I am a Kentucky based USDA Mortgage Lender that has originated over 300 KY Rural Housing Mortgage Loans in Kentucky
Category: Guaranteed Section 502 Loans
What are Kentucky USDA Home Loans? Do I Qualify? Deciding between rural and suburban is one of many choices you’ll make along your homeownership journey. And if the countryside is your preference, then you may want to consider applying for a USDA loan. You’…
Source: What are USDA Home Loans? Do I Qualify? – Cape Gazette
Source: Single Family Housing Direct Loan and Grant Programs
February 1, 2019
Single Family Housing Direct Loan and Grant Programs
We now have an enacted Fiscal Year (FY) 2019 continuing resolution that provides short-term funding for the U.S. Department of Agriculture (USDA), Rural Development. As we begin an orderly start-up of our loan and grant activities for FY 2019, we thank you for your patience and support during the period in which our services were unavailable.
We are taking a proactive and customer-focused approach to prioritizing our activities so that we can resume normal operations as quickly as possible. As Rural Development stakeholders, we will be working closely with you to achieve this goal.
On behalf of the USDA Single Family Housing Direct Programs, we appreciate your continued support and patience.
1. Certificates of Eligibility: USDA will issue a new Certificate of Eligibility (COE) to all
applicants under the Single Family Housing Direct Loan Program who had a valid COE
on December 21, 2018. This includes any COE that was under an allowable extension on
this date. The new certificates, which will be issued by the field staff as soon as possible,
will allow the applicants additional time to locate a home within their qualification
amount and submit the needed documentation to the agency now that normal operations
have been resumed.
2 . Self-Help Housing: USDA staff are currently working on a 2019 Funding Plan for the
Section 523 Self-Help Housing Program pending full year appropriations. Operating
grantees may continue to work with eligible applicants, process applications, and resume
construction activities delayed by the lapse in funding. Technical & Management
Assistance (T&MA) Contractors are authorized to resume services as well.
3. Repair Loans and Grants: Repair loan and grant funds are available for processing,
approval, and closings. Applicants with immediate health and safety hazards such as
inoperable heating systems will receive priority.
4. New 502 Direct Loans: Based on appropriations received thus far in Fiscal Year 2019,
which are applicable through February 15, 2019, USDA has had severely restricted levels
of funding available for new 502 Direct loans. USDA does not anticipate being able to
obligate new 502 Direct loans until the next Fiscal Year 2019 appropriation bill is passed.
Thank you for your support of the USDA Single Family Housing Direct Loan and Grant Programs. We look forward to serving you and the needs of rural communities.
Roger Glendenning
Deputy Administrator
Single Family Housing
For Program Information
Single Family Housing Direct Loans
The U.S. Department of Agriculture will not issue new Kentucky USDA Direct Loans or Kentucky Guaranteed Loans 502. This is due to the ongoing shutdown by the Federal Government.
Kentucky FHA, VA, Fannie Mae, and KHC loans are being closed currently as of this writing.
Current Scheduled closings of Kentucky Direct Rural Housing Loans are being canceled and unless your guarantee was previously issued for a Guaranteed Loan, those may or may not be closed, depending on the lender.
Check with your USDA lender immediately if you’re getting a USDA loan or had planned to use the program to buy a home; you might have to put off your purchase until the shutdown is resolved.
Text/call: 502-905-3708
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 loan? To 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.**********
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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.
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.
There isn’t a limit to the amount a homeowner can borrow
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.
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.
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.
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.
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.
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.
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%)
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.
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
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.
Yes, you can use a USDA loan to finance a condo; however, there are requirements that will need to be met.
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.
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.
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Kentucky USDA Mortgage Lender for Rural Housing Loans 