Getting a mortgage for the first time can be rather daunting. There is so much paperwork involved, terms used you’ve never heard of and so many other third parties involved. USDA loans require USDA lenders to approve a loan based upon your ability to repay your debts as well as validating a good credit history. Note, “good” not “excellent.” That said, your USDA lender will provide you with a list of documentation that will be needed to process your loan. Here are some things you can do to make that process go smoothly.
Check Your Credit
Too many people only look at their credit report once it’s provided to them after applying for a mortgage. Credit reports are notorious for having mistakes and if there is some negative information on your report that is an error, your credit scores are lower than they should be. When you find a mistake, document your situation and let your USDA lender help make the corrections for you.
Don’t Apply for New Credit
Even if you apply for an automobile loan yet change your mind the next day, the new credit inquiry on your credit report will cause your scores to drop and will also put a stop to your loan application until you can document you did not take out any new credit.
Get Your Pay Stubs Ready
You’ll be asked to provide your most recent pay check stubs covering a 30 day period along with your last two year’s W2 forms. If you’re self-employed, make copies of your last two years federal income tax returns and provide them to your lender.
There is no down payment needed for a USDA loan but there are closing costs needed. Bank statements will show you have enough money to cover those costs and also verify the funds belong to you.
Choose an Experienced USDA Lender
None of these tips will help very much if the lender you selected doesn’t have very much, if any, experience with USDA loans. Qualifying for a USDA loan is really no more difficult than any other loan but they do have their own little “quirks” that lenders need to know about.