A USDA-approved lender will be a key part of your USDA loan application journey. That’s why it’s crucial to select the right one.
Different USDA loan lenders have varying requirements which can make or break your loan application. Some also offer better rates than others.
To help you out in choosing the right lender, we’ve made a list below so you can compare them side by side and narrow down your options without breaking a sweat!
What Banks Offer USDA Home Loans?
The USDA assists low-income and moderate-income individuals in buying their own home. When applying for a USDA home loan, though, you’ll still have to go through a bank or lender.
The way USDA loans work is that the government guarantees your loan in case it defaults. This helps lower the risk for lenders, who are the ones who will fund your home loan.
Compared to other loans, there are not many banks or lenders that offer USDA home loans. And you can’t just go to your nearest bank or lender and apply for a USDA loan. Only those approved by the USDA can process your loan application.
Borrowers must check if they qualify with their chosen lender. Apart from USDA loan requirements, lenders may also have their own criteria.
Find a lender that caters to your needs to increase your chances of getting approved.
Who Offers USDA Mortgage Loans?
You can apply for a USDA loan with the following lenders:
1. Canopy Mortgage, LLC
| Minimum Credit Score | As low as 580 |
| Down Payment | 0% |
| Mortgage Rates | Competitive rates, lower than average |
| Pre-Approval | 24/7, same-day underwriting |
| BBB Rating | A+ |
Pros
- Offers lower interest rates and upfront fees than average
- User-friendly technology allows for seamless loan experience
- Services 43 states except DE, HI, ME, MA, MI, BY, RI, and VT
- Borrowers receive excellent customer service from loan officers
Cons
- Loans may be transferred to a third-party servicer
Applying for a USDA loan doesn’t have to be overwhelming. Canopy Mortgage, LLC provides borrowers with a simpler and more efficient loan process. You can easily upload documents using your smartphone or computer.
The proprietary portal also allows you to keep track of your loan. It has real-time updates and provides easy access to your loan officer. There is also a detailed breakdown of every lender fee or charge for transparency.
Once the loan has closed, you can use the system to make your mortgage payments.
Thanks to increased efficiency, Canopy Mortgage, LLC can lower overhead costs. This allows borrowers to take advantage of lower interest rates and upfront fees. As such, borrowers can enjoy bigger savings in the long run.
2. Fairway Independent Mortgage
| Minimum Credit Score | 620 |
| Down Payment | 0% |
| Mortgage Rates | Rates higher than average |
| Pre-Approval | Online pre-approval available |
| BBB Rating | A+ |
Pros
- Accepts alternative credit
- Has branches in all states except Alaska and West Virginia
- Provides educational resources for first-time homeowners
Cons
- Does not publish mortgage rates online
- Must contact a loan officer to access rates or services
Fairway Independent Mortgage is a good choice for borrowers with low credit scores. You can establish creditworthiness using other credit tradelines.
However, interest rates may be higher compared to other lenders.
3. Flagstar Bank
| Minimum Credit Score | 580 |
| Down Payment | 0% |
| Mortgage Rates | Average |
| Pre-Approval | Pre-approval available in 3 days |
| BBB Rating | A+ |
Pros
- Has a low minimum credit score requirement
- Accepts alternative credit
- Services all states with branches in 29 states
- Offers home construction and renovation loans
Cons
- Must enter personal information to access rates online
- Low customer ratings on BBB
Borrowers with a credit score lower than 640 can qualify for a USDA loan with Flagstar Bank. The full-service bank has lower loan costs, so you won’t have to pay as much upfront. Nonetheless, they offer discounts or incentives to help cover closing costs.
4. Guild Mortgage Company
| Minimum Credit Score | 600 |
| Down Payment | 0% |
| Mortgage Rates | Not available online |
| Pre-Approval | Pre-approval letter in 2-3 days |
| BBB Rating | A+ |
Pros
- Accepts borrowers with low credit scores
- Services 48 states except for New York and New Jersey, branches in 31 states
- Offers Homebuyer Express with a 17-day closing guarantee
Cons
- Does not publish mortgage rates online
- Higher loan origination fees
- Low customer ratings on BBB
With low minimum credit requirements, applying for a USDA loan can be fast and easy with Guild Mortgage. There is also flexibility in processing your loan. Borrowers can do it online or visit their local branch based on their preferences.
5. Movement Mortgage
| Minimum Credit Score | 580 |
| Down Payment | 0% |
| Mortgage Rates | Average |
| Pre-Approval | Same-day underwriting |
| BBB Rating | A+ |
Pros
- Accepts alternative credit for borrowers without a credit score
- Services all 50 states with over 775 branches
- Can close USDA loans in 8 business days or less
- Good customer ratings
Cons
- Mortgage rates not posted online
- Higher upfront costs
- Does not refinance USDA loans
In a hurry to buy your dream home? Movement Mortgage makes the process fast and easy, with underwriting results in less than 6 hours. You can process your loan in 7 business days and another day to close.
Although upfront fees are higher than other lenders, Movement Mortgage allows for seller concessions to help lower closing costs.
