USDA loan in Kentucky in 2025

If you’re looking to buy a home in Kentucky, consider a USDA loan. It may be the perfect mortgage program if you want to live in a rural area. The USDA Rural Development Loan offers 100% financing with no down payment, making it an excellent option for low-to-moderate-income homebuyers. Here’s everything you need to know to qualify for a USDA loan in Kentucky in 2025.

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Key Features of a Kentucky USDA Loan

Upfront Guarantee Fee:

A 1% upfront guarantee fee can be financed into the loan.
Annual fee: 0.35% of the average scheduled unpaid principal balance, paid monthly for the life of the loan.

Debt-to-Income (DTI) Ratio:

Standard ratio: 29/41% without compensating factors.
Ratio waivers may be approved if underwriting identifies strong compensating factors.

Credit Requirements:

Minimum credit score: 620 preferred but No minimum credit score requirement
Non-traditional credit is not eligible.
At least one applicant must have a 12-month credit history. This history should show no bankruptcies, foreclosures, tax liens, judgments, collections, or charge-offs in the last 36 months.

Income Restrictions:

Kentucky USDA Income limits apply based on family size, state, and county. see household income limits here click on link
All adult household income must be included to calculate total household income.

Employment Verification:

Wage Earners: Verbal or written verification of employment (VOE) is required. Pay stubs are needed. Provide 2 years of W-2s. 2 years of IRS tax transcripts are required.
Self-Employed: Verify 2 years of active business. Provide 2 years of personal and business tax returns. Include a year-to-date profit and loss (P&L) statement. Supply 2 years of IRS transcripts.

Eligible vs. Ineligible Properties

Eligible Properties:

Must be located in a designated rural area.
Includes single-family primary residences, modular homes, and detached or attached planned unit developments (PUDs).
Thermal standards must meet or exceed the International Energy Conservation Code (IECC).

Ineligible Properties:

Cooperatives.
Income-producing properties.
Manufactured or mobile homes.
Non-rural designated properties.
Non-owner-occupied homes.

How to Determine Eligibility

You need to confirm if a property is located in a designated rural area. Visit the USDA Property Eligibility Map by clicking this link 👇

Kentucky USDA Rural Housing Map for 2025 for Eligible Property Locations️

To check income limits for your county, use the

➡️ USDA Income Eligibility Tool.

Why Choose a Kentucky USDA Loan?

No Down Payment: 100% financing makes USDA loans affordable for first-time buyers.
Low Monthly Costs: With reduced mortgage insurance premiums and competitive interest rates, USDA loans help keep payments manageable.
Accessible Requirements: Even with moderate credit, you can qualify for a USDA loan if other requirements are met.

For personalized guidance and assistance with USDA loans in Kentucky, contact a mortgage professional today. Start your journey to owning your dream home.

Joel Lobb (NMLS#57916)
Senior  Loan Officer

Text/call 502-905-3708
kentuckyloan@gmail.com

Call TOLL FREE to speak
with a USDA Loan Specialist
502-905-3708

• 2025 Kentucky USDA Rural Housing Loan Guidelines