I am a Kentucky Mortgage Loan Officer that has successfully originated over 200 Rural Housing Mortgage Loans in Kentucky, Put my expert advice to use. This website is not affiliated with USDA or any other government agency. NMLS#57916 Equal Housing Lender Text or call today 502-905-3708 with your mortgage questions about USDA Rural Housing Loans in Kentucky. Free Pre-Approvals on most applications within the same day. Kentuckyloan@gmail.com
USDA has published new income limits for Kentucky USDA Rural Housing borrowers, effective immediately. Those new limits can be found HERE.
This slideshow requires JavaScript.
Maximum age for an RHS appraisal has been extended from 120 days to 150 days.
Accessory Dwelling units are now addressed in RHS guidelines. They may be allowed based on the appraiser’s evaluation that they represent the highest and best use of the property and are not a separate single family dwelling unit.
Additional clarification on site requirements was added to help in the underwriter’s determination as to when outbuildings and/or excess land should be considered income-producing.
It’s free to get pre-approved for the loan with us and we will supply you a copy of your credit report for free along with a pre-approval letter stating how much you qualify for.
It takes about 30-40 days to close the loan
USDA Loan Pre-Approval Checklist
1. One full month’s or 30 days worth of pay stubs
2. Last 2 years W-2′s
3. Last 2 years tax returns
4. Last two months bank statements for all accounts
I don’t need originals, copies are fine. You can fax, email the requested documents or meet me face-to-face if you wish.
Let me know your questions.
Thanks and look forward to helping you–
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
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/
— 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.
Lenders must include the greater of:
• 1 percent of the outstanding loan balance; or
• The fixed payment as reflected on the credit report.
Income Based Repayment (IBR) plans, graduated plans, adjustable rates, interest-only and deferred plans are examples of repayment plans that are subject to change and do not represent a fixed payment or repayment plan. These types of repayment plans are unacceptable to represent a long-term fixed payment repayment plan. It is the lender’s responsibility to ensure the correct fixed payment is utilized in the capacity analysis.
No additional documentation is required if a credit report is obtained.
30 year fixed rate only for Purchases and Existing USDA loans Refinances.
Zero down Mortgage loan with a loan limit of $424,000
Upfront funding fee is 1.0% and annual mi fee is .35% (very low compared to FHA)
Typically cannot own other real estate. There are exceptions to this.
You do not have to be a first-time home buyer in Kentucky
Can refinance existing USDA loan as long as lowering rate by 1% and can do without an appraisal. There are overlays to this by lenders.
Closing costs and prepaids can be paid by seller but must be put into contract
Closing costs may be financed into the loan up to the appraised value.
You will need two credit trade lines reporting at least for 12 months on your credit file. They don’t have to be open and active. Just reporting on your credit report.
All Guaranteed Mortgage Loans are ran through GUS. GUS stands for the Guaranteed Underwriting System. USDA and their underwriters use this system to pre-approve you. They review credit score/history, income, debt to income ratio and assets to determine your loan eligibility. If your credit score is below 640 or your debt to income ratio is over 45%, it will get a refer and you will find most lenders will not approve the loan.
Some lenders will do a credit score down to 600, but they will want a lot of documentation to overturn the refer and compensating factors for the lower credit score. They typically will need to verify rent for last 12 months, with no lates, cash payments are not acceptable, and debt to income ratios are set at 29% and 41% respectively. Reserves are typically helpful too on lower credit scores, so keep in that in mind, if you have money in a savings account, for a rainy day fund, this will help sometimes get the loan approved.
If you have access to 20% down payment you cannot use the USDA Program. Money in a retirement account does not account toward the 20% rule.
