Kentucky USDA Underwriting Guideline Mortgage Changes for Income, Credit, Work History and Assets

2023 Kentucky USDA Underwriting Guideline Mortgage Changes for Income, Credit, Work History and Assets

Rural Development Kentucky Underwriting Guideline Mortgage Changes for Income, Credit, Work History and Assets

Chapter 9 – Income Analysis

  • Paragraph 9.3 is being revised as follows:
    o To clarify that lenders must verify the income of each adult household member for the previous 2
    years, which is consistent with the requirements in 7 CFR 3555.
    o To clarify under “full income documentation”, the lender must obtain W-2s or IRS Wage and Income
    transcripts, in addition to paystubs.
    o To change the term “streamlined documentation” to “alternative income documentation” to remove
    confusion with the streamlined refinance product.
    o To clarify under “self-employed income documentation” that if ownership interest is less than
    25%, neither the “Business Owner” or “Self-Employed” options should be selected in GUS.
    o To clarify the Verbal Verification of Employment must be obtained within 10 business days of loan
    closing and confirmation a self-employment business remains operational must be obtained within 30
    days of loan closing, which may differ than the note date that is currently referenced.
  • Paragraph 9.8 is being revised to clarify it is the lender’s responsibility to review gaps in
    employment and determine if the income is stable and dependable. In addition, this paragraph is
    being revised to clarify a business loss from a closed business may be removed from consideration
    under the same circumstances that self-employment income from a closed business can be removed from
    consideration.
  • Attachment 9-A is being revised as follows:
    o Revising “Automobile Allowance” and “Expense Allowance” guidance to allow the full expense
    allowance to be included as repayment income and the full debt counted in DTI, as well as updating
    the required history to two years.
    o To clarify that “Boarder Income” refers to rental income received from an individual renting
    space inside the dwelling, making the property income producing and therefore ineligible.
    o Revising “Bonus” and “Overtime” income to clarify the one year history must be in the same or
    similar line of work.
    o Revising the “Child Support” and “Separate Maintenance/Alimony” guidelines to simplify the
    guidance, remove inconsistencies within the current guidance, and clarify that income that meets
    the minimum history, but the payment amounts are not consistent, must use an average consistent
    with the payor’s
    current ability/willingness to pay for repayment income.
    o To clarify that employer-provided fringe benefits that are reported as taxable income may be
    included in repayment income.
    o Simplifying the guidance on considering mileage deductions, referring to IRS guidance when a
    mileage deduction is claimed on income tax returns.

USDA is an equal opportunity provider, employer, and lender.
o Removing the requirement to obtain a copy of the IRS W-4 document when using a Mortgage Credit
Certificate as income.
o Revising “Secondary Employment” guidance to clarify that the applicant must have a one year
history of working the primary and secondary jobs concurrently to be considered for repayment
income.
o Revising “Section 8 Housing Vouchers” to permit Section 8 vouchers to be treated as a reduction
of the PITI when the benefit is paid directly to the servicer, rather than solely an addition to
repayment income. Subsequently, provided clarification that a manual file submission is required in
this instance and clarified that when lenders use the benefit as a reduction of the PITI, they must
maintain documentation in their permanent loan file to support the benefit is paid directly to the
servicer.
o Revising the “Unreimbursed Employee or Business Expenses” guidance to reflect instances where the
IRS continues to allow these deductions.
o Adding categories providing guidance on Guardianship/Conservatorship Income, Individual
Retirement Account (IRA) Distributions, and Variable Income.
o Revising guidance for sourcing deposits in depository accounts to simplify the process and become
more consistent with the lending industry. Clarified that all recurring deposits, as well as
non-recurring deposits greater than $1,000, need to be reviewed to confirm the deposits are not
from undisclosed income
sources.
o To clarify that gift funds applied as Earnest Money should not be entered on the “Loan and
Property Information” GUS application page.
o Adding a category providing guidance on “Lump Sum Additions.”
o To clarify in the “Retirement” section that funds borrowed against retirement accounts (e.g.
401(k), IRA, etc.) are eligible for funds to close, but are not considered in reserves.

  • Attachment 9-E is being revised to reflect a two year required history for “Capital Gain or
    Loss” to be consistent with the current guidance in Attachment 9-A.

