Minimum Credit Score Requirements for a Kentucky Mortgage Loan Approval Loan
Here are the most common loan programs and their general guidelines on credit scores:
FHA Loans in Kentucky
FHA mortgage loans are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development. These loans are an attractive option for many borrowers, not just first-time homeowners.FHA loans are available to borrowers with credit scores as low as 500. Borrowers with scores under 580 will need to have a 10% down payment.
VA Loans In Kentucky
VA Loans are designed to offer long-term financing to American Veterans. These loans are issued by federally qualified lenders and are guaranteed by the United States Veterans Administration. The Veterans Administration determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice.The Veterans Administration does not set a minimum credit score; however, lenders do impose their own limits. Some lenders will go down to a 500 credit score and will also do loans for borrowers without a credit score.
Conventional Loans In Kentucky
Conventional loans are mortgage loans offered by private lenders that are not guaranteed or insured by a government agency. These loans may also be referred to as conforming loans.Conventional loans are available to borrowers with credit scores as low as 620.
USDA Loans in Kentucky
The United States Department of Agriculture offers a home loan program designed to help individuals living in small towns or rural areas. This loan program is designed to help qualifying applicants, who may not be able to qualify for other types of mortgage loans, purchase homes as their primary residences.USDA Guaranteed loans are available to borrowers with credit scores as low as 581 and borrowers with no credit scores.
A note for Borrowers with No and Low Credit Scores
While it’s not impossible to qualify for a home loan with a low credit score or no credit score, it does make it harder to qualify. If you have a low credit score or you do not have a credit score, lenders will look more critically at other risk factors that you may have. This includes recent late payments, collection accounts, the amount of funds you have saved up, employment history and the time at your current job, etc.If you do not have a credit score, it means that the credit bureaus do not have enough information about you to give you a score. While there are some options available to borrowers without a credit score, most lenders will require that you provide proof of payment history on “alternative trade lines”. These are lines of credit or utilities that do not report to the credit bureaus, such as rent, cell phone, electric, cable/internet, car insurance, etc. Acceptable “alternative trade line” accounts must meet certain criteria. The account must be in your name, it must be 12 months old, every payment must have been made on time every single month, and proof of payment must be provided on the creditor’s letterhead.
GETTING APPROVED WITH LOW OR NO CREDIT SCORES
You are more likely to be approved with low or no credit scores if you:Make a larger down payment than is required.
Have sufficient reserves in checking and/or savings accounts.
Have low debt-to-income ratios, which is the percentage of your income that needs to be used towards paying your proposed mortgage and other lines of credit such as auto loans, student loans, credit cards, etc. Paying down existing debt will improve your debt-to-income ratio.The best part about credit scores is that they aren’t set in stone! It’s never too late start working on improving your credit. If our team can’t pre-approve you today, we’ll come up with a custom plan to help you get to where you need to be. There’s nothing to lose, so apply today!
Joel Lobb Mortgage Loan Officer NMLS 57916
EVO Mortgage
911 Barret Ave, Louisville, KY 40204
Company NMLS ID # 173846Text/call: 502-905-3708
email: kentuckyloan@gmail.comhttp://www.mylouisvillekentuckymortgage.com/
NMLS 57916 | Company NMLS #173846The 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, (http://www.nmlsconsumeraccess.org).I can answer your questions and usually get you pre-approved the same day.
Call or Text me at 502-905-3708 with your mortgage questions.Email Kentuckyloan@gmail.com
Category: USDA RURAL DEVELOPMENT DIRECT HOUSING LOANS
Kentucky USDA Home Loan Guide: Qualifying Criteria Explained
The Kentucky Rural Housing USDA home loan program offers an excellent opportunity for eligible homebuyers in rural and suburban areas of Kentucky to secure affordable financing with no down payment. To qualify, applicants must meet specific requirements related to credit score, income, work history, bankruptcy, foreclosure, debt-to-income ratio, property requirements, and mortgage insurance. Here’s a detailed guide to help you understand these qualifications:
Credit Score Required For Kentucky Rural Housing Approval
No minimum credit score but a 580 to 640 is generally required to qualify for a USDA loan. This score allows for streamlined processing through the Guaranteed Underwriting System (GUS). Applicants with scores below 640 may still qualify but will need to undergo manual underwriting, which requires additional documentation and scrutiny.
