Guaranteed USDA Loans PROS and CONS

Every borrower knows that USDA Loans have 2 types, Guaranteed USDA Loans, and Direct USDA Loans. These are the 2 types where people expect a green signal when they want to live in rural areas while purchasing their own homes. The USDA Department controls this entire program and helps people living in rural areas.

This article is all about Guaranteed USDA Loans. We’ll discuss the PROS and CONS of Guaranteed USDA Loans. There is also another program named Direct USDA Loans, but its discussion will be in another article. We want to mention the PROS and CONS of Guaranteed USDA Loans only. We haven’t uploaded the PROS and CONS of Direct USDA Loans on our website. You must be patient if you want to read that article because we haven’t written it yet. We’ll upload it once we get it written.

PROS and CONS are discovered in everything. Nothing in this world is perfect. Even the pills you take also have some side effects. So the same case appears in this Guaranteed USDA Loan. You must be prepared to face the disadvantages when earning some benefits through Guaranteed USDA Loans. We’ll start this article by revealing the PROS because I think everyone knows the definition of USDA Loans.

PROS of Guaranteed USDA Loans

We found 4 PROS when we tried to figure it out. These are the 4 PROS you must expect from these Guaranteed USDA Loans:

  1. Assets
  2. Credit Scores
  3. Down Payments
  4. No PMIs

These are the 4 PROS you earn with this Guaranteed USDA Loan. You will learn the entire scenario once we’ll explain this entirely. So let’s start with the assets system.


Borrowers who have never borrowed any Guaranteed USDA Loan before might not know this, but that’s true. These Guaranteed USDA Loans are earned through private lenders, but the USDA Department has provided a guarantee to those lenders they work with. So lenders don’t have a problem when they offer this loan without seeing your assets because of government support.

Borrowers think they need to show some assets to get approval, but that isn’t like this. You can get your Guaranteed USDA Loan approved without showing any assets. Even Investopedia has cleared this thing on their website’s main page. You can earn this loan by displaying 0 assets which is the best part about this. People thinking of shifting in counties can get shifted and earn this Guaranteed USDA Loan without showing any assets.

Credit Scores

Everyone has written this on their website when explaining that you need 640 credit scores for approval about this Guaranteed USDA Loan, but it isn’t like this. You can get approval on low scores, but there is one thing a lender will demand. That will also work if you have a documented copy of paying your rent on time. Showing that documented proof to your lender will change his mind. You’ll be able to convince him when your rent is paid on time, and you have to share the documented proof of your words.

Down Payments

These Guaranteed USDA Loans are approved on 0 down payments. This thing is necessary for other loans like FHA, Conventional, and Jumbo, but Guaranteed USDA Loans are awarded by paying 0% down. Your lender won’t ask for any down payment when you’ll purchase a home through this Guaranteed USDA Loan. Your lender will do the entire financing.


When you don’t have to pay something down, your lender will save you from paying the Private Mortgage Insurance (PMI). There is no need to pay the PMI when purchasing any home through a Guaranteed USDA Loan in rural areas. I think that type of relief isn’t provided in other loans. Thanks to the USDA Department, which is running this program.

We’ve shared the 4 PROS, but now comes the turn of CONS. It would be best if you were prepared for this because buying a home without facing hardships isn’t easy.

CONS of Guaranteed USDA Loans

After hours of research, we’ve found 2 CONS in these Guaranteed USDA Loans.

  1. Low DTI Score
  2. Property’s Location and Size

These are the 2 CONS you must be prepared for. Now you might wonder why I mentioned the property’s location. I’ll clarify my point during the explanation.

Your DTI Score needs to be 41% to get approval. That’s the only demand from the lender. You can get your loan approved on lower credit scores, 0 down payments, 0 assets, and 0 PMIs, but your lender will ask for 41% DTI before giving approval, which is his right. Your lender isn’t applying strict requirements on other things, so asking for Low DTI Score is his right. You must earn 41% before expecting any approval of these Guaranteed USDA Loans. You can improve this with a Real Estate Calculator. Visit ATOZ APK or any other famous Android Website like APK Pure to download the calculator and improve your DTI Score. Get to work for this after deciding to purchase a home through Guaranteed USDA Loans.

Low DTI Score

Property’s Location and Size

Property Location and Size matter considerably because lenders will not offer loans to people already living in big houses. When you are expecting this Guaranteed USDA Loan, you must keep some things in mind. The first thing is the home location. It must be in a rural area. If it is out of rural areas and you apply for any Guaranteed USDA Loan, you will face rejections. The boundary must be within the rural area.

Your area’s Real Estate Agents and Skip Tracers can help you with this. Contact any Skip Tracing Firm like Lert Skip Tracing to know well about the boundaries. It is necessary to know the boundaries before applying for this Guaranteed USDA Loan. Your file will be rejected faster than your expectations because you cannot buy a home that isn’t located inside the boundaries of rural areas.

Final Words

So these were the 4 PROS and 2 CONS of this Guaranteed USDA Loan. Drop a comment if anything is still left so that we’d mention it within the article. We’ve briefly covered everything, and people considering borrowing a Guaranteed USDA Loan must read this article to know everything. So that’s all for now. I’ll see you in the upcoming article, where I’ll mention the PROS and CONS of Direct USDA Loans.