What are the differences between a USDA loan and a VA loan? What are the typical credit limits?

What are the differences between a USDA loan and a VA loan? What are the typical credit limits?
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My credit score is 580, I think it’ll be required to have my home up front.


Great question!

A USDA and a VA loan have very specific differences but also some similarities.

A USDA loan is deemed as a "rural loan" meaning there are only certain areas in which the USDA can approve financing. Typically, this is going to be an area designated as a rural area by the USDA itself. You would want to check with the USDA to determine if the house you are interested is in an approved rural area. If not then this loan type will not be available to you. Also, USDA loans typically do not require a down payment and can be 100% financed. Typically, credit requirement are lower for a USDA loan than for conventional mortgage loans and rates are competitive. A USDA loan may have an upfront premium due to being 100% financed (similar to PMI on an FHA loan but this would be a one time cost instead of a monthly cost).

A VA loan is a loan product available to Veterans (as well as some spouses of veterans and other beneficiaries). If you are a Veteran we thank you for your service! It can also be 100% financed meaning there is no down payment required. Also, just like with USDA loans the credit requirements are more flexible and rates are competitive. With a VA loan there is no monthly PMI. However, there may be a one time funding fee (this can be sometimes be avoided if you choose to make a down payment).

You will want to speak with a mortgage broker to determine if you qualify based on your specific credit situation and to find about credit limits (I assume you mean the maximum amount allowed that you can finance?). If your credit ends up being a concern I would recommend you contact a non profit consumer credit counseling agency and go through a credit report review to develop a game plan to improve your score.

Good luck to you!


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