6. New American Funding
| Minimum Credit Score | 580 |
| Down Payment | 0% |
| Mortgage Rates | Example rates online |
| Pre-Approval | Pre-approval available in 24-48 hours |
| BBB Rating | A+ |
Pros
- Allows alternative credit for applicants with low or no credit score
- Serves all states except New York and Hawaii
- Can use the loan for repairs, necessary accommodations for members with a disability
- Good customer ratings
Cons
- Higher loan origination fees
- Loans may take longer due to manual underwriting
- Services not fully digital
New American Funding helps underserved communities become first-time homeowners. You can qualify for a USDA loan with little or no credit score.
If your home’s market value exceeds the purchase price, the lender allows borrowers to use the excess amount to fund necessary accommodations for household members with disabilities.
Although their loan process has yet to be fully digital, New American Funding provides good customer support for borrowers.
7. PNC Bank
| Minimum Credit Score | 620 |
| Down Payment | 0% |
| Mortgage Rates | Average |
| Pre-Approval | 30 min pre-approvals |
| BBB Rating | A+ |
Pros
- Low upfront fees
- Services 50 states with 2,600 branches
- Home Insight Tracker features real-time quotes, mortgage payment estimator, and online loan processing
- No prepayment penalties
Cons
- Does not offer home renovation loans
- High number of customer complaints on BBB
- Charges transaction fees on payments from non-PNC bank accounts
PNC Bank is a good option for low-income and moderate-income borrowers. There is no minimum loan amount, so borrowers can purchase inexpensive homes. The bank also offers specialty loans and grants that can help cover closing costs.
8. Truist (Suntrust)
| Minimum Credit Score | 620 |
| Down Payment | 0% |
| Mortgage Rates | Sample rates online |
| Pre-Approval | 24 hours |
| BBB Rating | A+ |
Pros
- Accepts alternative credit
- Offers low upfront fees
- Services all states except Alaska, Arizona, Hawaii
Cons
- Mortgage rates higher than average
- Physical locations limited to 12 states
Truist (Suntrust) is a good option for low-income borrowers with less-than-ideal credit scores. You can show creditworthiness by establishing other credit tradelines.
With lower loan fees, borrowers also don’t have to pay that much upfront. However, a drawback is that interest rates can be higher than average. You may end up paying more over time.
How to Find a USDA Loan Approved Lender
Here are important things to consider when finding the best lender for your USDA loan.
1. Check Credit Requirements
The first thing to do is to check your credit score. This helps determine which lenders you may qualify with.
As part of their USDA loan requirements, most lenders require a credit score of 640. If your credit score is lower, look for a lender that is lenient about requirements. Some lenders also accept alternative credit.
To increase your chances, take measures to improve your credit. This includes paying off revolving credit balances and other debts. You can also lower your debt-to-income ratio to at least 41%.
Next, make sure that your credit report is accurate. You can dispute inaccurate information to help improve your credit score.
By law, everyone is entitled to receive a free credit report every 12 months.
2. Shop Around
You may not need a down payment like with FHA loans. However, there are still expenses that come with originating your loan.
That’s why it’s good to shop around to find a lender that can offer you the best deal. Take your time settling for one lender, as you may lose out on significant savings in the long run.
Ask about their interest rates, origination fees, and closing costs. Some lenders will have lower interest rates but higher loan fees — and vice versa. You have to find the one that matches your current financial situation well.
Another thing to consider is USDA refinance options. Not all USDA lenders offer to refinance. So if this is something you’re considering down the line, it’s important to ask about their policies.
You should also get a feel of how a lender communicates with you. Are they responsive to your questions? It’s good to have a point person that can guide you through the process of USDA loans.
3. Get Pre-Approval
Even if you already have a list of lenders, you won’t be sure that they will accept your USDA loan application. So even at this stage, it’s best to seek pre-approval from several lenders.
Lenders will provide pre-approval letters that show a loan estimate. Choose a lender that offers the best deal when it comes to the loan amount, interest rates, and other fees.
Pre-approval also means that you can start shopping around for your dream home. You can use the pre-approval letter to show sellers that you are serious about making an offer.
Pre-approval will give you a better idea of how much fees and expenses will be. This is also important if you want to renovate or construct your home.
Just make sure to read the fine print so that there are no surprises down the line.
Choose the Best USDA Lender For Bigger Savings
There are a lot of USDA-approved lenders that can fund your dream home. However, each lender has its own criteria for originating your home loan.
The best deal depends on your financial situation. You need to consider which lender you’re most comfortable with that can also bring you better savings.
If you’re ready to apply for a USDA loan or want to know how you can get started on your application, feel free to get in touch with us today!
Frequently Asked Questions
Does Bank of America do USDA loans?
Bank of America offers conventional loans, as well as FHA and VA loans. It does not offer USDA loans.
Is Chase hard to get a mortgage with?
Chase Bank does not offer USDA loans. As such, you will need at least 3% down payment and a credit score of 620 to qualify for a mortgage with them.
How long does it take for USDA to approve loan?
USDA loan applications usually take 30-45 days. Make sure to prepare all your USDA loan requirements to avoid delays. Working with an efficient lender helps you go through the loan process faster.
Can you pay a USDA loan off early?
Borrowers can pay off their USDA loans without incurring prepayment penalties. You have the option to refinance, make additional payments on the balance, or make a final payoff.
Can you get cash out on a USDA loan?
No, the USDA does not allow cash-out refinancing. The streamlined-assist refinance only enables you to lower interest rates and mortgage payments. If you want to take cash out on your loan, you have to refinance it with a conventional loan.
