Category: Current USDA and RHS Guidelines

Kentucky Rural Housing Service (RHS) program Mortgage


Kentucky Rural Housing Service (RHS) program Mortgage

Program Descriptions RHS Fixed Rate 2 6/15/2011

The loan must meet the minimum FICO requirement listed in the following grids: Loans must be manually underwritten. Second Homes and Investment properties are not eligible. LTV/CLTV/HCLTV/FICO Primary Residence –

Min Fico 640 Ranges FICO Type Units *LTV CLTV HCLTV Salaried Self-Employed Purchase & Rate/Term Refinance 1 103.5% 100% NA 640 640 1 101% 100% NA 640 640

* Purchase: Maximum LTV is 103.5% of appraised value when guarantee fee is financed. Refinance: Maximum LTV is 101% of appraised value when guarantee fee is financed. Rate & Term refinancing is available on current RHS loans only.

Calculation of the Guarantee Fee: The Guarantee Fee may be calculated in two ways depending on whether the fee will be financed. Transaction Type Guarantee Fee Not Financed Guarantee Fee Financed Purchase Transactions Multiply the loan amount by 3.50% and round to the nearest cent. Example: $100,000 x .035 = $3,500. The fee is calculated as follows: 1. Divide the base loan amount by .965 and round to the nearest cent. 2. Multiply that number by .035 (3.50%) and round to the nearest cent. Example: $100,000 ÷ .965 = $103,626.943005 (rounded to $103,626.94). $103,626.94 x .035 = $3,626.9429 (rounded to $3,626.94). Rate and Term Refinances Multiply the loan amount by 1.00%. Example: $100,000 x .01 = $1,000. Follow steps 1 and 2 above, substituting 99 for .965 and .01 for .035. Example: $100,000 ÷ .99 = $101,010.10. $101,010.10 x .01 = $1,010.10.

Secondary financing may be used if it is approved by RHS and is offered by city or county agencies. SECONDARY FINANCING

Refinance transactions must comply with the following requirements: REFINANCE REQUIREMENTS • The interest rate cannot exceed the interest rate of the existing loan. • The loan security must include the same property as the original loan. The security property must be owner-occupied as the borrower’s primary residence. • 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, such as late fees due the servicer, cannot be included in the new loan amount. • Any existing secondary financing must be subordinate to the first lien. • Cash-out is not allowed. • HUD-1 cannot reflect cash back to the borrower except for items prepared by the borrower outside of closing.

PROGRAM DESCRIPTION

The rural Housing Service (RHS) program provides very-low-, low- and moderate-income rural resident with better access to affordable housing finance options with little or no down payment or out-of-pocket costs.

Borrowers may obtain a loan to purchase a new or existing home that is located in a designated rural area. A rural community generally has a population of 10,000 or less; however, a community with a population of 20,000 or less can be considered “rural” if it is located outside a metropolitan statistical area (MSA).

To be eligible for RHS assistance, borrowers must lack sufficient resources (for example, borrower is unable to secure the necessary down payment which is generally 20%, to obtain conventional financing without RHS guarantee assistance). Guidelines for the program follow.

AVAILABLE PRODUCTS AND TERMS

•

30 year fixed rate

LOAN PURPOSE

•

Purchase

• Rate term refinance (only allowed when refinancing a current Rural Housing Guaranteed loan.)

OCCUPANCY

•

Owner occupied only

ELIGIBLE BORROWERS

Borrowers are subject to the following eligibility requirements:

• Borrowers may have only one residence. Borrowers may be the current owner of a structurally sound, functionally adequate house, as long as it is sold prior to or concurrently with the purchase of the new home.

• Borrowers must lack sufficient resources (for example, borrower is unable to secure the necessary down payment which is generally 20%, to obtain conventional financing without RHS guarantee assistance).

• Borrowers must have a valid Social Security Number.

• Borrower may be a permanent or non-permanent resident alien. Refer to the Underwriting Guide for details.

• Title must be in individual names only.

• All borrowers must be screened using CAIVRS (Credit Alert Interactive Voice Response System) to determine if an applicant is delinquent on a federal loan.

INELIGIBLE BORROWERS

•

Non-occupant co-borrowers

PREPAYMENT PENALTIES

Prepayment Penalty Option is not available.

MIN/MAX LOAN AMOUNT

The LTV is based on the appraised value. Minimum 80.01% LTV is required on all purchase transactions. The minimum loan amount is $30,000. Loan limits are dictated by the applicant’s income with respect to program eligibility and loan repayment ability. The maximum loan amount is 100% of the conforming loan limit or 103.5% when the Guarantee Fee is financed.

