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
Kentucky USDA Mortgage Lender for Rural Housing Loans 