0% Down Payment
100% financing available
Rural Areas
97% of U.S. land eligible
Income Limits
115% of area median income
Low Rates
Government-backed rates
USDA manual underwriting occurs when your loan application receives a "Refer" or "Refer with Caution" status from the Guaranteed Underwriting System (GUS) and requires human review. This doesn't mean denial—it means an underwriter will personally evaluate your file.
Why Manual Underwriting Happens
- • Limited or no credit history
- • Recent credit events (bankruptcy, foreclosure)
- • High debt-to-income ratio
- • Non-traditional income sources
- • Complex employment history
The USDA Rural Development program is designed to help moderate-income families achieve homeownership in eligible rural and suburban areas. Manual underwriting provides a path for borrowers who don't fit the automated model but can still demonstrate creditworthiness.
Property Location
- Must be in USDA-eligible rural area
- Population under 35,000 (typically)
- Check eligibility at USDA property eligibility site
- Many suburban areas qualify
Income Limits
- Household income ≤ 115% of area median income
- Limits vary by county and household size
- All household members' income counted
- Certain deductions allowed
Occupancy
- Primary residence only
- No investment properties
- Must occupy within 60 days of closing
- U.S. citizen or eligible non-citizen
| Scenario | Front-End DTI | Back-End DTI | Requirements |
|---|---|---|---|
| Standard Limits | 29% | 41% | Baseline for all USDA loans |
| With Compensating Factors | 32% | 44% | One strong compensating factor required |
| GUS Accept (Automated) | No limit | No limit | GUS approval supersedes DTI limits |
Important: If GUS returns an "Accept" recommendation, there are no specific DTI limits. The automated system has already determined the loan is acceptable. Manual underwriting limits only apply to "Refer" files.
Strong Factors
- Cash Reserves: 2+ months of PITI in verified savings
- Minimal Payment Shock: New payment within 100% of current housing expense
- Residual Income: Exceeds USDA minimum by 10%+
- Employment Stability: 2+ years with same employer or field
Additional Factors
- Credit History: No late payments in 12 months
- Conservative Use of Credit: Low credit utilization
- Military Service: Active duty or veteran status
- Energy Efficient Home: Lower utility costs
640+ Credit Score
- • Eligible for GUS automated approval
- • Streamlined documentation
- • Faster processing
- • No manual underwriting required (typically)
Below 640 Credit Score
- • Manual underwriting required
- • Additional documentation needed
- • Compensating factors important
- • No official minimum (lender overlays apply)
Non-Traditional Credit
Borrowers with no credit score can qualify using non-traditional credit history. This requires 12 months of payment history from at least 3 sources such as rent, utilities, insurance, or other recurring payments. All payments must be on time.
| Household Size | Low-Cost Area | Moderate Area | High-Cost Area |
|---|---|---|---|
| 1-4 persons | $103,500 | $112,450 | $136,600 |
| 5-8 persons | $136,600 | $148,450 | $180,300 |
Note: These are approximate figures. Actual limits depend on your specific county. Use the USDA income eligibility tool to check your area's exact limits.
First-Time Buyer with Limited Credit
Situation: Young couple with only 2 credit cards and 18 months of history. GUS returned "Refer" due to thin credit file.
Solution: Provided 12 months of rent payment history, utility bills, and cell phone payments. Combined with 3 months reserves and stable employment, they qualified at 28%/39% DTI.
Self-Employed Borrower
Situation: Small business owner with variable income. Tax returns showed lower income due to deductions. GUS couldn't verify stable income.
Solution: Provided 24 months of bank statements showing consistent deposits. CPA letter confirmed business stability. Approved with compensating factors of 4 months reserves and minimal payment shock.
Post-Bankruptcy Recovery
Situation: Borrower had Chapter 7 bankruptcy discharged 3 years ago. Credit rebuilt to 620 but GUS returned "Refer with Caution."
Solution: Documented extenuating circumstances (medical emergency). Showed perfect payment history since discharge, stable employment for 4 years, and 5 months reserves. Approved at 29%/41% DTI.
How to Check Property Eligibility
- 1.Visit the USDA Property Eligibility Site (link below)
- 2.Select "Single Family Housing" under Property Eligibility
- 3.Enter the property address or use the map to locate it
- 4.The map will show if the property is in an eligible (unshaded) or ineligible (shaded) area
Important Notes
- • Many suburban areas qualify as "rural" under USDA guidelines
- • Eligibility can change—verify before making an offer
- • Income limits vary by county and household size