Category: 2022 Kentucky USDA Income and Property Guidelines

Kentucky USDA Guideline Changes for Income, Student Loans, and total debt ratios.


Updated HB-1-3555, Chapter 11, Ratio Analysis

The Single Family Housing Guaranteed Loan Program (SFHGLP) is pleased to announce revisions to technical HB-1-3555, Chapter 11, Ratio Analysis. An advance copy of the proposed changes was made available on July 20, 2021.  These changes became effective upon the recent issuance of a Procedure Notice (PN).  Below are the highlighted revisions:

Chapter 11- Ratio Analysis

11.2 B. The Total Debt Ratio:

  • Student Loans: Removed the phrase “the greater of” from Non-Fixed payment loans and added guidance regarding “when the payment is above zero” and “when the payment is zero”.
  • Revolving accounts: “with no outstanding balance” are not required to be closed.
  • Mortgages: Rental Property – Eliminated language regarding omission of mortgage debt.  Guidance for entry of rental income in GUS is provided in the GUS Lender User Guide under Section 4.1.4.1.1, Retained Investment Properties.
  • Added: Debt management plans:
    • Include the monthly payment amount due from the counseling plan.
    • Refer to Chapter 10 for guidance on credit exception and documentation requirements.

11.3 DEBT RATIO WAIVERS AND COMPENSATING FACTORS

A. Purchase Transactions: Debt Ratio Waivers

  • GUS Refer, Refer with Caution, and manually underwritten loans without GUS assistance:
    • Added: “The lender must document eligible compensating factors to support a debt ratio waiver.”
    • Added: “all” of the following conditions are met to the first paragraph.
  • Debt Ratio Waiver Request and Agency Approval:
    • Added: “The issuance of the Conditional Commitment for a Loan Note Guarantee represents Agency approval of the ratio waiver.”

B. Refinance Transactions: Debt Ratio Waivers

  • Added a bullet:  GUS files that receive a GUS recommendation of Refer, Refer with Caution, or are not supported by GUS, require debt ratio waivers, and supporting documentation must be submitted to the Agency.
  • Added: “The issuance of the Conditional Commitment for a Loan Note Guarantee represents Agency approval of the ratio waiver”. 

11.7 OBLIGATIONS NOT INCLUDED IN DEBT-TO-INCOME RATIOS

  • Added: “unless a payment plan is in place” to the second bullet concerning Federal, state, and local taxes.

Joel Lobb
Mortgage Loan OfficerIndividual NMLS ID #57916

American Mortgage Solutions, Inc.10602 Timberwood Circle Louisville, KY 40223Company NMLS ID #1364

click here for directions to our office
Text/call:      502-905-3708fax:            502-327-9119
email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/

Kentucky USDA Rural Housing Changes for Below


USDA Advance Copy Notice HB-1-3555 Chapter 11
USDA has announced that Chapter 11 of the HB-1-3555 will be updated and an advanced copy has been provided.  Changes will become effective after USDA issues a Special Procedure Notice.

  • Clarification was added that revolving accounts with no outstanding balance are not required to be closed.
  • USDA eliminated guidelines provided that a retained property that has been rented for 24 months or longer may be omitted from the DTI, and
  • Added guidance that the income received from rents may only be included in the repayment calculation if the property has been rented for 24 mo. or more.
  • Guidelines were added that monthly payment for borrowers in debt management plans must be included in the DTI.
  • The calculation guidelines for Non-Fixed Student Loan Payments were updated removing the requirement for the greater of calculation to be used and added guidance for when the payment amount is zero.
  • Additional guidance was added that compensating factors supporting Debt Ratio Waivers for manually underwritten loans must be documented.
  • Clarification was added that federal, state and local taxes don’t need to be included in the DTI unless there is a payment plan in place.

Refer to the Advance Copy Notice HB-1-3555 Chapter 11 and Chapter 11: Ratio Analysis

USDA Mortgage Benefits for First Time Buyers in Kentucky


Kentucky USDA Mortgage Benefits for First Time Buyers in Kentucky

100% mortgage financing at competitive fixed interest rates with USDA home loans  Credit score requirements (620 to 640)  are less restrictive than most conventional home loan programs.

Kentucky USDA loans also offer a single upfront mortgage insurance premium which may be financed. Currently only 1% of the loan and a monthly mi premium of .35% which is very cheap considering the lower credit score requirements and no money down financing. The mortgage insurance is the same for everyone, does not matter what your credit score is or how much down payment you have.

You can look up individual properties on USDA’s website here for Kentucky eligible areas.

