KENTUCKY RURAL DEVELOPMENT QUICK REFERENCE GUIDE

KENTUCKY RURAL DEVELOPMENT QUICK REFERENCE GUIDE

100% * NO MONEY DOWN LOAN and LOW “MI” * Seller Can Pay All CC’s
GENERAL INFO
• 29% PITI, 41% TD ratios on a manual underwrite
• (those ratios can be waived up to 32% PITI and 44% TD if every applicant on the loan has a 680 or higher credit score and you have a compensating factor)
• Debts with 6 months or more owed will be
counted
• Property must be located in eligible RD areas
• Land value cannot exceed 30% of total value
• Swimming pools are eligible. In-ground and above-ground pools are both fine, and there is no requirement to subtract the value of the pool on an existing home. You just cannot use repair or rehab money to put in a new pool.
• No substandard homes
• Existing (used) manufactured homes are eligible. That changed on May 5, 2025, and it applies in all 50 states including Kentucky. The unit has to have been manufactured within 20 years of your closing date, sit on a permanent foundation, never have been installed at another homesite, be at least 400 square feet, carry both the HUD certification label and the HUD data plate, and have no alterations made after it left the factory other than an engineered porch or deck. New units off a dealer lot are still eligible too.
• CAIVRS number(s) needed
ELIGIBILITY
• First time homebuyer not a requirement
• Income must be within RD limits
• Income must be adequate and stable
• Adequate ability to repay the loan
• Acceptable credit history
• Be without an adequate dwelling
• Cannot obtain conventional financing
• Citizen or permanent resident alien
• Owner occupied
• Legal capacity to incur debt
• Bankruptcy OK if discharged for 36 months
INCOME ELIGIBILITY
• All household income counted
• Overtime, bonuses, and commissions count, if
supported by history
• Child support counts –may be grossed up 25%
• Self-employment – (use IRS net income) – 2 year
history plus current information needed
• Same job or line of work for past 12 months
(some exceptions allowed)
• Written verification of SS, SSI, etc.
• Degree or certification can substitute for job time
• All income must be verified
GROSS INCOME DEDUCTIONS/ADJUSTMENTS
• $480 for each child under 18
• Over 18 counts if full time student living at home
• Actual child care expenses for children 12 or
younger if parents work or attend school
• $400 for applicant or co-applicant if disabled or
elderly
• Medical deductions may be considered for
disabled or elderly applicants (above 3% of gross
income
KEY POINTS
• No Down Payment
• 100% Guaranteed financing
• LOW MONTHLY “MI” — the USDA annual fee is 0.35% of your loan balance, well under what FHA charges, and you do not need the 3.5% down payment FHA requires.
• Terms—30 year fixed
• Upfront guarantee fee of 1.00% of the loan amount
• Refinance upfront guarantee fee is also 1.00% of the loan amount
• Appraised values can be exceeded by amount of
guarantee fee—up to 101% LTV
• How much credit review your file gets is driven by your GUS underwriting recommendation, not by a credit score tier. A GUS Accept means streamlined credit documentation. A Refer or Refer with Caution means the file gets manually underwritten with a full write-up. The old 680 / 679-640 / under 640 tiers are gone from the handbook — Attachment 10-A is now a topic-based Credit Matrix with no score tiers. The one score still written into policy is 680, which every applicant needs for a debt ratio waiver.
• Unlimited Gifts or Seller Contributions
• Down-payments accepted up to 19%
• Guarantee Fee is fully Tax Deductible in the year
it is paid
• No Loan Limit (Ratio Determined)
• Partner with other Funding Sources
• AUS System – GUS – USDA’s automated underwriting system
• Regular Program updates
• Monthly Newsletter by email
EXISTING DWELLINGS
• Satisfactory appraisal
• Thermal certification NOT required
• Well test
• Septic system certification
• Termite letter
NEW CONSTRUCTION
• Satisfactory appraisal
• Thermal certification
• Plan certification
• One year warranty on footings, framing, and final
inspection
• Termite Soil Treatment Certificate
• Well test
LOAN PURPOSES
• Purchase New
– Stick or Modular
– Manufactured (new from an approved dealer)
• Purchase Existing
• Stick, Modular, or Manufactured (used units allowed if they meet the 20-year rule above)
• Repairs/Rehab
• Refinance
• RD Direct Loans
• RD Guaranteed Loan
• Typical Loan Closing Costs
USDA Rural Development

RD PROGRAM – WEBSITES

Eligibility Website:
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

http://www.rurdev.usda.gov/rhs/sfh/sfh%20guaranteed%20loan%20in
come%20limits.htm

KY “MAPS”: http://www.rurdev.usda.gov/ky/maps.htm
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Related Articles

• Single Family Housing USDA Loans Contact info for Kentucky Rural Housing Loans (kentuckyusdaloan.com)
• https://kentuckyusdaloan.com/2011/08/04/248/ (louisvillemortgagepro.tumblr.com)
• Here are the cities in Kentucky that will no longer be eligible for RHS or USDA Rural Development mortgage loans effective 10/1/2012: (kentuckyusdaloan.com)
• October 2012 Kentucky USDA and Rural Housing Loans Changes for Property Eligibility Locations in Kentucky. (mylouisvillekentuckymortgage.com)
• USDA Rural Development’s impact is evident everywhere you look (crookstontimes.com)
• Previous Post (kentuckyusdaloan.com)
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• KHC Loan Programs (louisvillemortgageguide.com)
• Kentucky USDA Rural Development Single Family Housing Guaranteed Loan Program (kentuckyusdaloan.com)
• USDA is changing Eligibility areas and fee structures for Rural Development Loans in Kentucky beginning Oct 1, 2012 (mylouisvillekentuckymortgage.com)