Properties must be located in an eligible area of Kentucky. Typically the large metro areas of Kentucky including the following: all of Jefferson County, all of Fayette County, Owensboro, Paducah, Hopkinsville, Bowling Green, Richmond, Frankfort and Northern KY cities of Covington, Florence, Erlanger, Beechwood, Richwood are not eligible
The total household income must be within the county limits for household size. Typically a family household of 4 can make up to around $75,650 and a family of five or more can make up to $99,850 for a household- Some KY counties allow for higher like Shelby County, and the Northern Kentucky Counties of Boone, Kenton, Campbell allow $82,000 (household income of four) up to $108,250 (household income of five or more)
It’s a two step approval process. The chosen USDA lender must first underwrite the file and get it approved based on the income, assets, and credit report submitted. Then, the lenders must submit to USDA for a “conditional commitment”. This conditional commitment is the final loan approval paperwork you are looking for. Even though the lender may have approved the file, it still must go to USDA office in Lexington for an assignment to SFH underwriter for the final approval process. They typically are checking the appraisal and income at this stage. There have been instances where the lender would approve the file but USDA would not due to appraisal issues or income and job history. This is very rare instances, so keep that in mind when it comes to final loan approval.
This two-step approval process usually adds 4-6 days to the final loan approval process, so keep that in mind when you are writing up your contract because it takes a little longer to close these loans vs FHA, VA, and Fannie Mae loans.
Well Test Treatments: Properties with a well as the primary drinking source will require a well water test. There are local labs to perform this test and the water must pass.
Septic Test:Sometimes they will require the septic tank to be inspected if called for in the appraisal report or home inspection. Older Homes: As a general rule, USDA does not like homes older than 100 years old. They will sometimes require a home inspection in addition to the mandatory appraisal on older homes.
USDA Loan After a Short Sale: A short sale is not the end of the world. So it is very possible to obtain a USDA loan if 3 years have passed after the short sale. But a buyer would need re-established good rent and other credit history.
Bankruptcy and Foreclosure:If the mortgage debt that was foreclosed, was included in a Bankruptcy – then the USDA Home Loan waiting periods after foreclosure “waiting period” of 3 years, starts from the date of the discharge of the Bankruptcy. Because it can take 6 months or more for Banks to process the Foreclosure, and transfer title, this is a tremendous plus.
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 view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.
The total household income must be within the county limits for household size. Typically a family household of 4 can make up to around $75,650 and a family of five or more can make up to $99,850 for a household- Some KY counties allow for higher like Shelby County, and the Northern Kentucky Counties of Boone, Kenton, Campbell allow $82,000 (household income of four) up to $108,250 (household income of five or more)
It’s a two step approval process. The chosen USDA lender must first underwrite the file and get it approved based on the income, assets, and credit report submitted. Then, the lenders must submit to USDA for a “conditional commitment”. This conditional commitment is the final loan approval paperwork you are looking for. Even though the lender may have approved the file, it still must go to USDA office in Lexington for an assignment to SFH underwriter for the final approval process. They typically are checking the appraisal and income at this stage. There have been instances where the lender would approve the file but USDA would not due to appraisal issues or income and job history. This is very rare instances, so keep that in mind when it comes to final loan approval.
This two-step approval process usually adds 4-6 days to the final loan approval process, so keep that in mind when you are writing up your contract because it takes a little longer to close these loans vs FHA, VA, and Fannie Mae loans.
Well Test Treatments: Properties with a well as the primary drinking source will require a well water test. There are local labs to perform this test and the water must pass.
Septic Test:Sometimes they will require the septic tank to be inspected if called for in the appraisal report or home inspection. Older Homes: As a general rule, USDA does not like homes older than 100 years old. They will sometimes require a home inspection in addition to the mandatory appraisal on older homes.
USDA Loan After a Short Sale: A short sale is not the end of the world. So it is very possible to obtain a USDA loan if 3 years have passed after the short sale. But a buyer would need re-established good rent and other credit history.
Bankruptcy and Foreclosure:If the mortgage debt that was foreclosed, was included in a Bankruptcy – then the USDA Home Loan waiting periods after foreclosure “waiting period” of 3 years, starts from the date of the discharge of the Bankruptcy. Because it can take 6 months or more for Banks to process the Foreclosure, and transfer title, this is a tremendous plus.
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 view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.
