Current USDA and Rural Housing Credit and Income Guidelines for Kentucky Loans

 Applicant Eligibility  

 

Have the ability to personally occupy the dwelling
Be a citizen of the United States or be admitted for permanent residency

Non-occupant co-borrowers are not permitted

Generally, borrowers must sell their existing home

Income
 

 

 
 

 

 Applicants must have adequate and dependable income, typically with a history of 24 months

Qualifying ratios are 29/41; however, higher ratios considered with strong compensating factors, including good credit scores (660+), stable employment history, potential for increased earnings, and ability to save.

 

Income to be verified with a written VOE and one month’s current paystubs,
 

 

OR one month’s paystubs and two years of W2’s.2/1 buydowns qualifying ratios are calculated using note rate.
Debts with more than 6 monthly payments remaining must be included in qualifying ratios

Student loan payments must be included in ratios even if loans are currently in deferment

Self employed borrowers require two year history with 1040’s

Disability and Social Security benefits – 3 year continuance documented with award letter or 2 months bank statements, grossed up 125%

Salary increases within 60 days of the first payment due date are acceptable

Part time employment must have a history of no less than 12 months

Alimony and child support income must continue for 3 years and have no less than a 12 month history

Any income of a non-purchasing spouse must be verified to make sure income limits are not exceeded

Income Calculations

 

USDA Rural Development determines applicant’s income in two manners:

 

Eligibility Income
 

 

– Includes all income (salary, tips, bonus, overtime, alimony, child support, etc..) received by the applicant and co-applicant(s). This income is used to calculate qualifying ratios.
 

 

Adjusted Income
 

 

– This is the applicant’s eligibility income less the total of any of the following deductions applicable to the loan. Income from all household members must be included in the total adjusted income. This adjusted income must not exceed 115% of the median household income for the area. (see spreadsheet).
 

 

Allowable Deductions to Determine “Adjusted Income”:Member of Household   

  

Amount of Deduction   

  

  

Each minor child under 18 years of age    $480   
Each disabled or handicapped individual who is not the applicant or co-applicant    $480   
Each full time student 18 years or older    $480   
Each elderly (62 years of age or older) or disabled applicant    $400   
Medical expenses for any elderly family member    Total that exceeds 3% of gross annual income   
Child care expenses for children 12 years old or under However, the USDA-RD loan program DOES have 2 main qualifying features:(1) Eligibility is region or location specific CLICK HERE http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp&NavKey=property@11 to check if an address is USDA Eligible.(2) Eligibility is income specific. Qualifying income is based on household members and a max income cap. CLICK HERE http://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state&NavKey=income@11 to see if you qualify under the max income cap. Actual cost of care, supported by full documentation of cost   
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