How to Check for USDA Eligibility
- 1). Determine if the property you want to mortgage qualifies for a USDA loan by submitting the exact address on the USDA website or by viewing a state map of ineligible counties. (If the county of the property is not listed on the map, then it qualifies.) The USDA also includes a list of eligible disaster areas.
- 2). Determine the median income levels for the area in which the property is located.
- 3). Determine if you qualify for a Rural Housing Direct Loan, which are loans that are directly funded by the government and designated for applicants with very low or low incomes. Do this by assessing if your income level is below 50 percent of the area median income (low income level) or if your income level is between 50 and 80 percent of the area median income level.
- 4). Assess whether you can prove that you do not have adequate housing but that you can afford the mortgage payments, home insurance and property taxes (which will account for around 25 to 30 percent of your income). You will need to demonstrate that you and any other household members are steadily employed.
- 5). Determine if you can demonstrate that you cannot obtain credit from another lender, but also that you have a reasonable credit history. There is no minimum credit score for qualification. However, your credit history should reflect that you made payments on time for at least a year. Late payments should be more than a year old, and bankruptcy filings must have occurred two years ago.
- 6). If you do not qualify for a Rural Housing Direct Loan, then determine your eligibility for a Section 502 Guaranteed Loan, which are loans that are offered to low-income individuals or households to assist in the costs of purchasing, building, repairing, renovating or relocating a home in a rural area. Do this by calculating if your income is less than 115 percent of the median income for the area. In order to qualify for this type of loan, you must submit your IRS tax filings for the previous two years (three years if you are self-employed) to the loan underwriter of a USDA-approved lender. The lender will examine your gross income and that of any co-applicants or other household members to assess if you have been steadily employed and if you are capable of making the loan payments.
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