Kentucky USDA Rural Development Guaranteed Lending Program is geared to assist low to moderate income families realize home ownership. Below are some important highlights:
Debt Ratios–29/41% on manual underwrites – max to 45% Debt to Income ratios with GUS Approve/Eligible Finding.
ZERO down payment – 100% LTV ok
Income Eligibility Limits do apply. Usually to $75k for a family of four and up to $98k for a household family of five or more.
Lender Credit from the interest rate may be used to pay closing costs.
Gifts ok! Usually not needed for USDA loans because 100% Financing offered. Gift funds cannot be used for reserves to get a GUS approval.
Applicants with > 20% of the sales price in assets (exclude retirement accounts) are not eligible for USDA financing.
Clear CAIVRS required – CAIVRS is a Federal Government-wide data base of information regarding individuals where an insurance claim or guarantee loss was paid.
2 tradelines with > 12 months of repayment history – installment or revolving and trade lines may be open, closed or paid in full by applicant.
Student Loan Payments – important recent change to Kentucky Mortgage RHS USDA Loans. The change no longer allows for student loan payments that are IBR (Income Based Repayment), graduated, adjustable, interest only and deferred. USDA now requires a payment equal to 1% of the balance reflected on the applicant’s credit report.
Kentucky Rural Development USDA Changes Coming soon below:
Kentucky USDA Streamlined-Assist refinances – similar to an FHA Kentucky Streamline…details coming soon!
Upfront Fee and the Annual Premiums will be reducing in the Fall of 2016 for a new Kentucky Rural Housing Mortgage 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 view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). USDA Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.
There are two types of Kentucky USDA Rural Housing Home loans available to rural Kentucky Home buyers through Rural Development:
Direct homeownership loans and guaranteed home ownership loans.
Let’s first look at the 502 Direct USDA Loan in Kentucky
502 Direct USDA Loan in Kentucky:
With a Kentucky Direct Loan 502, the applicant applies directly to the USDA office serving their location in Kentucky. There are about 13 different locations . They lend the money direct from USDA , 100 percent financing, for the low rate currently at 3 percent on a 33 year term.
For a direct home loan, the purchase, construction, repair and rehabilitation of a single family home in rural areas must be used for the applicant’s permanent residence. “For manufactured housing, only new construction can be funded,” he explained.
Credit scores of 640 or greater are typically acceptable with a minimum number of trade lines (2 usually for 12 months can be opened or closed) that have been open and active.
No down payment typically is required- Loans may be up to 100 percent of the appraised value. Homebuyer education is required prior to closing for the Direct USDA Loan 502 program
Mortgage payments are based on what the applicant can afford to pay. USDA offers payment assistance/subsidies to make it affordable. When you go to payoff the USDA Direct loan, you may incur a subsidy recapture fee.
Student Loans and their Impact in the Total Debt Ratio
Recent updates to the 3555 Handbook intended to simplify guidance for the delivery of the guaranteed loan program have caused some misperception in regards to total debt ratio calculations, specifically in the subject of student loans. The Agency is working on revisions to Chapter 11: Ratio Analysis; however, we want to further clarify the subject at this time.
Total debt includes monthly housing expenses plus any other credit obligations incurred by the applicant. Student loan payments must be included in the calculation of the total debt-to-income ratio and captured under liabilities on the application. Student loan payments should be treated as described below:
Fixed payment loans: A fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed. There must be no future adjustments to the terms of the student loan payments.
Non-Fixed payment loans: Payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed cannot be used in the total debt ratio calculation. One percent of the loan balance reflected on the credit report must be used as the monthly payment. No additional documentation is required.
Effective for all loan commitments issued on or after March 9th, Kentucky USDA Rural Housing Loan Program is publishing an updated version of their 3555 handbook. The new handbook includes additional guidance and clarification on many previously vague subjects, including the following changes
RHS considers a loan as qualifying for conventional credit if all of the following are true
Borrower has eligible assets to meet a 20% down payment AND reasonable closing costs; AND
The loan meets all current FNMA guidelines
Assets should be calculated using the lesser of a two month average balance or the current bank statement/recent VOD.
