Kentucky USDA Rural Housing Loan Program

Kentucky USDA Rural Housing Loan Program

Kentucky First Time Home Buyers---Zero Down Loans Still Exist



LOAN TERM: 30 year only


 Maximum LTV– 100%No down-payment required if not financing guarantee fee.
 Guarantee Fee of 2% for purchase transactions (2%for refinances) can be
financed in the loan amount.
For existing site built single family. (More than 1 year old or previously lived in) and new
construction builder to borrower.
Full appraisal is required, appraiser must be HUD approved. (Note exception under

Effective October1, 2011 for commitments issued through USDA on all purchase
transactions, an up front guarantee fee equal to 2% of the loan amount and an annual fee
of 0.4%of the unpaid principal balance will be charged. Refer to the link below for
additional information through USDA. The upfront guarantee fee will be 2% for
refinances (with 0.4% annual fee) for commitments issued by USDA on 10/1/2012
and after (annual fee is collected monthly as part of regular mortgage payment).

USDA Frequently Asked Questions Implementation of Annual Fee

: Must be in a rural area as determined by USDA Rural Development. (Website– loan amount $75,ooo
No Condo’s.
No Manufactured homes.
Property must be in good condition. “As is” appraisal not acceptable when repairs
Homes with in-ground pools are eligible on a case-by-case and value of pool must be
subtracted as no financing available for pools. N/A on refinance loans.
Land value not to exceed 30% of total value.
Property must have public, state or county maintained roads and property must have
direct access to street or road.
If property is located in a subdivision, then subdivision must be approved by local,
regional, state or federal agency. Need documentation to support.
All improvements– repairs must be complete prior to closing, no escrow holdbacks
At closing.
All appraisers must be currently approved by FHA. See most current list dated
October1, 2009.
All electrical, plumbing, heating, water and waste disposal systems must meet HUD
requirements. If applicable, home Inspection report required by a qualified inspector.
All wells and septic systems must meet HUD requirements and must be cleared by
underwriter prior to closing.USDA Parameters 2 12/17/2012
Termite inspection required as determined by Rural Development Conditional
Commitment and must be cleared by underwriter prior to closing.
The property must be non-farm, non-income providing tract.
Appraiser to certify property meets current requirements of HUD Handbooks–
150.2 and 4905.1.
If the builder is providing a one-year warranty for new construction, the following
inspections are required: framing inspection, footing inspection and final inspection. If
the builder is providing a 10-year warranty, only the final inspection and the thermal
certification are required.
If property is not located in a platted subdivision, a survey will be required.
Appraisals are valid for 6 months. If over 6 months a new appraisal is required.
Properties having community wells or sewage systems will require a state operating
permit, evidence of compliance with the Safe Drinking Water Act and Clean Water
Act and a legal binding contract to enforce the obligation of the operator to provide
satisfactory service at reasonable rates-must be maintained in our file.
 Property must be held in Fee Simple, no leaseholds.

See USDA website for eligible areas.

Adjustments to income– $480.00 per child < 18 or 18+ if fulltime student,
100% child care paid.
Borrower must be within income limits. Refer to: for validation.
Salary Income– VOE – 24 month-history plus most recent pay-stub or 2 paycheck stubs
covering most recent 30 days and W2 for previous 2 years and processor
certification of employment within 10 business days of closing. Any gap of
employment beyond one (1) month must be explained by borrower.
Self-employed and Commissioned borrowers or employed by a relative– 2-year tax
returns required to reflect income is stable and will continue.
Part-time jobs–24-month history required.
Alimony, child support– must have received for 12 months and will continue for 3
years after application. Must document receipt for last 12 months consecutive
Reflecting no breaks in income.
3-year continuation for social security income, disability income, retirement income, etc.
Borrower’s adjusted annual income cannot exceed the appropriate moderate income
limit. Refer to
All household income must be included in the total eligibility income, even if not on the
loan, however, for qualifying purposes, use the income for borrowers signing
the Note.
All qualifying income must be stable and likely to continue for the next 3 years.
Significant increase /decrease must be analyzed closely to make sure income used
to qualify will continue.

