Kentucky USDA Guideline Updates for 2021

  • Annual Qualifying Income – The requirement for calculations to be included on the Income Calculation worksheet have been removed and should now be included on Attachment 9-B, the underwriter transmittal summary, FNMA form 1008/Freddie form 1077, or equivalent
  • 4506-T – The requirement for asset statements to be reviewed to ensure borrowers have no additional income sources has been removed.
  • Repayment Income – MCC income must now be included in repayment income.
  • Boarder Income – USDA now considers a boarder as a household member and a boarder’s income must now be included in annual income calculation. Rent paid by boarders that is reported on tax returns must also be included in annual income.
  • Capital Gains – USDA removed requirement from Repayment Income to provide evidence showing borrowers own additional property or assets that may be sold if additional income is needed to support the mortgage obligation
  • Commission – The borrower must now show one year history in same or similar line of work to include commission in repayment income.
  • Fellowship, Stipend, Scholarship – Scholarship award letters must now provide date of termination and USDA will no longer presume benefits with no expiration date will continue. USDA also added guidelines for GI Bill income and stated it cannot be included in annual or repayment income.
  • MCC – This income must now be included in repayment income, but no history is required. A copy of the W-4 from employer is required to verify borrower is taking tax credit on monthly basis. Note: MCC’s are ineligible with FWL as qualifying income.
  • Unreimbursed Business Income – only taxable income is allowed to be included in repayment income
  • Section 8 – USDA removed requirement for section 8 income to be deducted from the monthly PITI to determine DTI if it is paid directly to the loan servicer when included in the repayment income.
  • Self Employed Income – Federal tax returns must now be reviewed to determine gross income for annual calculations. Removed requirement to deduct business loss before entering as repayment income into GUS or on loan application. Clarified documentation requirements as most recent 2 years of federal tax returns / transcripts & YTD P&L may be audited or unaudited
  • Social Security Income – clarified documentation options and will allow social security benefit statement or form SSA-1099/1042S to source
  • Temporary Leave – The history requirements for repayment income has been changed and now income must be received by loan closing.
  • Cash on Hand – The underwriter must review the reasonableness of accumulation based upon income stream, spending habits, etc. and cash on hand can no longer be included in reserves
  • Gift Funds – Clarification provided on how gift funds must be sourced when gift funds have been deposited into borrower’s account, not deposited into borrower’s account, or if funds are being wired directly to the settlement agent.
  • Large Deposits – USDA no longer addresses lump sum additions.

USDA Loans in Kentucky 

USDA SINGE FAMILY HOUSING INCOME LIMITS FOR KENTUCKY IN 2021
1-4 person household and 5 or more household

New Income limits for most counties (*) in Kentucky are $91,900 for a household family of four and household families of five or more  can make up to  $121,300.

With the new changes for 2021 USDA Income limits, the Jefferson County Louisville, KY Metro area (**) saw an increase of $91,900 for a family of four and up to$121,300 for a family of five or more. The metro area surrounding counties of Jefferson County includes Oldham, Bullitt, Spencer are included in these higher income limits for USDA loans.
Remember,  the entire  Jefferson County and Fayette County  Kentucky counties are not eligible for USDA loans. Along with parts of the following counties Daviess (Owensboro), Mccracken (Paducah), Madison County, (Richmond), Clark County (Winchester), Warren (Bowling Green), Hardin (Fort Knox and Radcliff), Bullitt(Hillview, Maryville, Zoneton, Fairdale, Brooks), Franklin, (Frankfort), Henderson (Henderson City Limits), Christian County (Hopkinsville, Fort Campbell), Boyd County (Ashland city limits) and the most Northern Parts of Boone, Kenton, Campbell Counties of Northern Kentucky (Covington, Florence, Richwood, Hebron, Ludlow, Fort Thomas, Bellevue, Ryle, Beechwood, )
The Northern Kentucky Counties (***) of Boon, Kenton, Campbell, Bracken, Gallatin, and Pendleton are $99,250 for a household of four or less and up to $131,000 for a family of five or more.
USDA Eligible Areas in Northern Kentucky
Burlington
Hebron
Independence
Walton
Alexandria
Highland Heights
Cold Springs
Grant County
Owen County
Pendleton County
USDA Income Limits
Boone, Kenton & Campbell Counties (N. KY)

$99,250  (family size 1-4)
$131,000 (family size 5 or more)
Grant, Owen & Pendleton Counties (N. KY)

saw an increase of $91,900 for a family of four and up to$121,300 for a family of five or more

Most are familiar with USDA Rural Housing Loan Program  being a great no money down program available and it is not just for Kentucky first time buyers.