Income Requirements for Kentucky USDA Rural Housing Approval
USDA loans have income limits that vary by county and household size. These limits are designed to ensure the program assists low- to moderate-income families. Generally, your household income should not exceed 115% of the median income for your area. The USDA provides an online tool to check income eligibility based on your location and household size.
Work History requirements for Kentucky USDA loan Approval
A stable work history is essential for Kentucky USDA loan approval. Lenders typically look for at least two years of consistent employment. Any gaps in employment need to be explained and documented. For self-employed applicants, a minimum of two years of tax returns is required to verify income stability.
Kentucky USDA Rural Housing Bankruptcy and Foreclosure Guidelines
While past financial difficulties like bankruptcy or foreclosure can affect your eligibility, they do not automatically disqualify you. Here are the typical waiting periods:
- Chapter 7 Bankruptcy: At least three years from the discharge date.
- Chapter 13 Bankruptcy: At least one year of the payout period must be completed with satisfactory payment history and court approval for a new loan.
- Foreclosure: At least three years from the completion date.
Kentucky USDA Debt-to-Income Ratio (DTI) Requirements
The Kentucky USDA loan program has specific DTI requirements to ensure borrowers can manage their mortgage payments. The front-end ratio (housing expenses) should not exceed 29% of your gross monthly income, and the back-end ratio (total monthly debt obligations) should not exceed 45%. Exceptions can be made for borrowers with compensating factors, such as higher credit scores or additional cash reserves.
Kentucky USDA Property Requirements
USDA loans are intended for properties in designated rural areas. The USDA provides an online tool to check property eligibility. The home must be used as the primary residence and meet certain quality standards according to Kentucky FHA Appraisal HUD Guidelines including:
- Adequate and functional heating, plumbing, and electrical systems
- Structurally sound foundation and roof
- Safe water supply and waste disposal systems
- Must have an undamaged exterior, foundation and roof
- Must have safe and reasonable property access
- Must not contain loose wiring and exposed electrical systems
- Must have all relevant utilities, including gas, electricity, water and sewage functioning properly.
- Must have a working, permanent heating system that can heat the property adequately
- Must have surfaces free of chipping or peeling lead-based paint
- Must have adequate access to attic spaces and natural ventilation in crawl spaces
- Must have access to potable water
- Must be free from wood-destroying insect infestations
- Must not have interior and exterior health and safety hazards, such as no handrails on steep staircases
- Must be a marketable property
Mortgage Insurance Required For Kentucky USDA loan Approval
Kentucky Rural Housing USDA loans require mortgage insurance, which includes an upfront guarantee fee and an annual fee. The upfront fee is typically 1% of the loan amount, which can be financed into the loan. The annual fee, usually 0.35% of the loan balance, is paid monthly as part of the mortgage payment. These fees help protect lenders and the USDA in case of borrower default.
Summary
Qualifying for a USDA home loan in Kentucky involves meeting specific criteria in several areas:
- Credit Score: No Minimum score but a 620-640 for streamlined processing; lower scores may require manual underwriting down to 580 with some lenders but few and far between
- Income Requirements: Must not exceed 115% of the median income for your area.
- Work History: At least two years of stable employment.
- Bankruptcy and Foreclosure: Waiting periods of 1-3 years depending on the situation.
- Debt-to-Income Ratio: 29% for housing expenses, 41% for total debt; exceptions possible.
- Property Requirements: Must be in a designated rural area and meet quality standards.
- Mortgage Insurance: Includes an upfront guarantee fee and an annual fee.
