Category: Current USDA and RHS Guidelines

When qualifying for a USDA Loan and the borrower already owns another house?

USDA Loan assumes a very conservative perspective on financing homeowners who already own a home, unless the borrower can prove that the current home is not “adequate or suitable” for the borrower’s needs.

The USDA Loan assumes a very conservative perspective on financing homeowners who already own a home, unless the borrower can prove that the current home is not “adequate or suitable” for the borrower’s needs. Owning a house can be defined as not only being on the mortgage loan but also being on title to the property without being on the mortgage loan for that property. Factors that can determine when a house is not “adequate or suitable” include the following:

  • Household size change in which the borrower’s family size now exceeds the room count of the current house. The assumption being made here is that there is more than 1.5 household residents per room. The room count generally includes a living room, dining room, kitchen, recreation room, and bedroom(s). Room counts do not include bathrooms, hallways, or foyers.
  • In the case of divorce where the borrower remains on the mortgage loan, but the Courts have awarded the house to the ex-spouse.
  • Job transfer in which the borrower has relocated more than 50 miles away from the current residence.
  • Manufactured houses (i.e. doublewides) not on a permanent foundation.
  • The current house is not suitable due to documentable health and safety related issue, which includes the disability or limited mobility of a household resident that cannot be accommodated without substantial retrofitting of the current house.

Under no circumstances will the borrower be able to obtain another USDA Loan if the existing home is already financed using a USDA Loan. When qualifying for a USDA Loan and the borrower already owns another house, the costs associated with the current house, including the mortgage payment, property taxes, homeowner insurance, condo or Homeowner Association Fees, and lot rent in the case of a manufactured home, will be considered a liability to the borrower when calculating their debt-to-income ratio.

If the borrower has two years of rental history, as documented on their tax returns, the mortgage liability can be offset by the rental income. Also, in the case of a court ordered divorce settlement where the borrower can document 12 months of on-time mortgage payments being made by their ex-spouse, the liability can be excluded.

 

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 USDA Rural Development Loan Program:

Single Family Housing Guaranteed

The following is a list of the “nuts and bolts” of the Kentucky USDA Rural Development Loan Program:

  • The house has to be located in a Kentucky USDA Rural Development Loan Program: area designated as an USDA eligible area.
  • To determine the USDA approved designated areas, reference the following USDA map instructions:
    • Go the USDA Rural Development Website
    • On the top left hand side, click “Single Family Housing Guaranteed”
    • Click “Accept”
    • Enter the property address to determine if a specific house or general area is located in an USDA eligible area
  • The household income must be moderate as determined by USDA. The USDA Loan evaluates household income, which includes the combined income of all adults living in the household; even if they are not on the mortgage loan. Click here to determine your household income eligibility.
  • If it appears that the household income exceeds the moderate income thresholds established by USDA, do not throw in the towel just yet. USDA allows for deductions for child care and medical expenses as well as for children, students, and elderly members of the household that will be living in the USDA financed property.
  • This is not a farmer’s loan. As a matter of fact, the property cannot have any income producing capabilities, and when the land value of the property exceeds 30% of the appraised value additional requirements must be met.
  • The house has to be in fairly good condition. The appraisal type being utilized is an FHA appraisal, so make sure that there are not any safety related challenges(i.e. missing banisters, peeling paint, exposed electric).
  • This is a true no money down loan program. Or stated differently, you do not need a down payment.
  • While there is a monthly mortgage insurance premium (or prorated portion of an Annual Fee), the cost of the monthly mortgage insurance is 59% less than a comparable FHA Loan. This makes the USDA loan more affordable than an FHA Loan when analyzing down payment requirements and monthly mortgage payments.
  • The seller can pay all closing costs and pre-paids (i.e. escrows). Often the home buyer’s only out-of-pocket cost as part of the purchase transaction is approximately $550 for the appraisal report.
  • If the house appraises for more than the purchase price, the difference can be used to pay for closing costs and pre-paids (i.e. escrows). Only the USDA Loan program allows for closing costs to be rolled on top of the purchase price.
  • USDA has no restriction on whether you are a first time home buyer or move-up home buyer.
  • This loan program is only for primary residence (i.e. no second home or investment properties).
  • You should not own any other functional property; although there are some circumstances under which USDA may waive this requirement.
  • The preferred minimum credit score is 640. However, if you have a documented rent history, no late payments on your credit cards, and no new collections within the last 12 months, a credit score as low as 620 may be considered.
  • All property types including single family homes, town homes, modular, and even condominiums qualify for this loan program. Manufacture homes such as single and doublewides constructed prior to January 1, 2006 do not qualify.
  • There is no maximum mortgage amount, but the house does have to be considered moderate in a size

Western Kentucky are now eligible for low-interest loans from the U.S. Department of Agriculture

Several Kentucky counties eligible for low-interest USDA loans to repair agricultural damage

FRANKFORT, Ky. — Several Kentucky counties affected by the December 2021 storms that produced tornadoes and high winds in Western Kentucky are now eligible for low-interest loans from the U.S. Department of Agriculture, Kentucky Commissioner of Agriculture Dr. Ryan Quarles recently announced.