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. Most Kentucky Counties are 90,300  for a household family incomes of four or less, and up to $119,200 for a family of five or more in the household income
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
  • Minimum credit scores of 581, but helpful to have 640 and get an automated underwriting approval thru Rural Housing’s underwriting engine – GUS–GUS stands for the Guaranteed Underwriting System to pre-approval all Kentucky USDA loans.
  • 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 searchplease 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.

What Is The Mortgage Insurance Premium On A Kentucky Rural Housing USDA Loan?

When does PMI stop on Kentucky Rural Housing USDA Loans?

How Can I Get Rid of Mortgage Insurance for a Rural Housing Loan In Kentucky?

USDA’s Mortgage insurance is for the life of the loan

Mortgage insurance advantages & strategies for lower down payment and payment USDA has an annual fee which is similar to private monthly mortgage insurance premiums and an upfront guarantee fee paid to USDA at closing that is currently equal to 1% of the loan amount.

The annual fee is recalculated each year based on the new balance of the mortgage. The annual fee is currently only .35 which began October 1, 2016.

The annual fee percentage on USDA loans stays for the entire 30 year term but because it is based on the annual mortgage balance. Therefore, the dollar amount decreases each year.

How to calculate monthly mortgage insurance  for Kentucky USDA loans:

Take Loan amount x 1.0101% (USDA funding fee) x .0035 / 12 = monthly
fee to include in the monthly mortgage payment.

So on a $100,000 sales price, going no money down, this would yield a total loan amount of $101,000 with a monthly mortgage insurance premium of $29.45 a month.

This is very cheap mortgage insurance when compared to an Kentucky FHA loan. 

 

USDA Loan Payment Calculator: Calculate Loan Guarantee Eligibility ...

Kentucky USDA Mortgage Loans Affected by COVID-19

Kentucky Rural Housing USDA Implements Immediate Measures to Help Rural Housing Loan Program  Affected by COVID-19

WASHINGTON, April 1, 2020 – USDA Rural Development has taken a number of immediate actions to help rural residents, businesses and communities affected by the COVID-19 outbreak. Rural Development will keep our customers, partners, and stakeholders continuously updated as more actions are taken to better serve rural America.

* Visit www.rd.usda.gov/coronavirus for information on Rural Development loan payment assistance, application deadline extensions, and more.

OPPORTUNITIES FOR IMMEDIATE RELIEF

Rural Development Guaranteed Loan Programs

Effective immediately until September 30, 2020, lenders may offer 180-day loan payment deferrals without prior agency approval for Business and Industry Loan Guarantees, Rural Energy for America Program Loan Guarantees, Community Facilities Loan Guarantees, and Water and Waste Disposal Loan Guarantees. For additional information, see page 17721 of the March 31, 2020, Federal Register.

Rural Housing Service

Single-Family Housing

Effective March 19, borrowers with USDA single-family housing Direct and Guaranteed loans are subject to a moratorium on foreclosure and eviction for a period of 60 days. This action applies to the initiation of foreclosures and evictions and to the completion of foreclosures and evictions in process.

Direct Loan Program:

• USDA has waived or relaxed certain parts of the application process for Single-Family Housing Direct Loans, including site assessments, and has extended the time period that certificates of eligibility are valid.

• A Direct Loan borrower who is experiencing a reduction of income by more than 10 percent can request a Payment Assistance package to see if he/she is eligible for payment assistance or for more assistance than currently received.

• Moratorium Assistance is available for Direct Loan borrowers experiencing medical bill expenses (not covered by insurance) or job loss because of COVID-19. Qualifying borrowers can receive a moratorium on house payments for a period of time, repaid at a later date.

• Direct Loan questions should be directed to USDA’s Customer Service Center at 800-414-1226 (7:00 a.m.-5:00 p.m. Eastern Time Monday-Friday) or https://www.rd.usda.gov/contact-us/loan-servicing. Call volume and wait times are high at this time.