 Program Descriptions RHS Fixed Rate

2 6/15/2011

LTV/CLTV/HCLTV/FICO

The loan must meet the minimum FICO requirement listed in the following grids: Loans must be manually underwritten. Second Homes and Investment properties are not eligible.Primary Residence – Min Fico 640
Ranges  FICO 
Type  Units  *LTV  CLTV  HCLTV  Salaried  Self-Employed 
Purchase & Rate/Term Refinance  1  103.5%  100%  NA  640  640 
1  101%  100%  NA  640  640 
Related articles

Kentucky USDA and Rural Housing Underwriting Update for November 2012


Kentucky USDA and Rural Housing Underwriting Update for November 2012

This website is not an Government Agency, and does not officially represent the HUD, VA, USDA or FHA or any other government agency. 

1)  Kentucky USDA loans and rural housing underwriting  is tightening up!  You are going to see us asking for more to make sure we have it to respond to USDA when they ask for it.  We don’t want to be caught shorthanded on these deals and be stuck waiting to get them closed (neither do you!) so to be reactive to the changes with USDA, you will find that we are conditioning for more than we used to.  To help us be on the ball with your USDA loans, be sure to include the following:

1)  30 days most recent paystubs showing a YTD amount

2)  VOE’s if the borrower is NOT employed in the same position for more than 2 years or the borrower has OT, Bonus or commission income.  We will recommend Written VOE’s   for the purpose of showing the borrower is in the same line of work!

3)  Assets – if your 1003 shows bank information and asset information then you must provide the most recent 2 statements to prove this information

4)  Collections & open judgments must show on your liabilities.  Please provide an LOX for all Derogatory credit  this LOX should show that the circumstances were temporary in  nature, beyond the applicant’s control and resolved to the best of their ability

5)  VOR‘s are required for all USDA loans.  USDA has been consistently requesting this information in the past 30 days.  For files above 640, a VOR will suffice.  For files under 640,     we will require 12 months cancelled checks.  If a VOR is not available due to the borrower living with family,  an LOX will be needed

6)  Paystubs for all income in the household regardless if they are on the loan or not. Must be most recent and 30 days worth to help determine actual income

7)  Garnishments or child support shown and if paying it we will require the court order. If receiving it, we need a 12 month history of receipt and court order

8)  W-2’s for the past 2 years for ALL jobs

9)  Tax returns if self employed or unreimbursed expenses are shown

10)  YTD P&L if self employed prepared by tax preparer and signed by borrower.

11)  1980-21 signed by borrowers

12)  Fully executed purchase contract

Remember – we cannot send a file to RD without an appraisal!!!  The appraisal must state that the property meets HUD Handbooks 4150.2 and 4905.1.

2)  Turn times for USDA in several states are extreme.  We understand your frustration with the delays and want to express to you that we are watching diligently for return commitments to push your files to closing.  If you could review your USDA loans with us and insure that all conditions are met….except for the CC…we can expedite these files ASAP when the commitment comes in.  If your file has been with us for over 30 days, please update the paystubs as ours will have expired!!!

Thank you for your attention and please let me know if you need me!

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.comKey Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*
Related Articles

Kentucky USDA and Rural Housing Credit Scores Guidelines


Kentucky USDA No Score Loan Guides

Map of Kentucky highlighting Jefferson County
Map of Kentucky highlighting Jefferson County (Photo credit: Wikipedia)

DTI: 29/41 Maximum no exceptions.
Rent: 12 months 0 x 30 on Rent. 12 months cancelled checks or VOR if institution. Or a four Non Traditional Trade Lines may be substituted with underwriting
approval.
Credit: No delinquent or derogatory past or current credit. Regardless of size or type.
No open collections or judgments (exceptions granted upon review only
and only based on overall profile of the loan).
Job Time: 2 years of consecutive work/education with no gaps.
Alternative Trades: 3 Non Traditional Trades with Rent or 4 Non Traditional Trades with No Rent. 0 x 30 and must have 12 month history on each trade.
Pricing: 3.00 negative adjustment to price.
Miscellaneous: Required to have 2 months bank statements and/or 401k asset Account with 2 month Reserves. FTHB Education is required.
Minimum Loan: $30,000
Residual Incomer per Family/Geographic: Borrowers must have residual income left over after their loan closes, see table below for what is required:
Family Size
1
$450
2
$755
3
909
4
1,025
5
1,062
Over 5 Add $80 for each additional family member up to 7

