Be ready to submit documents that show your income, employment history and debts during the USDA loan preapproval process. You’ll also need a credit score of 680 for automated underwriting or 640 for manual underwriting.
How to get preapproved for a USDA loan:
Applying for preapproval can help identify potential issues you may run into during the actual application process. Here’s how to get preapproved:
Compare USDA-approved lenders based on the lender’s experience with USDA loans, customer service and underwriting requirements.
Submit details about your income, assets and credit.
Your lender reviews your application and eligibility.
Receive your preapproval application decision.
Compare USDA mortgage lenders
Compare top brands that offer USDA loans by state availability and credit score. Select See rates to provide the lender with basic property and financial details for personalized rates.
Disclaimer: The partners on Finder's mortgage comparison tables are sorted in alphabetical order.
Be prepared to answer questions based on USDA’s strict eligibility requirements. Some questions include:
Credit score. USDA’s Guaranteed Underwriting System (GUS) is an automated system that wants to see a credit score of 680. Most lenders who use a manual underwriting system require a minimum credit score of 640. You may qualify with a score below 640, but you’ll need to show extenuating circumstances.
Income. USDA income limits vary depending on the property location. Your annual income cannot exceed the median household income by more than 15%. Check an area’s income limit on the USDA website.
Debt-to-income (DTI) ratio. Lenders prefer to see a DTI maximum of 29% for all your monthly housing expenses and your overall DTI should be no more than 41%.
Loan-to-value (LTV) ratio. Your LTV can be as high as 100%.
Employment history. Lenders will likely request your previous two-year employment history but primarily look at the most recent 12 months on the job to make sure you have a steady income.
The USDA loan preapproval timeline
The preapproval process generally takes less than an hour. Your lender verifies your information and pulls your credit report. You should receive a preapproval letter within three business days. Your preapproval letter usually lasts from 45 to 90 days, depending on the lender. Speak to a loan officer for a detailed timeline.
What happens if I’m rejected?
Your lender should tell you why it denied your USDA loan so you can try and reapply. If your credit report is the issue, you can request a copy to check for any errors. If your debt-to-income (DTI) is too high, try to pay off some debts to lower the ratio. If your income is over the limit, you may consider qualifying in a different area with a higher median household income. Another option is to apply with another lender with different eligibility requirements, or talk to a loan officer to see whether you qualify for another loan program. If you have a credit score below 620, consider another program available to borrowers with bad credit. If you reapply for preapproval, be sure to apply within 45 days to protect your credit score — some lenders do a hard pull on your credit.
Bottom line.
USDA loan preapproval is a way to check your USDA loan eligibility and address any issues before you apply for the loan. Be sure to compare lenders to see which option is best for you.
Frequently asked questions.
Most lenders charge 2% to 5% of the purchase price, but it varies by lender. Costs can be rolled into your loan, but should be comparable to what a lender charges for similar loan programs, such as FHA or VA mortgages or its conventional loans.
USDA loans take a similar amount of time to close as other loans on the market. But unlike other loans, the lender cannot close the loan on its own. Instead, your state’s USDA office must also sign off on your mortgage. In general, it takes about 45 days to close, but it may take longer depending on additional requested documents and the speed of your state’s USDA office.
Only one. When you apply, your current home cannot be financed with a USDA loan. And since you must use your USDA loan as your primary residence, it’s not possible to have more than one USDA loan at the same time.
Hide
Sign up for the Finder newsletter
We know what the best deals in personal finance on the market are at all times, and now you will too.
Kimberly Ellis is a personal finance writer at Finder, specializing in banking and financial literacy. After teaching in public and private schools, Kimberly zeroed in on personal financial education to help families and kids develop lifelong money skills. She hails from New York City, graduating summa cum laude from Queens College with a BA in elementary education and mathematics, as well as a New York State teaching certificate. She’s also an aspiring polyglot, always in a book and forever on the hunt for the perfect classic red lipstick.
Cornerstone Home Lending offers a standard list of mortgage loans with some portfolio options, but you have to contact a loan officer for rates and fees.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Advertiser Disclosure
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