You can also research single family housing income eligibility for Kentucky  here.

.
You may qualify if your Chapter 7 bankruptcy was discharged three years prior.

USDA loans can be used to finance most types of single family properties although some exception may apply. Homes must be used as borrowers’ primary residences and not used as second homes or rental properties.

Farms and commercial properties are not eligible through USDA Rural Housing Development Guaranteed Loans.

In many cases USDA permits sellers to contribute borrowers’ closing costs and can be financed up to the appraised value if home appraises for more.

Here are the highlights of USDA Mortgages
. Down Payment: 0% down payment
 Closing Costs: up to 6%
. Credit Score: Minimum none–but lenders create overlays..typically 640 to     get  a GUS Automated approval
. Lower monthly mortgage insurance costs (PMI) versus FHA
. There is NO maximum set loan amount limit with USDA Rural Housing.
. No large savings are needed to qualify for USDA loans.
 The debt to income, or DTI is limited to 45% – lower than most other loan programs.
 The location of the home determines if it will be a USDA loan.
. The home can be a regular sale, short sale, foreclosure home or bank owned home single family, townhome or approved condo.
 Mobile/Manufactured homes and “build on your own land” not available.
. Applies for First-time home buyers, or move-up buyers.
 No special first-time buyer’s class, down payment assistance, or bond money is needed.
Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
 

Text/call:      502-905-3708

fax:            502-327-9119
email:          kentuckyloan@gmail.com

 

Kentucky Rural Housing Loan Program Update for 2021 Single Family Housing USDA Guaranteed Loan


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Kentucky USDA Rural Housing Streamline Refinance Guidelines


KENTUCKY USDA MORTGAGE STREAMLINE REFIANCE

Kentucky USDA Rural Housing Mortgage Lender: Top 5 Reasons To Apply For A Kentucky USDA Rural Housing Streamline Refinance
Rate/Term Refinance
(with
•
Allows financing of
unpaid principal and
eligible costs subject
to available equity
Streamlined Refinance
(without
•
Allows financing of
unpaid principal
balance and upfront
guarantee fee along
with accrued interest
•
Debt ratios are
calculated
Streamlined
Assist
Refinance (no appraisal
effective 6/2/2016)
•
Allows financing of
unpaid principal
balance and eligible
costs
•
Debt ratios not
calculated

Streamline Refinance
•
A new appraisal is not required (unless the loan being refinanced is a Direct Loan and subsidy
recapture is required).
•
The new loan amount may not exceed the original loan amount of loan being refinanced.
•
The new loan is limited to:
•
The principal balance of the loan being refinanced
•
The upfront guarantee fee (if financed)
•
Accrued interest (current interest)
•
Reasonable and customary fee for reconveyance
•
Subsidy recapture due for Direct Loan borrowers may not be included in the new loan amount
•
A borrower may be removed from the loan as long as at least one original borrower remains on
the new loan.
•
All other rate/term refinance requirements, including debt ratio calculation and limits apply.
(Except as outlined above, all Rate/Term Refinance requirements also apply to Streamline Refinance. See the
HB 1 3555 for all three types of refinance transactions allowed.)

Streamlined
Assist Refinance (cont.)
•
The new loan amount is limited to:
•
The unpaid principal balance of the loan being refinanced
•
The upfront guarantee fee (if financed)
•
Accrued interest (current interest)
•
Eligible loan closing costs (not to exceed 2% of total loan amount)
•
Permissible bona fide discount points (not to exceed 2% of total loan amount).
•
Funds to establish an escrow account for real estate taxes and insurance.
•
Subsidy recapture due for Direct Loan borrowers may not be included in new loan amount; however,
the cost of any appraisal obtained for recapture purposes is an eligible closing cost and may be
included.
Note:
The maximum loan amount cannot exceed the balance of the loan being refinanced, plus the guarantee
fee and reasonable and customary closing costs (including funds necessary to establish a new tax and
insurance escrow account). Subordinate financing, such as home equity lines of credit and down payment
assistance “silent” seconds, cannot be included in the new loan amount. Unpaid fees, past due interest and
late fees/penalties due the servicer, cannot be included in the new loan amount.
(Except as outlined above, all Rate/Term Refinance requirements also apply to Streamline
Assist Refinance.)

Joel Lobb
Mortgage Loan OfficerIndividual NMLS ID #57916

American Mortgage Solutions, Inc.10602 Timberwood Circle Louisville, KY 40223Company NMLS ID #1364
click here for directions to our office
Text/call:      502-905-3708fax:            502-327-9119
email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/