Guaranteed Loan Program:

• Guaranteed Loan borrowers who are in default or facing imminent default due to a documented hardship can have payments reduced or suspended by their lender for a period not to exceed 12 months delinquency. Once the hardship is resolved, the lender can modify the loan to cure the delinquency or make up the missed payments based on the borrower’s individual circumstances.

•*USDA is granting lenders temporary exceptions pertaining to appraisals, repair inspections and income verification for the Single-Family Housing Guaranteed Loan Program (SFHGLP) due to theCOVID-19 pandemic. Effective immediately, the following exception sto Agency guidance found atHB-1-3555 are in effect for a period of 60-days.

*Residential Appraisal Reports–Existing DwellingFor purchase and non-streamlined refinance transactions, when an appraiser is unable to complete an interior inspection of an existing dwelling due to concerns associated with the COVID-19 pandemic, an “Exterior-Only Inspection Residential Appraisal Report”, (FHLMC 2055/FNMA 2055) will be accepted. In such cases, appraisers are not required to certify that the property meets HUD HB 4000.1 standards. The appraisal must be completed in accordance with the Uniform Standards of Professional Practice (USPAP) and the Uniform Appraisal Dataset (UAD).This exception is not applicable to new construction properties or construction-to-permanent loans. As a reminder, appraisals are not required for streamlined and streamlined-assist refinance transactions.

*Repair Inspections–Existing Dwelling: For loans for which a completion certification is not available due to issues related to the COVID-19 pandemic, a letter signed by the borrower confirming that the work was completed is permitted. Lenders must also provide further evidence of completion, which may include photographs of the completed work, paid invoices indicating completion, occupancy permits or other substantially similar documentation. All completion documentation must be retained in the loan file. This exception is not applicable to rehabilitation and repair loans noted in section 12.28 of HB-1-3555.

*Verbal Verification of Employment: Lenders must document and verify the borrower’s annual and repayment income in accordance with Agency regulations. Lenders should use due diligence in obtaining the most recent income documentation to re-verify the borrower’s repayment ability prior to closing. When the lender is unable to obtain a Verbal Verification of Employment(VVOE)within 10 business days of loan closing due to a temporary closure of the borrower’s employment, alternatives should be explored. For example, email correspondence with the borrower’s employer is an acceptable alternative to a VVOE. If the lender is unable to obtain a VVOE or acceptable alternative, the requirement will be waived when the borrower has a minimum of two months cash reserves. In the case of a reduction of income, the borrower’s reduced income must be sufficient to support the new loan payment and other non-housing obligations. Borrowers with no income at the time of closing are not eligible for SFHGLP loans regardless of available cash reserves.

Kentucky USDA Rural Housing Repair and Grant Program.

Section 504 Repair Loan and Grant Program for Kentucky USDA RHS Loans
If you missed the live webinar to learn about recent changes to the Section 504 Single-Family Housing Repair Loan and Grant Program, the presentation slides from the webinar are available on the U.S. Department of Agriculture  (USDA) Rural Development’s website. This information is for individuals and organizations, including nonprofits and public agencies, who work with affordable housing products such as weatherization, home repairs, and Section 504 application packaging.

The slides will provide information on the following:

  • An overview of recent changes to the Section 504 Single-Family Housing Repair Loan and Grant Program.
  • Information on Procedure Notice 527 (published on August 29, 2019).

For a brief overview of the 504 program, please watch the USDA Helps You Make Home Repairs

Program Guidelines & Terms –Section 504 Loans
• Maximum outstanding 504 loan amount is $20,000
• Interest rate is fixed at 1%
• Maximum term of 20 years (term and payment is based upon the
family budget)
• Appraisal and escrow account is required for loans over $15,000
• Flood insurance is required for properties located in a flood zone
• Mortgage, title work and closing agent required for loans of
$7,500 or more
• Mortgage is filed for loans of $7,500 and over
• Assets above $15,000 ($20,000 for elderly/disabled households)
must be applied toward repairs.
• Residential Mortgage Credit Reports are ordered by Agency for
loans of $7,500 and over (RMCR fee paid by Rural Development

General Eligibility Criteria – Section 504 Loans
• Household income must not exceed “very low” income
limits; < 50% HUD median income
• Applicant must own home (to include site when
considering manufactured housing) and occupy house on a
permanent basis
• Demonstrate repayment ability based upon a family budget
• Stable and dependable source of income
• Acceptable credit – reasonable ability and willingness to
meet debt obligations
• Meet asset limitations (15K non-elderly and $20K elderly*)

Program Guidelines & Terms –Section 504 Grant
• Maximum cumulative lifetime grant assistance is $7,500
• Grantee must sign Grant Agreement requiring occupancy
of home for 3 years
• No lien on property
• Repairs to remove health and safety hazards or to make the
home accessible and useable for household members with
disabilities.