By understanding and meeting these requirements, you can take advantage of the USDA loan program to achieve homeownership in Kentucky’s rural areas. For personalized assistance, consider consulting with a mortgage broker or lender experienced in USDA loans, like Joel Lobb in Louisville, who can guide you through the process and help you qualify.
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Joel Lobb
Mortgage Broker – FHA, VA, USDA, KHC, Fannie Mae
EVO Mortgage • Helping Kentucky Homebuyers Since 2001
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 Call/Text: 502-905-3708 Email: kentuckyloan@gmail.com Website: www.mylouisvillekentuckymortgage.com  Address: 911 Barret Ave, Louisville, KY 40204NMLS #57916 | Company NMLS #1738461 |
| Free Info & Homebuyer Advice → |
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Kentucky Mortgage Loan Expert
FHA | VA | USDA | KHC Down Payment Assistance | Fannie Mae
Equal Housing Lender. This is not a commitment to lend. All loans are subject to credit approval and program requirements.
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USDA Loans in Kentucky: New Income Thresholds Explained
What is KY USDA Rural Development Guarantee in Kentucky?
Kentucky USDA Rural Development Guarantee USDA loans offer 100% financing options on home purchases in rural areas. Properties though can be located within city limits and in subdivisions depending on population density of that area.
The RDG loan program is primarily used to help low to moderate income individuals or households to purchase homes and the applicants need to be within 115% of the median income for the area. Most Kentucky Counties are 90,300 for a household family incomes of four or less, and up to $119,200 for a family of five or more in the household income
Some highlights of the are:
- 100% financing on purchases and 100% Zero Money Down
- Low 30 year fixed rates on all loans. They don’t offer any other terms or offer cash-out refinancing.
- A small Rural Housing monthly guarantee fee or sometimes called annual fee of .35% of the loan amount divide by 12 months to get total monthly mi payment.
- Upfront Rural Housing funding fee of 1% of the loan amount and is financed into new loan
- Minimum credit scores of 581, but helpful to have 640 and get an automated underwriting approval thru Rural Housing’s underwriting engine – GUS–GUS stands for the Guaranteed Underwriting System to pre-approval all Kentucky USDA loans.
- No rental verification needed with GUS approval if Approved Eligible Findings.
- Flexible trade line requirements with GUS approval with only 1 trade line needed on credit for 12 months
- No foreclosures in the last 36 months, but need explanation if < 36 months
- Bankruptcy discharged at least 36 months
For a Kentucky USDA Rural Housing property and income eligibility search, please click HERE.
Issues to avoid or be aware of with Rural Housing property search:
- Avoid homes with any income producing activities such as working farms, detached buildings with offices or car lifts for auto repairs, or anything else related to income producing activities.
USDA Loan Payoff Guide for Kentucky Homeowners
MORTGAGE LOAN PAYOFFS
FOR USDA RURAL DEVELOPMENT DIRECT HOUSING LOANS
What is this? After a loan is closed, the subsidized portion of a borrower’s monthly payment will accrue as a separate account. The Government pays this subsidy each month to help very low and low income household
afford to own a home. This account is subject to being repaid or “recaptured” at the time a borrower
sells or transfers the property to another owner, no longer occupy the property, or pays the loan in full.
The maximum amount of recapture due will be the lesser of the amount of subsidy received or up to
50 percent of the Adjusted Value Appreciation in the property.
The Value Appreciation is based on appraised value and/or sales price at time of sale, refinance, or when the principal and interest balances are paid in full. This value excludes any of the borrower’s original equity or any value that resulted from eligible Capital Improvements that were made by the borrower. Borrowers who
refinance their Rural Development loan and want to pay off the principal and interest balance, have the
option to defer the final amount of Recapture due, or pay it off at closing. (See section below“Deferring
Payment of Recapture Due”).
Understanding your need for getting a payoff.