Chapter 15 – Submitting the Application Package

  • Attachment 15-A is being revised as follows:
    o Removing the requirement to submit evidence of qualified alien requirements on page 1, as it is
    not required to be submitted to the Agency on GUS Accept files.
    o To change the term “streamlined documentation” to “alternative income documentation” on page 2,
    to remove confusion with the streamlined refinance product.
    o Rent is required for manually underwritten loans less than 680.




Have Questions or Need Expert Advice? Text, email, or call me below:

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708
fax: 502-327-9119
email:
 kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

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 approvalnor 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).

$0 Down, 100% Financing for Kentucky USDA Rural Housing Loans

$0 Down, 100% Financing for Kentucky USDA Rural Housing Loans

 

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Out of Pocket Costs
$0 Down, 100% Financing for Kentucky USDA Rural Housing Loans

 

single or multi-family home icon

Home Qualifications
Single & Multi-Family Rural Homes and Condos that meet FHA Guidelines or Fannie Mae Guidelines

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Competitive Interest Rates
Often Lower than Conventional Loans with lower mortgage insurance requirements than FHA and Fannie Mae.

 

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Flexible Credit Guidelines
640 Credit Score Requirement* Can go lower possibly if the loan meets credit and debt to income ratio requirements. 

 

*Scores below 640 may be eligible via manual underwriting. 

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Eligibility
USDA Defined Rural & Suburban Areas See may below for approved areas in Kentucky for USDA loans. 👇 click on link

https://kentuckyruralhousingusdaloan.blogspot.com/p/usda-property-eligibility-text.html

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Closing Cost Opportunities
Roll Closing Costs into Mortgage and seller can pay for your closing costs and prepaids or if home appraises for more, can lump in the costs to higher appraised value. 



Kentucky USDA Loan Eligibility Requirements


As with any loan, you must meet certain requirements to confirm USDA loan eligibility. To be an eligible candidate for a USDA loan, consider these general requirements:

Be a legal U.S. resident.
Show two years of income history.
Demonstrate a willingness to repay the loan as proven by no late payments or collections within the prior 12 months.
Have an acceptable debt ratio.
Possess an adjusted annual income of no more than 115% above the median income for the area as related to family size.
Be interested in a property in an area certified by USDA loan agreements.


Frequently Asked Questions

What’s a government-backed mortgage?

These mortgage loans are insured by an agency of the federal government, protecting the lender in the event a borrower can’t repay the debt. This significantly reduces the risk to the lender and may make it easier for borrowers to take out a loan by offering more lenient credit guidelines, interest rates, and down payment options.

What’s the difference between Kentucky USDA loans and other types of government-backed mortgage loans like Kentucky FHA loans?

While both are government-backed mortgages, Kentucky USDA loans are run by a different government agency than Kentucky FHA loans and has different application, underwriting, appraisal, lending amount, and mortgage insurance requirements. To be eligible for a Kentucky Rural Housing USDA loan, borrowers must be purchasing or refinancing property in rural areas that the USDA has defined as eligible.

Do I have to be a farmer or rancher to get a Rural Kentucky USDA loan?

No, despite what the name implies. As long as you meet the property and eligibility qualifications for a Rural Kentucky USDA loan, you can apply.

How do I know if a home is eligible for a USDA loan?

You can navigate to the link here👉  Rural Development Kentucky USDA’s eligibility website and type in the exact address of the home you want to purchase to find out if it’s in an approved area.

Are there maximum lending amounts for KY Rural Development USDA mortgage loans?

There are no set loan limits for USDA loans in Kentucky, but the maximum amount is set based on your ability to qualify for a USDA loan based on borrower’s income and work history over the last two years. and debt to income ratios. The max back-end debt ratio on USDA loans is set at 45.9% of a borrower’s gross monthly income while the front-end debt ratio centers around 28% to32% depending on credit score, ratios, assets. 

Do USDA loans require private mortgage insurance (PMI)?

Yes, Kentucky USDA mortgage loans have an upfront funding fee of 1% currently with a monthly mortgage insurance premium of .35%– mortgage insurance is required by the USDA and pays your lender if you default on your loan.

