what is considered a target “reasonable credit history” for a USDA home loan approval?

: what is considered a target “reasonable credit history” for a USDA home loan approval?
I’d like to hear anecdotal information regarding credit history and approval for USDA home loans. My spouse is enrolled full time working on an emt/nursing degree and we are planning to purchase a rural home in a different state in approx 3 years when he’s completed all degrees he is pursuing. He’s earning about 15,000 a year working full time in a retail job.
We had a voluntary repossession of a car when the economy tanked a year ago in addition to misc debts totaling about $ 2000. Our FICO score is hovering at about 550 due to that repossession.

My first question is what criteria will we be required to meet credit wise to qualify with FHA or USDA?

My second question is would it look better to a loaning body if he remained consistent at his low paying job before applying, or if we should apply just after he accepts a better paying job with a new company after he graduates so we have a better income to consider?

My income is not worth considering, we have 3 children and I am unable to “out-earn” daycare. My husband’s credit score is better than mine because we’ve held few accounts under my name, except the same ones damaging his score as well.

Answers and Views:

Answer by bdancer222
You will need at least a 620 FICO score for FHA and that may not be enough. You also need clean credit reports — all derogatory items resolved. That repo is gonna have to be settled.

It will also look better to have more income. Having a stable work history only goes so far. A $ 15K per year job for a family of 5 is simply not even close to sufficient income to qualify for a mortgage. Your debt to income ratio is a very large part of the qualification process.

You need to really work on cleaning up both credit reports and re-building your credit. If you do not have an open active line of credit, get a credit card, even if you have to get a secured card. Use the card, wait for the statement, and pay the balance in full every month. This will build your credit and avoid interest.

If your husband has good credit history on credit cards, he should add you as an authoirzed user. This will help improve your score.

You will need at least 24 months of consistent, on time payment history to see any improvement in your score. You will probably need the whole three years to just get your FICO to minimum level.