There are different options provided by our Centralized Service Center (CSC) for payoffs. These are:
The Principal and Interest Payoff (P & I) is based on the anticipated principal, interest and
fee balance (if any fees have been added) for the requested date. This form of payoff is used
when the borrower’s account is not subject to recapture or if the borrower is only concerned
with the principal and interest balances due on their loan(s). As a note, all RD Section 504
repair loans are not subject to any recapture due.
The Maximum Payoff statement indicates the Maximum amount the borrower may be
required to pay as of a requested date. It includes 100% of all Subsidy Recapture funds
including Principal and Interest and any fees that are due. This statement advises borrowers to
submit additional information to CSC so that Subsidy Recapture can be properly calculated for a
Final Payoff statement.
The Estimated payoff is an estimated figure only. The Agency offers an automated Voice
Response Unit (VRU) by calling our toll-free number (1-800-414-1226). It provides an accurate
P&I balance and an estimated Subsidy Recapture amount based on a hypothetical sales price or
appraised value. Please follow the directions (below) for an “Estimated Payoff”.
The Final Payoff statement is based on the account balance on the requested payoff date, and
the actual Subsidy Recapture Amount due is calculated based on the final documentation
provided by the borrower/settlement agent. This statement indicates the actual amount the
borrower will be required to pay at loan closing.
“USDA is an equal opportunity provider, employer and lender.”
To file
Getting the Estimated Payoff — (Recommended but not required).
Please note: This is an Estimated Figure AND CANNOT BE USED TO PAYOFF AN ACCOUNT. It
is calculated as of the date of your call. The Subsidy Recapture amount does not include any
value deductions for Capital Improvements.
CALL: 1-800-414-1226 (This is an automated Voice Response Unit (VRU).
You will need the customer’s loan number and the last 4 digits of their Social Security Number
Choose: 1 Touchtone – Then: 1 English Speaking – Then: 2 Payoff Information
Then: You will be asked to input the customer’s loan number and the last four digits
of their Social Security Number. Stay on the line and listen to the entire
explanation of the different types of payoff figures.
Then: Go to Calculated Payoff, “Estimated Loan Balance” – Choice Number 2. You will be
asked to input the Estimated Market Value and the Estimated Closing Costs in
whole dollars.
Getting a Final Payoff—applies to all transactions (ex. sale, refinance, pay in full)
1. A copy of the Residential Appraisal Report and/or a copy of the Signed Contract.
2. A copy of the Estimated Settlement Statement. A Good Faith Estimate from the lending
institution is
3. The Date of the Payoff. Funds are to be received at Rural Development on this date.
4. The reason for paying off the loan: selling, refinancing, pay in full, and paying the recapture, or
refinancing and deferring the Recapture (Subordination).
5. Capital Improvements that the borrower has made to the property can help to reduce the
amount of subsidy that is subject to recapture. If a borrower has made any improvements to the
property, he/she should request that the appraiser provide an addendum to the
appraisal to indicate the value of the improvements. Capital Improvements are additions that
add value to the property above and beyond repairs that maintain the property. General
maintenance to keep the property in good condition is not considered a Capital Improvement.
Examples of Capital Improvements that do not qualify: yard maintenance, painting,
wallpapering, floor coverings, roofing, siding, wells, septic systems, appliances, furnaces or
water heaters. The value of a Capital Improvement must be determined by an appraiser, based
on the increase in the property’s value because of the improvement. The cost of making the
Capital Improvement is not considered when making this assessment, only the value that the
Capital Improvements have added to the property. A copy of the original appraisal can be
requested by the borrower(s) to assist the appraiser in Capital Improvement Determinations.
6. Borrowers who refinance or wish to pay off their loan(s) and subsidy recapture in full
and remain in the property will receive a 25 percent discount on the recapture amount if it is
included in the final payment. Please be aware that the 25 percent discount only applies if the
borrower refinances the loan, or pays the loan in full and continues to occupy and retain title to
the property.
