USDA Income Guidelines

Credit Guidelines

Flexible Credit Criteria

Many loan programs only have automated computer underwriting systems driven heavily by credit scores. However, the Rural Development Loan allows for manual underwriting.

Manual underwriting allows us to consider the personal circumstances of each borrower and make good common-sense decisions regarding those who have demonstrated the ability to manage their financial affairs in a responsible manner. This is particularly helpful when a borrower has lagging credit scores despite a sustained recovery from past difficulties.

No Credit History

A lack of credit history reflected on a credit report is not a problem with the Rural Development Loan. We simply document the applicant's willingness to pay debts through third-party verification, copies of canceled checks, or other acceptable documentation for recurring payments or monthly obligations such as rent, utility, phone, and bills.

Credit Scores

Under the manual underwriting system, credit scores are considered according to the guidelines published by USDA. Download the credit score guidelines.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy does not disqualify a borrower from obtaining a Rural Development Loan if at least three years have elapsed since the date of the discharge of the bankruptcy. An elapsed period of less than three years may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances that were of a temporary nature, were beyond the applicant's control, and have been removed (e.g., loss of job, delay or reduction in government benefits or other loss of income, increased expenses due to illness, death, etc.).

> Return to top

Chapter 13 Bankruptcy

Chapter 13 bankruptcy does not disqualify a borrower from obtaining a Rural Development Loan provided he has sucessfully completed the bankruptcy debt restructuring plan and has demonstrated a willingness to meet obligations when due for the 12 months prior to the date of application.

Foreclosure

A borrower may obtain a Rural Development Loan after a foreclosure when three years have elapsed from a foreclosure with the loss of security or when one year has elapsed in a foreclosure with no loss of security.

Collections, Charge-Offs, and Judgements

Under the Rural Development Loan, collections must be paid in most cases, but we may make exceptions depending on the account type, the amount owed, and the cause of the collection. All judgements must be paid, and charge-off accounts showing balances must be paid.

> Return to top

Rocky Mountain Mortgage Specialists, Inc.