All collections and judgments must be satisfied unless the total is <$1,000 and
The accounts are at least 12 months old.
Credit 640 minimum– No Exceptions. All borrowers must have a minimum of 2 credit
scores (borrower with one credit score is unacceptable). Borrower’s
Ability to pay on time must be analyzed regardless of credit score. No collections in
last 12 months.
Borrower must not have any late rent/mortgage payments in last 24 months.
Except for obligations specifically excluded by state law, the debts of non purchasing
spouse in a community property state must be included in the qualifying ratios. This
must be documented by a credit report on the non-purchasing spouse. The GUS system
will only pull credit for applicant, so this must be pulled outside of GUS.
Previous Mortgage– all previous mortgages disposed of through a sale, trade or
transfer without a release of liability must be included in the debt ratio
calculation unless you can provide evidence the party other than our borrower
has made payments over the last12 months. In a divorce settlement, a divorce
decree, along with a release of liability from the mortgage credit or must be
presented as evidence reflecting our borrower is no longer legally responsible for
the mortgage payment. If this cannot be provided, you must include that debt in the
qualifying ratios. Quit Claim Deeds do not remove liability for mortgage debts.
Borrower cannot be delinquent on any tax or non-tax debts and there can be no
judgment liens against the borrower’s property for a debt owed to the Federal
Government. Crescent to check HUD’s Credit Alert Voice Response System for
each borrower.
3 years since Chapter7 and Chapter 13 discharged 1 year.
 Deferred student loans must be included indebt ratio. Calculate 1% of outstanding









Age of credit/income docs – within 90 days of Note date.
All loans must be approved through USDA, GUS System
Debt Ratio– 29% PITI / 41% Total Debt. Exception to 45% with strong comp.

All debts over 6 months must be in debt ratio. All co-signed debts must be included in
debt ratio unless you can provide evidence someone other than the borrower has made
payment for the last 12 months.
Gift letters OK.
6% of sales contract for seller contributions.
Escrows required–no exceptions.USDA Parameters 4 12/17/2012
Closing costs maybe included in the loan up to appraised value when the sales contract is
lower than the appraised value. Discount points cannot be financed unless
borrower’s income is in the low income household bracket as defined by Rural
Development, underwriter to establish.
The borrower must not have sufficient assets to meet the down payment and closing cost
requirements associated with a conventional uninsured mortgage (LTV<80%).
Secondary financing not allowed.

Non-occupant co-borrowers are not allowed.

Borrower cannot own other homes within local commuting area.

No lates in last 12 months.

 All student loan debt, including loans in repayment AND deferred, must be in qualifying

 Loans secured against personal assets, such as a 401k account retirement or other liquid
asset are not considered in the debt ratio.

 The “Accept” recommendation in GUS will be downgraded to a “Refer” and manual
underwrite will apply when all debts on the application are not verified on the credit
report. This may require different documentation and a full underwrite through the
USDA office. Risk layers – (payment shock, credit waiver, ratio waiver) can only allow
1 risk layer and the file must have strong, documented compensating factors.

REFINANCE: RATE/TERM (Non-Streamlined) for Kentucky USDA Rural Housing Loans

 OnlyKentucky  USDA Guaranteed loans eligible (no Direct loans)
 Current appraisal required
 Closing costs, lender fees and the new guarantee fee may be financed in the new loan to
the extent that the new appraisal supports the loan amount (100% max LTV before
guarantee fee added).
 Unpaid fees, such as late fees due the servicer, are not eligible to be included in the new
loan amount.
 GUS should be run with favorable resultsUSDA Parameters 5 12/17/2012
 Up front Guarantee fee of 2% and annual fee of 0.4% apply.
 Subject property must still be the borrower’s primary residence
 Loan must have been fully documented, underwritten and originated in compliance with
RD instruction 1980-D, supplemented by published Administrative Notices.
 Any late mortgage payments within the past 36 months on the existing USDA loan, with
emphasis on the most recent 12 month period, must be analyzed and addressed by the
lender to determine if any late payments were a disregard for financial obligations, an
inability to manage debt, or factors beyond the control of the borrower when considering
the underwriting decision.
 Maximum ratios 29/41
 30 year fixed rate loan only
 Interest rate must be lower than the existing loan to be refinanced
 If the final settlement statement shows nominal cash back to the borrower, that amount
must be applied as a principal curtailment. The borrower can receive no cash back from
the transaction.