Debts omitted in GUS now require that reason for omission be listed in the “Notes” section.
Military applicants are no longer required to provide evidence of pending discharge.
The following are now considered part of the Household income when determining income eligibility
Documented pay raise/cost of living raise to occur on or prior to closing
Income from spouse living apart less than 3 months, unless divorce or legal separation proceedings have been commenced
Continuance is automatically assumed on Social Security income unless the benefit letter specifically states an expiration date.
Payments for the care of foster children or adults cannot be used as income.
Authorized User accounts can be used to meet tradeline requirements if 12 months payment can be documented by the borrower.
30 day accounts paid each month do not have to be included in the DTI.
Previous mortgage liabilities disposed of without release of liability (i.e. divorce, assumed, etc.) can be excluded from the debt calculation if the transaction can be fully documented along with 12 months of mortgage payments by the remaining party
Judgments accounts may be excluded from the debt calculation if less than 10 months remain on the repayment plan.
Charge-off accounts should not be included as a liability or a debt.
Debts incurring a significant impact on repayment are now defined as being 5% or more of the gross monthly income.
USDA does not have to be added to the appraisal as an intended user.
Use the greater of one percent (1%) of the outstanding loan balance or the verified fixed payment as reflected on the credit report.
Income Based Repayment (IBR) plans, graduated plans, adjustable rates, interest only and deferred plans are examples of repayment plans that are subject to change. These types of repayment plans are unacceptable to represent a long term fixed payment plan.
Income from all occupants of the household must be included as qualifying income regardless of whether or not they are obligated on the note. Income eligibility can be determined from the following USDA web site. Final eligibility must still be determined by USDA
When a borrower has a rental property it must also be included in the eligibility calculation.
Positive net rental income is included in the eligibility income for the household
Negative net rental income is counted as zero for eligibility income
Qualifying Income:
The underwriter is responsible for calculating income and approving the loan. Applicants with commission only position’s, or varying amounts of overtime and bonus income may not exhibit enough stable monthly income to qualify. Typically, income of less than 24 months duration should not be included in qualifying income.
Salaried Borrowers
Pay-stubs covering most recent 30 day period, W-2’s for the previous two years and telephone verification of employment performed by Freedom Mortgage (paystub must show at least 30 days of year-to-date earnings).
If overtime, commission, or bonus income is used for qualifying purposes the file must be documented with a two year history of receipt and be expected to continue.
Standard VOE, sent directly to the employer, along with the borrower’s most recent paystub.
Self-Employed Borrowers
Copies of the borrower’s signed individual Federal tax returns that were filed with the IRS for the most recent two years. As an alternative, the Freedom may obtain IRS-issued transcripts of the borrower’s tax returns, as long as the transcripts include the information from all of the applicable schedules. The tax return documentation should be complete and include all appropriate schedules.
The self-employed applicant also should submit current documentation of the business’s income and expenses, including any applicable Federal tax returns that were filed with the IRS for the most recent two years as well as year-to-date profit and loss and balance statements.
Rental Income
Rental income may only be counted for repayment income if the lease has been in place for at least two years. For leases older than two years, count positive net rental income in repayment income and negative net rental income as debt. If rental income is not received for a full two year period then the full PITIA must be used in the debt to income calculation.
Rental income calculation – reduce monthly gross income by a 25% vacancy rate, and then the monthly PITI, HOA dues, etc. are subtracted. If positive then include in income if negative include in DTI.
All other income sources refer to USDA guidelines for all income guidelines and documentation requirements
Assets:
Assets are not required; however, any assets disclosed must be supported with appropriate documentation
Satisfactory explanation and documentation should be provided for large deposits or increases in liquid assets
Cash on hand is not acceptable
Bank accounts require Verification of Deposit with average 2 month balance, or 2 consecutive months statements dated within 45 days of loan application
Earnest money deposit may be considered an asset if deposit is not already reflected in liquid assets
Asset amount of retirement accounts is 60% of the vested account balance
Gifts must be documented through gift donor letter and establish that gift does not have to be repaid
For sale proceeds of real property, provide HUD-1 or equivalent closing statement to indicate the actual amount of cash proceeds realized by the borrower
Stocks and bonds must be documented by a statement provide by stockbroker or financial institution managing the portfolio
Households with net family assets of greater than $5,000 require that the actual income derived from all net family assets or a percentage of the value of such assets based on the current passbook savings rate be considered when calculating income.
