Amount |
194,300 |
190,000 |
204,000 |
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Principal & Interest |
1,228.11 |
1,264.07 |
1,289.42 |
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Mortgage Ins. Premium (monthly) |
80.96 |
272.33 |
0.00 |
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Total Monthly Payment |
1,309.07 |
1,536.40 |
1,289.42 |
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DOWN PAYMENT |
5,700 |
10,000 |
0.00 |
You can apply for a USDA Guaranteed Rural Home Loan here.
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