 Only USDA Guaranteed loans eligible (no Direct loans)
 The value of the new mortgage loan request can be supported by the original appraisal
report obtained in connection with the existing mortgage.
 The maximum loan amount cannot exceed the principal balance of the existing loan to be
refinanced, plus the guarantee fee. The new loan amount cannot include any accrued
interest, closing costs or lender fees.
 Loan must be manually underwritten (GUS is not run).
 Up front Guarantee fee of 2% and annual fee of 0.4% apply.
 Subject property must still be the borrower’s primary residence
 Loan must have been fully documented, underwritten and originated in compliance with
RD instruction 1980-D, supplemented by published Administrative Notices.
 Any late mortgage payments within the past 36 months on the existing USDA loan, with
emphasis on the most recent 12 month period, must be analyzed and addressed by the
lender to determine if any late payments were a disregard for financial obligations, an
inability to manage debt, or factors beyond the control of the borrower when considering
the underwriting decision.
 Maximum ratios 29/41
 30 year fixed rate loan only
 Interest rate must be lower than the existing loan to be refinanced
 If the final settlement statement shows nominal cash back to the borrower, that amount
must be applied as a principal curtailment. The borrower can receive no cash back from
the transaction.
Please note that the USDA Refinance Pilot program has different guidelines.

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*

Author: Louisville Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Zero Down Payment Home Loans