General Eligibility Criteria – Section 504 Grants
• At least one applicant must be 62 years of age or older.
• Household income must not exceed “very low” income limits;
< 50% HUD median income
• Applicant must own home (to include site when considering
manufactured housing) and occupy house on a permanent basis
• Repairs must be necessary to remove health and safety hazards or
to make the home accessible and useable for household members
with disabilities.
• Must demonstrate a lack of repayment ability based upon a
household budget.
• Meet asset limitations (15K non-elderly and $20K elderly*)
• No outstanding federal judgments

SECTION 504 PROPERTY REQUIREMENTS
• Must be modest for the area; market value cannot be in
excess of USDA established area loan limit
• Property must be located in a designated rural area
• Must not have an in-ground swimming pool
• If the property has income producing land or structures, we
may use loan/grant funds as long as repairs are used for the
residential portion of the home.
• Mobile or manufactured homes must be on a permanent
foundation or be placed on a permanent foundation with
loan or grant funds.
For additional program Information, please visit the following USDA webpages:

USDA Rural Development Housing Program 

 

USDA Home Loan in Kentucky Compared to FHA loans in Kentucky.

 

Why use USDA financing for your next home purchase in Kentucky?

There are very few ways to purchase a home these days in Kentucky without a typical 3.5% down payment that is required for an FHA loans in Kentucky.  Many home buyers in Kentucky are surprised to find that a USDA Home Loan offers a lower payment than an FHA loan, even with NO DOWN PAYMENT!  “How can this be?” you ask.  The reason is because a Kentucky USDA home loan requires much lower MORTGAGE INSURANCE.

Kentucky FHA Loan vs. Kentucky USDA Loan Comparison

FHA USDA
   
   
$150,000 purchase price $150,000 purchase price
   
4.75% 30 year fixed rate 4.75% fixed rate
   
1.75% up front mortgage insurance (financed) 1.0% Guarantee Fee (financed)
  .85% month mi premium .35% monthly mi premium
$871.19 P&I monthly payment
with monthly mortgage insurance (not including taxes and insurance)
$826.86 P&I monthly payment (not including taxes and insurance
   
$5250.00 required down payment $0 down payment
   

A rural housing USDA loan saved this client $46.74 per month and they made NO DOWN PAYMENT!

Other benefits of Kentucky USDA Home Loans

  • Low up front closing costs
  • In some cases closing costs can be financed if home appraises for more than purchase price 
  • Minor credit problems OK with a minimum credit score of 581***Most lenders will want a 620 or 640 score or higher.
  • No maximum loan amounts just household income limits based on which Kentucky County you are buying a home.
  • Fixed Rates Only for 30 years with no prepay penalty

A Kentucky USDA rural housing loan strive to find anyway possible to approve your loan, however there are some cases where a USDA Loan is not an option;

a previous bankruptcy must be discharged 3 years,

you must occupy the home being purchased as your primary residence,

the home may not be used for income producing purposes (farm, rental, etc.),

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Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

Federal USDA home loans on hold during government shutdown

https://www.nbc4i.com/news/local-news/federal-usda-home-loans-on-hold-during-government-shutdown/1692968028Other federal loan programs such as VA and FHA mortgage loans have been unaffected by the partial shutdown.

Source: Federal USDA home loans on hold during government shutdown

Who is eligible for a Rural Housing Loan in Kentucky?

Rural Housing Loan in Kentucky

Kentucky USDA loans are loans offered by the United States Department of Agriculture to those looking to buy homes in rural areas of Kentucky.

There are a few requirements and restrictions associated with this type of loan however, if you are a first time home buyer in Kentucky with a limited income, no down payment and are looking to live in a rural part of Kentucky, this may be a good option for you to purchase a home going no money down and getting a 30 year fixed rate loan.

