USDA loans are typically available to those who meet the following qualifications:
– Geographic — Must purchase a home in a USDA-eligible rural area (most areas outside major cities are eligible)
– Income limits — Household income must be at or below 115% of the area’s median income
– Credit score — A credit score of 640 or higher is typically required (although some lenders may accept lower scores with compensating factors)
– DTI — A debt-to-income ratio of 41% or less (higher DTI may be acceptable with compensating factors)
– Work history — 1-2 years of consistent employment history. Two years typically required if self-employed
– A qualifying home — The home you’re buying must meet USDA property standards and serve as your primary residence — not a vacation home or investment property
Most of these are general guidelines, and home shoppers should get a full qualification check and pre-approval letter from a USDA lender. Many buyers are eligible, but don’t know it yet.