fbpx Skip to content

USDA Underwriting Guidelines

Updated on: January 6, 2025

Reviewed by David Naimey

Approved by Chad Turner

Key Takeaways

  • USDA uses the Guaranteed Underwriting System (GUS) to evaluate loan applications.
  • GUS provides recommendations: Accept, Refer, Refer with caution, or Ineligible.
  • If GUS doesn’t approve, manual underwriting can be requested, which may require resubmission if changes occur.
Table of Contents

You will encounter the first step through an automated underwriting system. There are several types, and these computer programs evaluate your credit and financial profile to make a preliminary judgment based on your information.


USDA lending utilizes an automated system known as GUS.



Guaranteed Underwriting System – GUS

The USDA uses an automated system called GUS (Guaranteed Underwriting System) to evaluate loan applications. 


GUS factors

GUS reviews the loan file based on factors like:


  • Household income

  • debt ratios

  • credit score

  • location 


USDA Requirements 


To qualify for the USDA program, you must fulfill these requirements.


  • Household income must be within 115% of the area’s median income

  • housing expenses (PITI) should be no more than 34% of income

  • total debts should not exceed 41% of income


Different recommendations based on the loan file’s information


Accept

The loan file meets the USDA rural development guaranteed loan criteria and can proceed to the next step in loan origination.


Refer

The file needs further review by a human underwriter.


Refer with caution

Indicates multiple risks that require thorough manual evaluation.


Ineligible

The loan or property doesn’t meet the USDA LINC (Lender Interactive Network Connection) guidelines.


Underwriting Evaluations


There are three possible outcomes in the underwriting process:


Eligible

The applicant, property, and loan meet all the necessary requirements for a USDA Rural Housing Guaranteed Loan.


Ineligible

One or more requirements are not met.


Unable to determine

Issues with the property or loan file prevent GUS from making a clear recommendation.


GUS Resubmission


If GUS doesn’t automatically approve the loan, applicants can request manual underwriting. This process involves a human underwriter and has stricter requirements. Changes in income, assets, or loan terms might also require resubmission.


How Long Does USDA Underwriting Take?


The process of closing a USDA loan program can take longer because it requires approval from both the lender and the state’s USDA office. However, most USDA loans close within 60 days, especially if they are automatically approved by GU

What if your monthly rent was the same price as a mortgage payment?

Facebook
Email
LinkedIn

Written by:

Related Articles

USDA Loan in Iowa

The USDA Loan Program The search for an affordable home in Iowa can be frustrating. House prices are high, and down payments make it almost impossible to own a home, especially for first-time homebuyers. As…

USDA Loan in Louisiana

If you want to buy a home in the Pelican State and apply for a new home loan, you may have witnessed high prices and mortgage down payments that make homeownership in Louisiana inaccessible. As…

USDA Loan in Arkansas

Many Arkansas households are dreaming of owning their own home. However, given the rise of home prices across the Natural State, many hardworking Arkansans find that homeownership is getting more difficult. Most prospective buyers find…