Income Requirements for USDA Loans in Kentucky

The Rural Housing USDA website provides an income eligibility calculator depending on where you are looking for housing in the state of Kentucky. Because it is a nationally funded loan by the United States Government, the income restrictions will vary county-by-county  but the loan recipient cannot make more than 115% of the median income for the area in which they are applying. There is also a chart you can consult that provides Kentucky USDA county income limits depending on the number of people in your home. Most Kentucky Counties will allow up to $90,200 for a household family of four or less, and up to $119,350 for a household of five. The Northern Kentucky Counties of Kenton, Bracken, Boone, Gallatin, Campbell allow for more. See Chart below

Households with 1-4 members have different limits as households with 5-8. Similarly, applicants living in high-cost counties will have a higher income limit than those living in counties with a more average cost of living.

Credit Score Requirements for a USDA Loan in Kentucky 

Borrowers in Kentucky are required to have a FICO minimum credit score of 581 or higher. However, most USDA lenders will create a credit overlay where they will want a minimum credit score of 640 in order to get a GUS approval. 

If the potential borrower has declared bankruptcy or foreclosure within the last 36 months, they would be ineligible for this type of loan.

If the mortgage was included in the Bankruptcy, sometimes the 36 month hold is ignored and you just have to make sure the property is out of your name before applying for a USDA loan

Can you get a USDA loan in Kentucky with a Previous Bankruptcy?

Chapter 7 bankruptcy, the bankruptcy must have been discharged at least 3 years prior to becoming eligible for a Kentucky USDA home loan.

Borrowers must be in a Chapter 13 bankruptcy for a minimum of 12 months, with documentation of 12 months of on time payments and a letter of authorization from the bankruptcy trustee authorizing you to enter into new debt.

In order to qualify for a USDA home loan after filing a Chapter 13 bankruptcy, additional documentation may be requested/required stating that the reason for the Chapter 13 filing was due to extenuating circumstances beyond the borrower’s control, temporary in nature and not likely to re-occur.

Home must be primary Residence.

Recipients must be U.S. Citizens, U.S. non-citizen nationals or Qualified Aliens to apply for this program. They must also agree to use the home as their primary residence and not as a rental property.

The property must be for a family including townhouses, single family homes, condominiums (FHA Approved), new construction or new mobile homes.

What areas of Kentucky Qualify for the USDA Loan Program?

The USDA provides a map of the  where you can apply a USDA loans are eligible in Kentucky. The major metro areas of Jefferson County and Fayette County Kentucky are not eligible for Rural Housing Loans in Kentucky, along with some  parts of Northern Kentucky next to Cincinnati;  parts of Owensboro, Paducah, Bowling Green, Richmond, Frankfort, Winchester, Radcliff,  Hopkinsville and Henderson Kentucky are not eligible.

If you have a property in mind, you can head over to the eligibility map to see if the home you are considering qualifies.

What are the advantages of USDA loans in Kentucky?

For many people in a low to middle-income bracket, saving for a down payment can be difficult. A USDA loan does not require the purchaser to put any money down toward the purchase price of a home. The government insures the loan in this case, should the borrower default, therefore the borrower is required to carry mortgage insurance during the life of the loan. The mortgage insurance for the USDA loan is provided at a more discounted rate than that required by traditional loans.

On USDA loans the mortgage insurance is 1% upfront, called a guarantee fee, and .35% monthly called an annual mortgage insurance fee to USDA.  The beauty of USDA, is that it does not matter if you have a credit score of 640, or a credit score of 740, everyone pays the same premiums, unlike conventional loans. 

They only offer 30 year fixed rates with no prepayment penalty, and usually the rates are very low and compare to FHA rates and much lower than conventional loans. 

USDA loans take on average about 30 days to close, and the appraisal must meet FHA requirements. Home inspections are not required, and only new mobile homes are allowed on this home loan program. 

screenshot_20201203-145606

Joel Lobb (NMLS#57916)


Senior  Loan Officer

 

American Mortgage Solutions, Inc.

10602 Timberwood Circle Suite 3

Louisville, KY 40223

Company ID #1364 | MB73346

 


Text/call 502-905-3708

kentuckyloan@gmail.com

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

What is a Kentucky USDA Rural home loan?