7. Borrower(s) can defer recapture and pay it off later. A mortgage discharge
Borrower(s) can defer recapture and pay it off later. A mortgage discharge is not provided,
however, the Agency can subordinate it’s lien to another lender for the new loan (see below).
8. For unpaid or deferred subsidy, the borrower will establish a “Subsidy Receivable” account
with the Agency which will not be due and payable until the borrower transfers title or
vacates the property. The borrower cannot obtain the 25 percent discount if they voluntarily
decide to pay off the balance at a later date. The “Subsidy Receivable” account will not accrue
any interest or fees.
Deferring Payment of Recapture due.
When a borrower initially refinances their RD loan(s), they have the option to defer their Recapture
payment, or pay it in full. As mentioned above and under current rules, if it is paid in full they will
receive a 25% discount in the amount of recapture owed. A Loan Subordination of the RD debt to
allow another lender to make a loan can be requested by a borrower who wishes to refinance their
Rural Development loan and payoff the principal, interest, and fees (if any) and defer the Subsidy
Recapture Amount. The borrower can receive no “cash out” or consolidate additional debt (including
other liens against the property). Modest real estate improvements may be considered as long as the
Loan to Value for the new loan and the Recapture Receivable Amount are at or below 100% of the
Current “as improved” Market Value of the property. Requests can include reasonable closing costs.
A Subordination Package for refinancing and/or making improvements to the property must be
completed and returned to the Agency for review.
The following must also be included:
If Improvements are being done, a Contractor’s Bid must be provided to the agency for
review prior to approval.
A signed, dated authorization from the borrower(s) waiving the 25 Percent Recapture
Discount in lieu of a Subordination must be provided to Rural Development. This form is
included in the Subordination Package.
A copy of a recent Uniform Residential Appraisal Report (Pages 1 and 2).
A copy of the Estimated Settlement Statement from either a lender or a closing
agency. A Good Faith Estimate is acceptable if it includes the proposed loan
amount.
If this account is a previously established Recapture Receivable Account, we will also need
a Principal and Interest payoff on the first mortgage.
After the Subordination has been approved and prior to the issuance of the Subordination, the
proposed lienholder must complete Form RD 1927-8, Agreement with Prior Lienholder, which
requires the proposed lienholder to provide at least 30 written days notice to Rural Development,
before any foreclosure actions on the proposed lien are initiated. This form is also included in the
Subordination Package.
TO COMPLETE A FINAL PAYOFF FOR
TO COMPLETE A FINAL PAYOFF FOR THE USDA/RURAL DEVELOPMENT
Date: _____________
Company:______________________________
Fax Number___________________
Attention: ____________________
Your payoff request for borrower(s):_____________________________
Account Number(s)______________________ Phone Number:____________
FOR SALES, PLEASE FAX THE FOLLOWING DOCUMENTS: THE ACCOUNT NUMBER MUST BE
WRITTEN ON EACH PAGE:
• Sales Contract that includes the sales price (establishing market value) and signatures of both
buyer and seller AND/OR Pages 1 and 2 of the Uniform Residential Appraisal Report (with 1st page
as property description, 2nd page to include comparison approach, the estimated market value and
the appraiser’s signature. The appraisal must be less than one year old).
• Estimated Settlement Statement detailing our borrower’s (the sellers) closing costs. THIS MUST BE
COMPLETED BY THE SETTLEMENT/ESCROW AGENT. AN ESTIMATE FROM A REAL ESTATE AGENT IS
NOT ACCEPTABLE.
• Authorization to release information signed by the borrower(s). If the request is from a lender or its
agent, Social Security Number(s) and Account Number(s) are acceptable.
• Effective date of payoff requested.
When the above documentation is received together as a package, a Final Payoff will be
calculated. If you are notified by the Centralized Servicing Center (CSC) that additional
information is needed to calculate the payoff, please fax the entire package together again.
