Can You Qualify For A Home Loan If Your Credit Is Below 640

Dated: February 18 2017

Views: 80

Can you qualify for a USDA loan if your credit score is below 640?

Posted onFebruary 17, 2017bySean Stephens

Can you qualify for a USDA loan if your credit score is below 640?

While many lenders will only offer USDA loans if your credit score is 640 or above, it can still be possible to qualify for a USDA loan when your score is below that mark.

In today’s video, I will walk you through the qualifying steps on how it can be possible to qualify for a USDA loan if your credit score is below 640.

but before we get started, for those that have been denied by another lender or bank please take advantage of our free second opinion service “SOS” which is a resource designed to help Realtors and Buyers get access to an expert second opinion and is great for both new pre-qualifications and loans that are already in progress.

As a starting point, by having a 640 qualifying credit score, it allows access to the USDA automated Guaranteed Underwriting System (GUS) which can allow for a more streamlined approval process.

Tampa FL USDA Approved Lender

Here is a link to the video


Also, USDA guidelines state that loans with credit scores of 580 or below should not be approved.  However, while a certain credit score can help open the door to available loan programs, it is important to understand that a credit score does not guarantee an approval.

In cases when your credit score is below 640, it is still possible to qualify for a USDA loan under more stringent underwriting guidelines.  If you are not familiar with the term, it is exactly how it sounds, a more manual process to qualify for a USDA loan.  For example, we may need to verify rental payment history, or require more explanations for any collections, charge-offs, or previous negative credit history.

Tampa FL USDA Approved Lender

It is always important for a potential applicant to show their intent for good credit through proper explanations and documenting any adverse credit which includes evidence to support that the negative event was:

  1. Temporary in nature

  2. Beyond the applicant’s control, and

  3. Circumstances contributing to the adverse credit have been removed.

Once this evidence has been provided, a properly documented credit waiver will be created to explain the details surrounding the adverse credit, thus supporting the underwriter’s rationale for initially approving the loan.

While the steps seem overwhelming, through proper planning and guidance, USDA loan qualifying can be possible with credit scores below 640.

Qualifying for a USDA home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process can eliminate the uncertainty and open the door to homeownership.

USDA Blueprint for Success

If you are looking to purchase a home within the next six months, download your free USDA Blueprint for Success! This is a great educational resource for both buyers and Realtors.

For more immediate scenarios, click here to get pre-qualified for a USDA mortgage today!

So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

And don't forget, we are known for returning calls, replying to your emails, and responding to voice mails.

Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.

Want to Advertise on this Site?

Latest Blog Posts

Kens YouTube Channel

Here's a link to check out Ken's YouTube Channel:Unfortunately, an error occurred: Panel only seen by widget

Read More

Check Out Episode 2 Of Just Florida TV Where We Explore The Florida Aquarium And More

In this Episode Team SKL takes you on a behind the scenes tour of the Florida Aquarium.  We also take another look back at John's Pass and tour the historical boardwalk and village! 

Read More

Kitchen Fire Safety

Kitchen Fire SafetyThere are a number of potential causes of kitchen fires. There are the usual fire hazards such as electrical shorts, but you also have kitchen-specific risks such as splashing oil

Read More