What is a Kentucky USDA Rural home loan?

A Kentucky USDA home loan is a zero-dollar-down mortgage option provided by USDA’s Department of Rural Development.

This government-backed loan program comes in two types: direct loan, which is reserved for lower-income households and issued by USDA, and the guaranteed loan, which is reserved for low- to moderate-income families. The guaranteed loan is funded by private lenders, and USDA guarantees a portion of the loan against default.

Is a Kentucky  USDA loan more beneficial than a Kentucky conventional loan?

 The KY USDA home loan program is generally more beneficial to rural families than a conventional lending program, particularly for first-time homebuyers with lower- to median-level incomes.

Some of the benefits of Kentucky Rural Housing USDA loans include:
• zero down payment 
• competitive interest rates
• lower-than-average monthly mortgage insurance 
• relaxed credit requirements versus conventional loans
• no loan limits

How do I determine eligibility for a Kentucky Rural Housing USDA loanTo be eligible for a USDA home loan, borrowers must meet the program’s basic eligibility requirements. These requirements are relaxed compared to other mortgage options and are in place to ensure borrowers can make their monthly mortgage payments.

Here are a few of the basic Kentucky RHS USDA eligibility requirements:

• Income. Applicants must not have annual adjusted income greater than 115% of the median household income for the area. Check your county’s USDA income limit. This called compliance income.

• Credit. USDA’s guaranteed underwriting credit requirements. However, most lenders will want a 620 or preferably to get an Automated Approval 640 is the magic number in most cases. With regards to bankruptcy, 3 years is usually the date needed to lapse since your discharge. They actually require no minimum score but no lenders that I know of will do a no score loan.

• Employment. Applicants must have proof of two years of stable income and employment.

:  Income: They will take your gross monthly income and develop two ratios for you: The front end ratio, which is called your housing ratio, and then the back-end ratio or total debt ratio is the house payment plus the total monthly payments listed on the credit report. If you pay child support, this is included in the qualifying ratios but utility bills, car insurance, cell phone bills, water bills etc, is not included. Typically 28% is used for the housing ratio, and

Student Loans:  They are pretty tough on student loans and qualifying with your current student loan debts. They will make us use 1% of your outstanding balance on student loans, so sometimes this will cause the loan to get denied because your debt to income ratio is too high. If they are in an Income-Based repayment plan they will still make us use the .5% balance so keep this in mind. For example, let’s say you owe $50k in outstanding student loans, and your IBR plan calls for a $50 monthly payment. RHS will make us use $250, not the $50 IBR payment so you can see where this will cause issue on higher debt to income ratios on some loans.**********

⬇️⬇️⬇️⬇️
Effective immediately for all Kentucky USDA Rural Housing Mortgage Loans.

If you are a Kentucky USDA Mortgage applicant who has student loan calculations will be changed to the following Fixed Payment Loans:

A permanent amortized, fixed payment may be used when it can be documented that the payment is fixed, the interest rate is fixed, and the repayment term is fixed.

Non-Fixed Payment Loans (i.e. deferred, income based, graduated, adjustable, etc.): The payment should be calculated as the greater of 0.5% of the loan balance or the actual payment reflected on the credit report. No additional documentation is required.

• Property location. Homes must be located within a rural area, as defined by USDA. Rural areas are any that have a population less than 35,000 depending on the area’s designation. Use this tool from USDA to determine if a specific address is eligible.

• Physical property. Homes must be the borrower’s primary residence, have direct access to a street, and have adequate utilities and water and wastewater disposal, among other things No working fams allowed or properties that income producing livestock or crops.

For those with lower incomes, a USDA direct loan provides greater opportunities for lending, as its credit and income requirements are more lax than the guaranteed loan option.

Joel Lobb (NMLS#57916)
Senior  Loan Officer
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

Kentucky USDA Rural Development Loans

 

USDA-Loan-Apply-Today
USDA-Loan-Apply-Today

Frequently Asked Questions

Are only first-time homebuyers eligible?

No, you do not have to be a first time home buyer.  The USDA Loan program has no restrictions that prevent previous homeowners from using the program.


What is the maximum amount that I can borrow?

There isn’t a limit to the amount a homeowner can borrow


How much are the closing costs for a USDA mortgage?