Kentucky Rural Housing and USDA 620-639 Credit Score Loan Guides:

DTI: 29/41 Maximum no exceptions.
Rent: 12 months 0 x 30 on Rent. 12 months cancelled checks or VOR if institution. Or a four Non Traditional Trade Lines may be substituted with underwriting
approval.
Credit: 3 Trade Lines seasoned for 12 months with high balances of a minimum $500. No delinquency in last 12 months regardless of size or type.
No open collections or judgments (exceptions granted upon review only and only based on overall profile of the loan)
Alternative Trades: May be needed if credit is thin or needed to be strengthened overall credit quality.
May require four non-traditional trades if no Rent History.
Job Time: 2 years of consecutive work/education with no gaps.
Pricing: 1.50 negative adjustments to pricing.
Miscellaneous: Required to have 2 months bank statements and/or 401k asset Account with 2
months reserves.
Minimum Loan: $30,000

Kentucky USDA and Rural Housing Manual Underwrite with GUS Refer Scores >=640:

DTI: 29/41 Maximum no exceptions.
Rent: 12 months 0 x 30 on Rent. 12 months cancelled checks or VOR if institution. OR a four Non Traditional Trade Lines may be substituted with underwriting
Approval if no rent history is available.
Credit: 3 Trade Lines seasoned for 12 months with high balances of a minimum $500.
OR if payment shock <=25% and traditional trade lines cannot be supplied we can accept 3 alternative trade lines with 12 month history and 0 x 30.
No delinquency in last 12 months regardless of size or type on any credit.
No open collections or judgments (exceptions granted upon review only and only based on overall profile of the loan)
Job Time: 2 years of consecutive work/education with no gaps.
Pricing: 2.00 negative adjustments to pricing.
Miscellaneous: Required to have 2 months bank statements and/or 401k asset Account with 2
months reserves. May be waived with strong compensating factors.
Minimum Loan: $30,000

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com

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

Related Articles

Kentucky Single Family Housing Guaranteed Loan Program


Kentucky Single Family Housing Guaranteed Loan Program

Kentucky Single Family Housing Guaranteed Loan Program 
– 25 Frequently Asked Questions

“

25 Questions and  Answers

1 What is the guarantee?
USDA Rural Development provides the full faith and assurance of the U.S Government
that any financial loss resulting from servicing the loan will be reimbursed in full up to
an amount not exceeding 90% of the original loan amount. All loss up to an amount not
exceeding 35% of the original loan is fully reimbursed. Losses exceeding 35% are 85%
reimbursed.
2 What is the advantage to the customer?
100 percent financing, fixed interest rate,  low monthly mi fee (.50bps) and upfront mi fee of 2% and no restrictions on size or design are just a few of the advantages.
3 What are the eligibility requirements?
Have adequate and dependable income (up to 115 percent of adjusted area median
income), have acceptable credit, do not own a dwelling in the local commuting area, US
Citizen or permanent resident, have the ability to personally occupy the home on a
permanent basis, and do not have funds for a 20% down payment loan plus closing and
moving expenses.
4 Can a Broker originate Guaranteed loans? Yes, however only Approved lenders may underwrite & submit loans.
5 How long does it take to get an answer?
Our goal is a 2 to 5 day turnaround. Time will be longer in some offices due to the large
number of guarantee requests received.
6 What is the maximum fixed Interest Rate  and term?
Fannie Mae 90 day delivery rate plus 60 basis points rounded up to nearest quarter of
one percent Or no more than the Lender’s published VA rate for first mortgage loans
with no discount points. The term is 30 years.
7 What is the maximum loan amount? The Loan amount is limited by the market value and repayment ability.
8 What is the maximum Loan to Value? It can be up to 100% LTV plus the Agency guarantee fee.

9 What is the Guarantee Fee? The guarantee fee is 2.0 percent of the “Total” loan amount.
10 What are the qualifying ratios? PITI Ratio 29 percent, TD Ratio 41 percent.
Higher ratios may be approved with compensating factors.
11 Do we show deferred student loans in the debt ratio?
Deferred student loans should be included in the debt ratio calculations for Guaranteed
Loans regardless of the deferment period.
12 What is the minimum credit score?
Under certain criteria, credit score 640 and above no comment required.
For credit score 639 and below document circumstances were temporary in nature
beyond the applicants control and have been removed. In most cases, loans will not be
guaranteed for applicants who have a middle credit score of 580 & below.
13 What about location? The dwelling must be located in eligible rural area (See eligibility site) http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
14 What about refinancing? Limited to existing USDA Rural Development guaranteed or direct loans.
15 Can loans include acreage?