USDA Home Loans : 100% Financing Kentucky USDA Rural Development Housing Zero Down Kentucky USDA Mortgage Loans Kentucky Single Family Housing Guaranteed Loan Program
The program’s full name is the Kentucky USDA Rural Development Guaranteed Housing Loan program. Most people call them “USDA loans” or “Rural Housing Loans.” Kentucky USDA loans are insured by the U.S. Department of Agriculture and the program’s most popular feature is its option for “no money down” financing. Via the USDA, you can finance 100% of a home’s purchase price.
It is a common misconception that these loans are only for farm types of properties. In fact, income producing farms are not eligible for the program. 118 of Kentucky’s 120 counties contain areas that are eligible for program (The whole area of Jefferson & Fayette Counties currently are ineligible). Parts of Bullitt County, McCracken, Christian, Boone, Kenton, Campbell Counties are ineligible.
The property cannot be located within the city limits of a municipality with a population level determined by the U.S Census with a limit set by the USDA.
A Kentucky USDA loans are similar to other loan types including loans via Fannie Mae and Freddie Mac. Kentucky USDA loans differ in their down payment requirements (none required) and its simpler loan approval standards. Kentucky Rural loans can be used by first-time buyers and repeat home buyers alike. Homeowner counseling is not required to use the Kentucky USDA program. Mortgage insurance premiums are also often more attractive than many alternative financing types.
Since October 1, 2012, USDA mortgage insurance rates have been : •For purchases, 2.00% of loan amount upfront fee paid at closing •For refinances, 2.00% of loan amount upfront fee paid at closing •For all loans, 0.40% annual fee, based on the remaining principal balance
As a real-life example, then, a homebuyer with a $100,000 loan size in Kentucky would be asked make a $2,000 upfront mortgage insurance premium payment at closing, plus $33.33 in mortgage insurance monthly.
The upfront mortgage insurance is not required to be paid as cash and the amount is often added to your loan balance even above the purchase price and appraised value of the home. USDA is one of the only loan types that allows you to also finance in other closing costs and prepaid items above the purchase price up the appraised value if it is greater than the purchase price of the home.
Also similar to the FHA, the USDA requires mortgage insurance premiums to be paid until the loan is paid-in-full, or until the home is sold. USDA mortgage insurance rates are lower than those for a comparable FHA mortgages.assess a 1.75% upfront mortgage insurance premium and charge as much as 1.55% in MIP annually.
—
For home buyers today, there are two mortgage programs which offer 100% financing. The first is the VA loan from the Department of Veterans Affairs. It’s available to most active military personnel and veterans nationwide.
The other program is the U.S. Department of Agriculture’s Rural Development Single Family Housing Loan Guarantee Program.
Sometimes called a “Rural Housing Loan” or a “Section 502” loan, today’s USDA financing isn’t just for farms. Because of the way the USDA defines “rural”, there are plenty of exurban and suburban neighborhoods nationwide in which USDA loans can be used.
Home buyers who buy a home in a qualified USDA area, and who meet USDA income eligibility requirements, can take advantage of the USDA’s low interest rate, no downpayment mortgage program..
What Are The Benefits Of A USDA Home Loan?
USDA mortgages are structured just like conventional ones via Fannie Mae and Freddie Mac. Where they…
Kentucky USDA Rural Housing Home Loans 1 100% Financing in Kentucky for Home Loans
The 2014 Income Limits for Kentucky USDA’s Single Family Guaranteed Loan Program were recently published. The good news is that the majority of all areas either increased or stayed the same.
Click Here to view the updated Kentucky Rural Housing USDA Income Limits for 2014 in your area.