I have helped over 589 Kentucky families buy or refinance their home over the last 18 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process. I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues. You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process. Give us a try or let us compare your options on your next mortgage transaction. Call me locally at 502-905-3708. Free Mortgage Pre-Qualifications same day on most applications. Email me at with your questions I specialize in Kentucky FHA, VA ,USDA, KHC, Conventional and Jumbo mortgage loans. I am based out of Louisville Kentucky. For the first time buyer with little money down, we offer Kentucky Housing or KHC loans with down payment assistance. Customer Testimonials 😍😍😍 We just moved here the first of January in 2017 from Ohio to the Louisville, KY area and we found Joel's website online. He was quick to respond to us and got back the same day on our loan approval. He was very knowledgeable about the local market and kept us up-to date throughout the loan process and was a pleasure to meet at closing. Would recommend his services. Angela Forsythe "We were searching online for mortgage companies in Louisville, Ky locally to deal with and found Joel's website, and it was a godsend. He was great to work with, and delivered on everything he said he would do. I ended up referring my co-worker at UPS, and she was very pleased with his service and rates too. Would definitely vouch for him." September 2016 Monica Leinhardt "We contacted Joel back in July 2011 to refinance our Mortgage and he was great to work with. We contacted several lenders locally and online, and most where taking almost 60 days to close a refinance, Joel got it done in 23 days start to finish,I would definetly recommmend him. He got us 3.75% with just $900 in closing costs on our FHA Streamline loan. Kayle Griffin “Joel is one of the best Mortgage Brokers I have ever worked with in my sixteen years in the real estate and mortgage business.” May 25, 2010 Tim Beck “Joel has always worked very hard to keep his word and to work out seasonable solutions to difficult problems. He is truly an expert in FHA and other type loans.” September 1, 2010 Nancy Nalley “I have worked with Joel since 1998. He is a great loan professional.” I refer most of my Louisville, Kentucky area home buyers to him and he always take special care of them. August 23, 2012 Jon ClarK “Joel Lobb is a real professional in the lending industry, with many years of experience, he is the one to go to for any mortgage lending needs.” August 22, 2011 RICHARD VOLZ , Residential Sales , Remax Foursquare Realty “When looking to purchase our new home in 2006, I had the pleasure of meeting Joel Lobb. Not only was he personable and easy to reach, he was extremely knowledgable in his field and made sure to find us the best rate and a top notch mortgage company. We were able to complete the process in less than 3 weeks with his expertise. I find Joel to have the utmost high integrity and I recommend him to anyone who say's they are need of mortgage assistance. He is also fantastic and keeping everyone up to date on the latest in the housing industry through his twitter posts. He provided great results for our family and we still communicate to this day!” August 21, 2010 Stacie Drake "We first use Joel on our new home purchase in 2007 in St Matthews, Kentucky area and he was great to work with. We have since refinanced our home with him in 2010 when rates got really low and he has always delivered on what he says. I could not imagine using anyone else." Melody Glasscock March 2014 Absolutely Amazing!! I emailed Joel after I had just got a denial from a bank and just thought i would try to get some advice on what my next steps would be to get a house. I honestly didn't expect to even get a reply because my credit is not great. That was about a week and a half ago. I just signed a contract on a house last night. ONLY because of Joel Lobb. He even worked with us throughout the weekend, which shocked me. Best decision I have ever made. THANK YOU SO MUCH FOR WORKING WITH US THROUGHOUT THE ENTIRE PROCESS. Cee Bellisle August 2017 Contacted him about buying a home and he was great to work with. I was moving to Louisville Ky to take a new job and he walked me through the entire process. He explained to me all the different options for FHA, VA, USDA mortgage loans and credit score requirements versus Fannie Mae. Since I was a first time home buyer I needed alot of help and guidance. I would definitely recommend him. Fast to respond and available to answer questions that I or my realtor had after hours. Anderson Johnson April 2018 Wow, what a great loan officer. I was referred to him by our agent and he was great to work with. We used him for a USDA no money down loan in Shelby County and we were really impressed. We were afraid we could not buy a home since we did not have money saved for a down payment, but Joe l was able to get us a zero down loan and we even got our appraisal fee and good faith deposit back at closing. We actually got money back at closing!!! I Can't think him enough. Our family moved from our apartment in the south end of town to get our own home with 5 acres for our kids and 2 dogs, at a payment that is equal to our rent payment also. .Thanks Again Joel. May god bless you Patty Locker We contacted Joel about buying a house on our move from Ohio for my husband's job transfer with Ford. We put a lot of trust in him since we were new to the area and first time home buyers in the Louisville KY market, and he always delivered on what he said. It took us a while to find a home due to the lack of homes, but once we got one, he was always quick to respond our questions via text or email ,and kept us informed through the process. We got to meet him at the closing and he was super nice and even got us a closing gift for our home which we didn't expect at all. Super nice guy 😀!!! I would definitely recommend him for a local Home loan in the Louisville area. pam dolby I got a VA loan with Joel and he was great. He is an ex-army guy so he could relate to my past experiences of being a veteran and moving around the country a lot. I had some credit issues that required a little extra work but Joel was able to find A VA lender to approve my situation as far as having past bad credit problems and a lower credit score. We closed yesterday on our home here in Louisville and we could not be happier. We finally have a home of our own thanks to Joel . I would definitely recommend him for a mortgage loan. Great experience and closed 8 days before expected close date so we were able to move in early. larry summit I contacted Joel about the $10,000 KY Housing Grant last month and we were able to get it and I just closed on my home. He was great to work with and if you are a first time home buyer here in Louisville, I would definitely contact him. I met him at his office and he was very nice and knowledgeable and kept me informed through the process. No surprises either so I was very happy. I am new homeowner thanks to Joel . Joel Lobb Senior Loan Officer American Mortgage Solutions, Inc. 10602 Timberwood Circle Suite 3 Louisville, KY 40223 phone: (502) 905-3708 Fax: (502) 327-9119 Company ID #1364 | MB73346E This website is not an government agency, and does not officially represent the HUD, VA, USDA or FHA or any other government agency. Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. NMLS#57916 . The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

8 thoughts on “Kentucky USDA Rural Housing Loan Program”

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