To be eligible for a U.S Department of Agriculture loan, an individual must have a good credit history and a stable income, according to USDALoans.com. The borrower must also meet property eligibility requirements.
A good credit history indicates to the creditor that the borrower has the ability to repay the loan by giving information on how he handled his past debts, explains USDALoans.com. To stand a better chance of getting the loan, no late payment in the credit history should have occurred in the course of the most recent year, and the credit report should indicate that the borrower met his debt deadlines during the same year. In the case of bankruptcy, the report should indicate that at least two years have elapsed since the borrower's previous bankruptcy.
In terms of borrower income, a USDA loan application requires the borrower to provide copies of two years IRS tax filings, says USDALoans.com This helps the lender to understand the borrower's level of income, which guarantees the lender that the borrower is capable of settling the loan. Those who are in employment also have to submit pay stubs of their most recent two months, while the self-employed have to submit a three-year tax return.