Closing costs vary from lender to lender and state to state. The charges from the USDA are a Guarantee fee of 1% of the loan amount. Additionally, there is a monthly mortgage insurance factor of .35% of the principal balance.


Can closing costs be financed into a USDA Loan?

Yes! The USDA home loan has the ability to finance closing costs up to the appraised value or to get a 6% seller contribution to closing costs from sellers on the contract.

What are USDA eligibility requirements?

USDA requires that the borrower demonstrates a reasonable ability and willingness to repay the mortgage loan. USDA lenders will view your credit history, income, and assets to verify your ability to repay the mortgage.


What is the USDA’s minimum credit requirement?

The USDA has no minimum score required; however, most lenders require a minimum credit score of 640 or sometimes 620 to obtain financing. Exceptions can be made and you should talk to a loan specialist about this.


Can you qualify for a USDA loan if your credit score is below 640?

Many lenders do require a 640 minimum Fico score to be eligible for a USDA home loan, however, exceptions can be made. It is important to note that the derogatory credit is temporary in nature, beyond the applicant’s control, and the circumstances that caused the adverse credit are no longer a factor.


What does the USDA require for employment eligibility?

You must have established employment to be eligible for a USDA Loan. Almost all lenders will require a minimum of two years of steady employment or schooling prior to your current employment if less than 2 years. If you are self-employed, you are eligible but will be required to provide two years of federal tax returns to verify your income.


Do USDA home loans have PMI?

USDA mortgages do have a guarantee fee and monthly PMI. The rate for the mortgage insurance is .35% of the outstanding principal balance and the current guarantee fee is 1% of loan amount. For example, if you borrowed a full $150,000 from your lender, the guarantee fee would be $1,500, which you can finance into your mortgage. The monthly PMI would be about 44.00 dollars a month on a 151,500 loan amount. (which includes the guarantee fee of 1%)


Can I get a USDA Mortgage after bankruptcy?

Yes, the USDA Loan Program requires the bankruptcy to be discharged for at least 3 years for a CH 7 and at least 12 months of on time payments on a CH 13. You can be in a CH 13 currently as long as 12 months of on-time payments have been made and verified.


How soon can you qualify for a mortgage after foreclosure?

 VA Loans: 2 years after foreclosure
 USDA Loans: 3 years after foreclosure (Exceptions are possible!)
 FHA Loans: 3 years after foreclosure
 Conventional Loans (Fannie Mae and Freddie Mac): 7 years after foreclosure


Can I use a USDA Loan on investment property or Second Home?

No, the USDA Rural Housing Program is for primary residences only. Furthermore, any property that is income producing (farms, multi-family, over 30 acres, etc.) cannot qualify for the 502 Guaranteed Rural Home Loan.


Can a USDA loan finance a condominium?

Yes, you can use a USDA loan to finance a condo; however, there are requirements that will need to be met.


Does a USDA home loan finance modular or manufactured homes?

Modular and manufactured homes can be considered a USDA eligible property, but additional appraisal requirements will apply. Most lenders do not offer Section 502 USDA loans on manufactured homes; however, they do finance modular homes. The difference between a modular and manufactured is how and where the home is constructed. A manufactured home is already fully built and put on a foundation and modular homes are built in pieces, and then taken to the site to be constructed.


How fast can you close a USDA loan?

USDA loans have a 2 prong process. The loan is first approved by the lender and then sent to the local USDA field office to be insured. Depending on the turn-times at the local USDA office, closing can be as fast as 20 days or up to 60 days.

 

Kentucky USDA Rural Development Loans

  • Looking for 100% Financing without the Military Service Requirement?
  • Tired of Sourcing Funds for a Down Payment?
  • Need a New Product Niche Designed Specifically for Purchases?

100% Financing – If your borrower wants low down payment options, Kentucky USDA Rural Housing is the only widely available zero-down loan (other than VA which includes military service requirements).  Plus – reduced MI and no cash reserve requirements! *

Not a Farm Loan – It takes just a few minutes to check property eligibility – moving to a farm isn’t required – in fact, many suburban and rural parts of the country are eligible. Visit the USDA Mapping Tool Site (for residential properties only).

Program Minimum Down
Payment
Conventional 3%
FHA 3.5%
USDA 0%
VA 0%

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Kentucky USDA Mortgage Lender for Rural Housing Loans

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Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/