USDA Home Loan Eligibility

Are there certain eligibility requirements to qualify for USDA Guarantee Home Loan? Of course, borrowers still need to qualify for USDA home mortgage loans even if they fall within the low income bracket. In general, the USDA has two types of eligibility requirements 

  1. Eligibility of the property
  2. The borrower’s credit and financial eligibility

The Eligibility of the Property

A USDA guarantee home loan is for 30 years and can be used to relocate, renovate, build, repair or buy properties as well as prepare sites. According to section 502 of the loan program, properties that USDA home loans can be used for must meet the following requirements:

  • Any homes that are built, renovated or bought must adhere to HCHP thermal and site standards
  • Newly constructed properties must meet the Manufactured Housing Construction and Safety Standards by the HUD

Borrower’s Credit History

Like most mortgage loans, a USDA mortgage loan is only provided to a borrower who can successfully demonstrate his/her willingness and ability to repay the loan amount in the form of monthly payments. However, your credit history will still be up for analysis. This is to determine whether you will be capable of keeping up with payments when they are due. Generally, a borrower must have a middle FICO score of 640 to qualify. Certain conditions may apply if a borrower has a middle score lower than 640, thus, constitutes a manual underwrite.

Additionally, the income of a borrower must also be moderate according to the area where the property in question is located in Texas. According to the USDA, no more than 29% of a borrower’s income can go towards mortgage liability. Ultimately, income requirement for USDA loan is based upon the number of people in household and area median income. Borrowers must check for income eligibility in any county in Texas to see if they qualify for USDA financing.