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