Possibly. The acreage must not contain any income producing facilities and the value of
acreage may not exceed of the total property value.
16 Can Manufactured Homes be financed? Yes, however they must be new and sold by an approved dealer contractor. We as a lender currently don’t offer these type of loans

17 What about an in-ground swimming pool?  Swimming pools are now okay with the recent changes on December 1st, 2014

18 What are the required inspections?Property must meet HUD Handbook 4905.1 & 4150.2 or similar standard. A FHA roster appraiser can verify adequacy/working order of electrical, plumbing, heating, water & waste disposal on existing dwellings.
19 Will USDA Rural Development issue a letter asking the Approved Lender to make a loan? No. This is the Approved Lender‟s loan. They underwrite the loan and decide if it meets their standards and Agency standards before submitting.
20 Is homebuyer education required? Homebuyer education is not required, however it is recommended.
21 Are seller concessions allowed? Yes. Rural Development  restricts  the amount of seller concessions to 6% of sales price
22 Who approves the Appraiser? The appraiser must be licensed by the State to complete appraisals.
23 Can necessary repairs be included in loan? Yes. An „as improved‟ appraisal will be needed to include cost of repairs.
24 Are alternate verifying income documents allowed

Yes. Paycheck stubs, payroll earnings statements and W-2 tax forms for previous 2 tax

years, and telephone verification of employment.

25 Who buys Guaranteed Housing Loans?

FHLB, Fannie Mae, Ginnie Mae, and other

— b91d9-requestinformationbutton

 
Joel Lobb
Senior  Loan Officer
(NMLS#57916)
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223
 Fax:     (502) 327-9119
 
 Company ID #1364 | MB73346

Kentucky USDA Rural Development Single Family Housing Guaranteed Loan Program


Kentucky USDA Rural Development Single Family Housing Guaranteed Loan Program

Kentucky Guaranteed Loans Offer Affordable Financing To Rural Homebuyers.

The mission of Kentucky Rural Development’s Single Family Housing Guaranteed Loan Program is to assist low to moderate income rural Kentucky  homebuyers achieve their dream of homeownership!

Kentucky Rural Development partners with approved local lenders to extend 100% financing opportunities to eligible rural individuals and families for the purchase of safe and sanitary dwellings. Guaranteed loans have assisted thousands of homeowners to purchase a home with affordable interest rates and loan terms.

Applicants must purchase a home within the eligible rural areas, and have a household income that does not exceed the established limits where the home is located. Additional Guaranteed Loan Features include but are not limited to:

  • 100% financing, no down payment is required. The loan amount may not exceed 100% of the appraised value, plus the guarantee fee may be included.
  • Guarantee Fee applies: may be rolled into the loan amount.
  • Flexible credit guidelines. Non-traditional credit histories may be accepted.
  • Fixed 30 year interest rates apply. Lenders and applicants agree upon interest rate.
  • Qualifying ratios are 29% for housing costs and 41% for total debt. Lenders may request an exception to exceed these ratios when strong compensating factors are identified.
  • No maximum purchase price. Qualifying ratios and the applicant’s stable and dependable income will determine home affordability.
  • Eligible property types include existing homes, new construction, modular homes, Planned Unit Developments (PUD’s), eligible condominiums and new manufactured homes.
  • Eligible closing costs and lender fees may be included in the loan or paid by the applicant.
  • Gift/Grant Funds/Mortgage Credit Certificates (MCC’s)/Seller Concessions are allowed.
  • Eligible repairs and improvements may be included in the loan.
  • Applicants apply with an approved lender of their choice.
  • Not limited to first time homebuyers.

 

Changes to RHS Guarantee and Annual Fee

Effective on October 1, 2012, RHS will revise the Up-Front Guarantee Fee and Annual Fee structure as follows:

 

Up-Front Guarantee Fee

Through

Sept. 30, 2012

Effective  Oct. 1, 2012
Purchase Transactions (no change)

2%

2%
Refinance Transactions

1.5%

2%

 

Annual Fee

Through

Sept. 30, 2012

Effective  Oct. 1, 2012
Purchase Transactions

.30%

.40%
Refinance Transactions

.30%

.40%

 

Loan guarantee requests submitted to RHS by September 30, 2012, in which a conditional commitment has not been issued, will be subject to the new, October 1, fee structure.  Lenders are encouraged to plan for the changes because, as mentioned previously, some RHS offices are experiencing extreme backlogs in loan guarantee delivery.

 

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.comKey Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*

Related Articles