What’s a USDA guarantee fee and annual fee?

These are fees involved during the USDA home loan process. The upfront guarantee fee is normally equal to 1% of the loan amount. It’s usually added to the initial loan amount and paid at closing. The annual fee is normally equal to 0.35% of the loan amount and some is financed into your loan.

 
💥👇


Have Questions or Need Expert Advice? Text, email, or call me below:

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708
fax: 502-327-9119
email:
 kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

Quick Guide to Kentucky USDA Rural Development Loans Approval Requirements

Quick Guide to Kentucky USDA Rural Development Loans Approval Requirements

Quick Guide to USDA Rural Development Loans
Not every community qualifies—but if it does, it’s the best thing since sliced bread!
Check your listings to see if the property location qualifies. http://eligibility.sc.egov.usda.gov. Generous household income limits also apply, and you can check them out at this link as well.
Generate phone calls by letting everyone know 100% financing is still available for eligible properties and borrowers.
Add an additional note to the listing info and mention it in your ads.
Buyer Qualifications Highlights
• No down payment required, and zero move-in cost is possible.
• 30-year fixed rate loan.
• 6% seller contribution limit allowed.
• Lender closing cost contribution by premium pricing allowed. Does not count against 6% seller limit.
• 100% Loan up to appraisal allowed plus you can add the 1.00% Guarantee Fee on top of that.
• Low .35% Annual Fee included in monthly payment.
• Finance closing costs & prepaids if appraisal Is higher than sales contract.
• No stated maximum loan amount; maximum loan based on repayment ability.
• No cash contribution required from borrower.
• No pre-payment penalty
• Liberal income limits (by county)
• Gift funds and grants allowed.
• No cash reserve requirements.
Property Qualification Highlights
• Existing Home
• New Construction
• New Manufactured Homes (Existing MH allowed under test program in 22 states)
• Modular Homes
• Town Homes
• Condos (Must be approved projects)
Prohibited Loan Purposes
• Co-signors not residing in the household
• Furniture and personal property
• Income-producing property unless minimal income-producing activity.
• Previously occupied manufactured homes…unless refinancing existing Agency loan or home built on or after 2006 and in the certain states (22 test states).

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223Company NMLS ID #1364

click here for directions to our office
Text/call:      502-905-3708fax:            502-327-9119
email:

          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/

Kentucky USDA Rural Development Loan Program:

Single Family Housing Guaranteed

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 Guidelines 

Kentucky Rural Housing Mortgage Lender
Homebuyer Benefits for Kentucky Rural Housing Lenders

• No down payment required.
• Buy existing, build new, or refinance current Rural Development loan.
• Finance eligible loan costs up to 100% of the appraised value plus the one-time
upfront guarantee fee.
• Eligible loan costs may include: purchase price, repairs, lenders fees, closing costs,
essential household equipment.
• 30-year fixed rate that is negotiated between the applicant and lender.
• No maximum purchase price limits.
• Gift and grant funds allowed.
• Normal purchase contract time.
Why is the Single Family Housing Guaranteed Loan Program a top financing option for homebuyers?
USDA loans offer many advantages such as…
• No down payment so they can keep reserves in the bank for future unexpected costs.
• USDA offers the option to buy existing, build new, or refinance a current Rural Development
loan.
• Borrowers can finance eligible loan costs up to 100% of the appraised value plus the one-time
upfront guarantee fee.
• Eligible loan costs may include: purchase price, repairs, lenders fees, closing costs, essential
household equipment.
• 30-year fixed rate that is negotiated between the applicant and lender.
• No maximum purchase price limits. Maximum loan amount is determined solely by the
applicant’s repayment ability.
• Gift and grant funds allowed.
• Normal purchase contract time. No need to extend the contract time. Rural Development
typically issues a Conditional Commitment to the lender within 2-3 business days of receiving a complete application

Joel Lobb
Senior  Loan Officer
(NMLS#57916)
 Company ID #1364 | MB73346

 

text or call my phone: (502) 905-3708

email me at kentuckyloan@gmail.com

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

Apply for Free Home Loan Today Kentucky
Apply for Free Home Loan Today Kentucky
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