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.

Rural Housing Requirements For USDA Loans In Kentucky

Kentucky Rural  Housing Loans

 

Kentucky USDA loans are mortgages made by lenders and guaranteed by the U.S. Department of Agriculture. They are available to moderate- and low-income borrowers to build, rehabilitate, improve or relocate a primary residence in eligible rural and suburban areas. The income limit is 115 percent of the median income in your area. You can check the income limits for your area here.

 

It can be closed with zero down. USDA loans do have a monthly insurance requirement, but the upfront fee is significantly lower than on the VA loan and the mortgage premiums are lower than on the FHA loan.

The problem is that the number of buyers who qualify for a USDA loan is much smaller. Unlike on other loans where more income is better, a USDA loan has strict income maximums.

Fees for Kentucky USDA Loans

USDA loan borrowers pay an upfront fee of 1 percent of the loan amount, and this fee can be added to the loan balance. Borrowers also pay a mortgage insurance premium of 0.35 percent of the loan balance per year in 12 equal installments. This fee is based on the current balance and added to the monthly payment.

 

Down Payment Requirements for Kentucky USDA Loans

 

USDA loans are available with up to 100 percent financing (zero down).

 

Credit Score Required for Kentucky Rural Housing Loans

 

There is no minimum credit score for a USDA loan, but you are automatically ineligible if you are presently delinquent on a nontax federal debt.

Automated approval is available if you have two tradelines reported on your credit history and acredit score of 640 or higher.

If you do not have sufficient credit data, the underwriter can assess your creditworthiness other ways, such as by examining your history with rent payments. Applicants with a credit score lower than 640 will undergo additional underwriting steps.

 

Loan Limits for Kentucky USDA Loans

 

They are no loan limits for Kentucky USDA loans backed-up the guarantee loan program. The Direct USDA loan program does have loan limits.

 
 
 
 



 
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/
 
— 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.
 
 

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 

 

What are Kentucky USDA Home Loans? Do I Qualify?

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

Kentucky USDA Increased Income Limits for 2020

Kentucky USDA Loan Requirements Updated Income Limits for 2019

Income limits for all Kentucky Rural Housing USDA Rural Development Loans and their  Counties have increased.

After a four year pilot that was tested in 16 States, USDA published a final rule making changes to allow for a two-tier income structure. Rather than buyer(s) meeting the income limit based on household members, income limits are divided into 2 groups: 1-4 and 5+ household members. Each Kentucky county has an income limit for families with 4 or fewer people, and each has a limit for households with 5 or more people.

Reminder on how to exceed Kentucky USDA Income Limits using the following exceptions:
• $480 for each child under 18
• Documented child care expense
• Full-time college students 18 or older
• Disability expense incurred
• Medical expense for elderly or disabled

The Guaranteed Underwriting System (GUS) and the Income Eligibility calculator on USDA Eligibility website have been updated to use the new income limits for every Kentucky County this is eligible for USDA loans in Kentucky

If you are looking to buy a home in Northern Kentucky,  to either own a home on acreage in the country with 100% financing on your home loan with zero down,  then you need to look at the Kentucky USDA Rural Housing Loan Program.

 How Does the USDA Home Loan Work in Northern Kentucky?

Here are some of the Key Financial Elements of the USDA Home Loan in Northern Kentucky:

  • Low to Middle-Income Households are generally eligible – If the Household Income is too high, you may be ineligible.
  • 30 Year Fixed Term Loans at Today’s Low Interest Rates compared to FHA, USDA and other government mortgage loans
  • Qualifying rations are 29% for Housing and 41% for total debt. or possibly higher with a credit score over 640.
  • Rural Development Loan Guarantee Fee applies, currently 1% USDA funding fee and .35% monthly mi premium
  • Zero Cash required for the Down Payment.  If access to 20% down payment, then you cannot use this program.
  • Flexible Credit Guidelines, where non-traditional histories may be accepted. USDA will do a no score loan, but it is very difficult to qualify for so your best bet is to get your credit scores to 620 to 640 range and go from there. You will need two trade lines on the credit report for last 12 months, so no limited credit history is allowed on this program.
  • Eligible properties include: Existing Homes, New Construction, New Manufactured Homes, Modular Homes, and eligible Condos!—No used mobile homes.
  • Eligible Repairs may be included in the loan as well! If home appraises for more than sales price, sometimes you can finance these repairs into the loan.
  • They’re are two income tests. Compliance income and repayment income. See pic below for answers about Northern Kentucky Counties with max income limits for household
  • Home must be in an eligible area. See map below of Northern Kentucky Eligibility for USDA Rural Housing Loans
 