Also, please be sure that the account number is written on every piece of paper. This will
expedite your payoff request.
To complete a Final Payoff Statement: PLEASE FAX ALL REQUIRED DOCUMENTATION
TOGETHER AS A PACKAGE TO: 314-457-4433.
For Questions, you may call the Customer Service Department Toll Free at 1-800-414-1226
or TDD (hearing impaired only 1-800-438-1832) 7:00 a.m. to 5:00 p.m. Monday – Friday,
Central Time.
“USDA is an equal opportunity provider, employer and lender.”
To file a complaint of discrimination write USDA, Office of Civil Rights, Programs, 300 7th Street SW, Room 400 (Stop 9430),
Washington, DC 20024 or call (866)632-9992 (Voice), (202) 401-0216 (TDD/TTY Hearing Impaired Only) or (202)720-8046 (FAX
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Subsidy Recapture |
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Payment subsidies received on loans approved after October 1, 1979 are subject to recapture. This means that when the property is sold, transferred, or no longer occupied by the customer, all or part of the subsidy granted must be repaid to the government. The amount of subsidy recapture will be determined by the increase in property value since the loan originated. Subsidy recapture must be calculated when the loan is paid off. Not all USDA Rural Development Loans are subject to recapture. Please call our Customer Service Department at 1-800-414-1226 or 1-800-438-1832 (TDD/TTY Hearing Impaired Only) to find out if your loan is subject to recapture or to receive payoff information. We are available from 7:00 A.M. to 5:00 P.M. Central Standard Time (CST), Monday through Friday. |
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Subsidy Recapture Payment |
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Subsidy recapture must be paid when the property is sold, transferred, or no longer occupied by the customer. If the loan is being paid off but the customer continues to live in the property there are two payment options:
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Statement of Loan Balance(s) for Loans Subject to Recapture |
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With a touch-tone telephone, call 1-800-414-1226, and select option #2 from the Main Menu, and select option #1 from the Payoff Information Menu. Through our Interactive Voice Response system you can request a Statement of Loan Balance be mailed to the homeowner of record. The Statement of Loan Balance(s) provides the current outstanding balances of the loan, which includes principal, interest, fees, late charges, and escrow (if applicable). The statement also includes the total amount of payment assistance (subsidy) granted. The amount of subsidy can be quite large, but in many cases this amount is reduced when subsidy recapture is calculated. |
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Verbal Estimated Payoff Quotes |
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With a touch-tone telephone, call 1-800-414-1226, and select option #2 from the Main Menu, and select option #2 from the Payoff Information Menu. Our Interactive Voice Response (IVR) system can provide a verbal estimated payoff amount based on the information you enter. The IVR is easy to use and will provide instructions when you call. To calculate the estimated payoff amount you will need to enter the estimated value of the property and estimated closing costs that may be incurred as a result of selling or refinancing the loan. This information is necessary to estimate the subsidy recapture to be paid. The estimated payoff should not be used to pay off your loan. |
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How to Receive a Final Payoff Statement |
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In order to calculate subsidy recapture and provide a payoff statement, certain documents need to be submitted to our Payoff Department. The type of transaction (refinancing, selling, or paying off) will determine the documents needed. The payoff statement will be faxed or mailed to the address of record within 5 business days of receipt. Refinancing
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Capital Improvements |
