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Are you eligible for a USDA loan credit exception?

July 22nd, 2016 by Sean Stephens

How do you get a USDA loan credit exception?

With previous bankruptcies, short sales, or foreclosures – who can be eligible for a USDA loan credit exception? While USDA credit guidelines can be flexible, there may be cases that need an exception which falls outside of the standard requirements.

Today’s video tip will explain how qualifying for a USDA Credit Waiver can help in this type of situation.

As we all know, 2nd opinions are always important, so if you have financing questions and are working with another lender, we offer this complimentary service where you can get access to an expert 2nd opinion and is great for both pre-qualifications and loans that are currently in progress.

First off, the applicant must have a credit history which indicates a reasonable ability and willingness to meet obligations as they become due.

USDA loan credit exception

In situations where there is adverse credit reflecting on the borrower’s credit profile, the lender may establish mitigating circumstances to determine the borrower’s intent for good credit when the applicant provides evidence supporting that the negative credit was:

  1. Temporary in nature
  2. Beyond the applicant’s control, and
  3. Circumstances contributing to the adverse credit have been removed. 

Examples of supporting documentation which could be provided are:

  1. Hardship letters of explanation
  2. Any applicable attorney or medical documentation
  3. Evidence of payment arrangements and history with creditors

Once this evidence has been provided, a USDA loan credit exception can be obtain through a properly documented credit waiver which is completed by a USDA underwriter and explains the details surrounding the situation along with supporting the underwriter’s rationale for USDA loan approval

Remember that many lenders only choose to work with USDA automated approvals and because of that are not able to successfully review and approve USDA credit waivers.

Processing a successful USDA loan credit exception takes both guideline understanding and experience.

Most importantly, remember that we are justWho is eligible for a USDA loan credit exception? a phone call away!  As a USDA approved lender we hold the credit experience necessary to help maximize your qualifying ability and make the most out of this great program.

Just call or email us to discuss your scenario and let us show you the Metroplex difference!

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