Closing Cost Opportunities Roll Closing Costs into Mortgage and seller can pay for your closing costs and prepaids or if home appraises for more, can lump in the costs to higher appraised value.
Kentucky USDA Loan Eligibility Requirements
As with any loan, you must meet certain requirements to confirm USDA loan eligibility. To be an eligible candidate for a USDA loan, consider these general requirements:
Be a legal U.S. resident. Show two years of income history. Demonstrate a willingness to repay the loan as proven by no late payments or collections within the prior 12 months. Have an acceptable debt ratio. Possess an adjusted annual income of no more than 115% above the median income for the area as related to family size. Be interested in a property in an area certified by USDA loan agreements.
Frequently Asked Questions
What’s a government-backed mortgage?
These mortgage loans are insured by an agency of the federal government, protecting the lender in the event a borrower can’t repay the debt. This significantly reduces the risk to the lender and may make it easier for borrowers to take out a loan by offering more lenient credit guidelines, interest rates, and down payment options.
What’s the difference between Kentucky USDA loans and other types of government-backed mortgage loans like Kentucky FHA loans?
While both are government-backed mortgages, Kentucky USDA loans are run by a different government agency than Kentucky FHA loans and has different application, underwriting, appraisal, lending amount, and mortgage insurance requirements. To be eligible for a Kentucky Rural Housing USDA loan, borrowers must be purchasing or refinancing property in rural areas that the USDA has defined as eligible.
Do I have to be a farmer or rancher to get a Rural Kentucky USDA loan?
No, despite what the name implies. As long as you meet the property and eligibility qualifications for a Rural Kentucky USDA loan, you can apply.
How do I know if a home is eligible for a USDA loan?
Are there maximum lending amounts for KY Rural Development USDA mortgage loans?
There are no set loan limits for USDA loans in Kentucky, but the maximum amount is set based on your ability to qualify for a USDA loan based on borrower’s income and work history over the last two years. and debt to income ratios. The max back-end debt ratio on USDA loans is set at 45.9% of a borrower’s gross monthly income while the front-end debt ratio centers around 28% to32% depending on credit score, ratios, assets.
Do USDA loans require private mortgage insurance (PMI)?
Yes, Kentucky USDA mortgage loans have an upfront funding fee of 1% currently with a monthly mortgage insurance premium of .35%– mortgage insurance is required by the USDA and pays your lender if you default on your loan.
What’s a USDA guarantee fee and annual fee?
These are fees involved during the USDA home loan process. The upfront guarantee fee is normally equal to 1% of the loan amount. It’s usually added to the initial loan amount and paid at closing. The annual fee is normally equal to 0.35% of the loan amount and some is financed into your loan.
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Have Questions or Need Expert Advice? Text, email, or call me below:
Joel Lobb Mortgage Loan Officer Individual NMLS ID #57916
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
How to Qualify for a Rural Housing Loan in Kentucky with Student Loans.
For potential home buyers with student loans that are either in a deferred payment status or being paid back through an income based or graduated repayment program, the treatment of this liability needs to be considered.
When student loan debts are not currently being paid upon, due to the loan applicant still being in school or recently graduating from school, the monthly liability will be calculated based on the lower of 1/2 of 1% of the outstanding loan balance or the monthly payment listed on the credit report.
Example if you owe $100,000 in student loan debt the monthly payment will be $500. Also, if the student loan is being paid upon, but at a lesser amount than originally agreed, such as the payment being determined based on repayment ability (i.e. Income Based Repayment Plan), the monthly payment will be calculated the same as above (monthly liability = 1/2 of 1% of the outstanding loan balance).
This offers a significant improvement compared to the FHA Loan guidelines, in which student loans that are in deferment or under an income based repayment plan will have the monthly payment calculated at 1% of the outstanding loan balance.
If the student loan is being paid upon as originally agreed upon when the loan was first obtained, the monthly liability will be the amount specified on the credit report.
Or if the student loans have been consolidated into a new loan, so long as the monthly payment is based on a fixed repayment schedule, that payment will be used when calculating the borrower’s debt to income ratio.
There’s no universal minimum credit score needed for a mortgage, but a better credit score will give you more options. (iStock)
If you’re trying to get a mortgage, your credit score matters. Mortgage lenders use credit scores — as well as other information — to assess your likelihood of repaying a loan on time.
Because credit scores are so important, lenders set minimum scores you must have in order to qualify for a mortgage with them. Minimum credit score varies by lender and mortgage type, but generally, a higher score means better loan terms for you.
Let’s look at which loan types are best for different credit scores.
Credit score needed to buy a house
Mortgage lending is risky, and lenders want a way to quantify that risk. They use your three-digit credit score to gauge the risk of loaning you money since your credit score helps predict your likelihood…
2-1 and 1-0 buydowns for Kentucky Rural Housing USDA RD loans Interest Rates.
What are Buydowns for Kentucky USDA RD Loans?
The Kentucky Rural Housing USDA Buydown Program provides simple financing options that lowers the interest rate on a mortgage for either 1 year (1-0) or 2 years (2-1), before it rises to the regular permanent rate. Specifics2-1, and 1-0 temporary interest rate buydowns are allowed on 30 year fixed-rate mortgages for principal residences, purchase only. Not permitted on refinance transactions.The seller or agent may provide funds for the temporary interest rate buydown, subject to standard interested party contribution limits.Lender paid buydowns are not offered.The borrower is qualified at the note rate fully amortized (not the buydown rate)Minimum credit score for loans with buydown is 620
Have Questions or Need Expert Advice? Text, email, or call me below:
Joel Lobb Mortgage Loan Officer Individual NMLS ID #57916
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org).
Kentucky USDA Mortgage Lender for Rural Housing Loans 