 
 

What are the income limits for a Rural Housing Loan in Northern Kentucky?

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.

Northern Kentucky Counties
Boone, Kenton, Campbell, Bracken and Pendleton, Gallatin ***
Cincinnati (OH, KY, IN FMR) Household income of 4 or less:

 

 
***$99,250
Household income of 5 or more:

 

 
***$130,000
     
All Other Areas $90,300 $119,200
 
click here free USDA quote, pre-approval and property eligiblity report

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

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

Mortgage In "100% Financing Zero Down" Kentucky USDA Guaranteed Rural Housing Mortgage Guidelines In "100% Financing Zero Down"

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
  • 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/

Gaps in Employment for KY USDA Rural Housing Loans

The rule states the following:
A borrower who has no verifiable employment for 6 months or longer is deemed to have a gap in employment. 
  •  Any gaps in employment must be analyzed in order to make a final determination of stable and dependable income. An employment gap does not automatically render an applicant ineligible. Applicants with job gaps due to maternity leave, medical leave, relocation, etc. are considered to have employment continuity. Applicants returning to the workforce after leaving a previous job to care for a child/family member, complete education, etc. will require a 12 month employment history.

 

 

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?

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.

Below I will spell-out the qualifying requirements for a USDA loan in Kentucky for 2019

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 $86,400 for a household family of four or less, and up to $116,350 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 in 2020

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. 

 

 

 

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.

 

 

Kentucky Rural Housing Development Mortgage Guide for 2020 USDA Loans

USDA Lenders Based in Kentucky Offering Rural Housing Mortgage loans.

2020 Kentucky Rural Development Mortgage Guide

 

  • 30 year fixed rate only for Purchases and Existing USDA loans Refinances.
  • Zero down Mortgage loan with no loan limits!
  • 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
USDA Eligible Areas In Northern Kentucky for Boone, Kenton, Campbell, Grant Counties
  • Independence
  • Burlington
  • Hebron
  • Highland Heights
  • Walton
  • Alexandria
  • Cold Springs
  • All Of Grant County, Pendleton County And Owen County

Search for Kentucky USDA Eligible Properties 

A property must be located in an eligible area in order to use a USDA loan to purchase a home.  Contrary to belief, Rural Development loans are not only for farms or very rural homes.  

Actually, a property with an operating and income producing farm is not eligible for these loans!


2020  Kentucky USDA Rural Max Income Limits:

  • New Income limits for most counties (*) in Kentucky are $86,850 for a  4 unit household and household families of five or more + can make up to  $114,650.The Northern Kentucky Counties (***) of Boon, Kenton, Campbell, Brackenn, Gallatin, and Pendleton are $93,500 for a household of four or less and up to $123,400 for a family of five or more.With the new changes for 2019 USDA Income limits, the Jefferson County Louisville, KY Metro area (**) saw an increase of $87,600 for a family of four and up to $115,650 for a family of five or more. The metro area includes Oldham, Bullitt, Spencer, Hardin, Larue and Meade are including in these higher income limits for USDA loans.

    Remember,  Jefferson County Kentucky, Fayette County Kentucky are not eligible for USDA loans.

    ,Below is the website where you can check and make sure

Some More Facts about a Kentucky USDA loan:


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.

RHS Student Loans
Effective immediately for all RHS loans, 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.