“Both my office and I have been on the ground in western Kentucky and witnessed the historic and devastating destruction that hit the region last month,” Commissioner Quarles said. “Our farmers need funds and resources to maintain operations and rebuild. The low-interest loans offered by USDA may help some get back on their feet and regain some sense of normalcy.”

The low-interest loans offered by USDA are for physical losses and can help producers repair or replace damaged or destroyed physical property essential to the success of the agricultural operation, including livestock losses. Examples of property commonly affected include essential farm buildings, fixtures to real estate, equipment, livestock, perennial crops, fruit and nut-bearing trees, and harvested or stored crops and hay.

USDA designated 24 Kentucky counties as primary eligibility areas for low-interest physical loss loans. They include:
Barren

  • Boyle
  • Breckinridge
  • Caldwell
  • Christian
  • Edmonson
  • Fulton
  • Graves
  • Grayson
  • Green
  • Hardin
  • Hart
  • Hickman
  • Hopkins
  • Logan
  • Lyon
  • Marion
  • Marshall
  • McLean
  • Muhlenberg
  • Ohio
  • Spencer
  • Taylor
  • Warren

The USDA has also designated 29 counties as contiguous and also eligible. They include:

  • Adair
  • Allen
  • Anderson
  • Bullitt
  • Butler
  • Calloway
  • Carlisle
  • Casey
  • Crittenden
  • Daviess
  • Garrard
  • Hancock
  • Henderson
  • Jefferson
  • LaRue
  • Lincoln
  • Livingston
  • McCracken
  • Meade
  • Mercer
  • Metcalfe
  • Monroe
  • Nelson
  • Shelby
  • Simpson
  • Todd
  • Trigg
  • Washington
  • Webster

The deadline to apply for the loans is Aug. 30, 2022.

Kentucky Rural Housing USDA loan program

What are the eligibility requirements for a Kentucky USDA loan?

Kentucky Rural Housing USDA loan program

Kentucky Rural Housing USDA loan program
Kentucky Rural Housing USDA loan program

The Kentucky Rural Housing USDA loan program has certain eligibility requirements .

Must be located in a eligible USDA Rural Housing Area.

The home would be your primary residence, not a rental property
Household income requirements beginning around $91, 000for a family of four and up to $120,400 for a family of five or more

Clear Cavirs Numbers.

No minimum credit score requirement but most lenders that offer USDA loans will want a 620 credit score or higher

What are USDA loan fees in Kentucky?

There are two fees on a USDA loan. An upfront fee, called the Guarantee fee and the monthly annual fee.

The upfront guarantee fee for fiscal year 2020 is 1 percent of the loan amount. This fee can often be rolled into the mortgage, instead of paying it out of pocket. The annual fee for  is .35 percent of the loan amount.

It’s important to check the maximum income limits   for your family size and where you live to get the most accurate data.

Advantages of USDA Loans

Zero Down Payment

Low Credit Score Requirements

Can finance closing costs up to appraised value

Streamline refinance an existing USDA with less documentation

No max loan amount

Disadvantages  of USDA Loans

only eligible in rural areas

Must be 3 years removed from bankruptcy or foreclosure

Limited to Income Requirements

Debt to income ratios tighter qualifying guidelines than FHA, Fannie Mae

Joel Lobb Mortgage Loan Officer Individual NMLS ID #57916 American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364 click here for directions to our office Text/call: 502-905-3708 fax: 502-327-9119 email: kentuckyloan@gmail.com https://www.mylouisvillekentuckymortgage.com/

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle 
Louisville, KY 40223
Company NMLS ID #1364
 

Text/call:      502-905-3708


email:          kentuckyloan@gmail.com

Rural Housing Funds for Kentucky USDA Loans Now Available

updates
RHS Funding Now Available for Kentucky Rural Housing Mortgage Loans for 2022
Funding has now been authorized for RHS loans.


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 views of my employer. Not all products or services mentioned on this site may fit all people

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