USDA Loans in Kentucky

What is KY USDA Rural Development Guarantee in Kentucky?

Kentucky USDA Rural Development Guarantee USDA loans offer 100% financing options on home purchases in rural areas. Properties though can be located within city limits and in subdivisions depending on population density of that area.
The RDG loan program is primarily used to help low to moderate income individuals or households to purchase homes and the applicants need to be within 115% of the median income for the area. Effective July 13, 2026, most Kentucky counties are $122,800 for a household of one to four people, and up to $162,100 for a household of five to eight people. In Boone, Bracken, Campbell, Gallatin, Kenton and Pendleton counties the limits are $128,600 and $169,800.
Some highlights of the are:
  • 100% financing on purchases and 100% Zero Money Down
  • Low 30 year fixed rates on all loans. They don’t offer any other terms or offer cash-out refinancing.
  • A small Rural Housing monthly guarantee fee or sometimes called annual fee of .35% of the loan amount divide by 12 months to get total monthly mi payment.
  • Upfront Rural Housing funding fee of 1% of the loan amount and is financed into new loan
  • USDA does not publish a minimum credit score in HB-1-3555. What drives the file is the automated underwriting recommendation from Rural Housing’s underwriting engine – GUS–GUS stands for the Guaranteed Underwriting System. A 640 middle score typically gets a GUS Accept. Below 640 the file is manually underwritten, which is still possible. Most lenders impose a 640 floor as their own overlay, not a USDA rule.
  • No rental verification needed with GUS approval if Approved Eligible Findings.
  • Flexible trade line requirements with GUS approval with only 1 trade line needed on credit for 12 months
  • No foreclosures in the last 36 months, but need explanation if < 36 months
  • Bankruptcy discharged at least 36 months
For a Kentucky USDA Rural Housing property and income eligibility search, please click HERE.

Issues to avoid or be aware of with Rural Housing property search:

  • Avoid homes with any income producing activities such as working farms, detached buildings with offices or car lifts for auto repairs, or anything else related to income producing activities.

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