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If certain improvements, referred to as capital improvements, are made to the property, the value of the improvements added may be used to reduce subsidy recapture owed. To receive credit for capital improvements, the appraiser should submit an addendum to the appraisal. Instruct the appraiser that an itemized list of the improvements or additions and the value the improvements or additions added to the property should be submitted along with the appraisal. The cost of the improvements or additions should not be submitted and will not be used. Replacement items such as kitchen cabinets, floor coverings, roofing, siding, furnaces, appliances, and water heaters are not considered capital improvements. Maintenance items or repairs that maintain the property in good condition, such as yard maintenance, painting, and wallpapering, are also not considered capital improvements in our calculation of subsidy recapture. Examples of capital improvements include, but are not limited to, room additions, adding a fence, deck or enclosed porch. |
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Related articles
- >kentucky Usda, Rural Development Guidelines 2011 (louisvillekentuckymortgagerates.com)
- The Kentucky Guaranteed Rural Housing (GRH) Loan Program (kentuckyusdaloan.com)
- HUD Homeownership Center Reference Guide Refinances (louisvillemortgageguide.com)
- Kentucky Rural Housing USDA Guidelines 2011 (kentuckyusdaloan.com)
- Section 502 USDA Guaranteed Loan Program Rural Refinance Pilot Guidelines for Kentucky Mortgages (kentuckyusdaloan.com)
- HARP 2.0 Refinance Guidelines for Fannie Mae and Freddie Mac Louisville Kentucky Mortgage Loans (louisvillekymortgage.net)
- MHA’s Home Affordable USDA Rural Development / Special Loan Servicing Program Explained (boldrealestategroup.wordpress.com)
- Rural Housing and USDA Loans in Kentucky (kentuckyusdaloan.com)
- Home Affordability (bestfloridamortgage.wordpress.com)
- USDA Announces HARP-like Program (harp2.com)
🏠 Kentucky USDA Loan Payoff Guide
Your Complete Step-by-Step Process for Rural Development Mortgage Payoffs
💰 Understanding Subsidy Recapture
Important: Most USDA Loans Have Recapture
Loans approved after October 1, 1979, require repayment of government subsidies when you sell, transfer, or pay off your property. The recapture amount is the lesser of total subsidy received OR 50% of property value appreciation.
25%
Discount if paying in full
50%
Max recapture of appreciation
5
Business days for payoff
📋 4 Types of Payoff Statements
Principal & Interest
Basic loan balance only. Used for loans not subject to recapture or Section 504 repair loans.
Maximum Payoff
Shows maximum possible amount including 100% of subsidy recapture. Starting point for calculations.
Estimated Payoff
Quick estimate via phone (1-800-414-1226). Cannot be used for actual payoff transactions.
Final Payoff
Official amount required for closing. Based on actual documentation and final calculations.
📞 Quick Estimate Process
Call USDA
Dial 1-800-414-1226 and follow prompts: 1 → 1 → 2
Enter Information
Provide loan number and last 4 digits of SSN
Get Estimate
Choose option 2 for “Calculated Payoff” and enter property value
📄 Required Documents by Transaction Type
R
Refinancing
• Written authorization
• Uniform Residential Appraisal
• Good Faith Estimate
• Payoff date
• Capital improvements addendum
• Uniform Residential Appraisal
• Good Faith Estimate
• Payoff date
• Capital improvements addendum
S
Selling
• Written authorization
• Signed sales contract
• Settlement statement from agent
• Payoff date
• Current appraisal report
• Signed sales contract
• Settlement statement from agent
• Payoff date
• Current appraisal report
P
Paying Off
• Written authorization
• Statement staying in property
• Current appraisal report
• Payoff date
• No transfer of title
• Statement staying in property
• Current appraisal report
• Payoff date
• No transfer of title
🏗️ Capital Improvements Can Reduce Recapture
✅ Qualifying Improvements
- Room additions
- Enclosed porches/decks
- Fencing installations
- Structural improvements
❌ Non-Qualifying Items
- Routine maintenance
- Appliance replacements
- Painting/wallpapering
- Roofing/siding replacement
💳 Two Payment Options for Kentucky Homeowners
🎯 Option 1: Pay in Full (Recommended)
- 25% discount on recapture
- Clean title with no liens
- No future obligations
- Best for refinancing
⏳ Option 2: Defer Payment
- Pay when you sell/move
- No discount available
- USDA maintains lien
- No interest or fees accrue
Need Help with Your Kentucky USDA Loan Payoff?
Over 20 years helping Kentucky families with mortgage solutions
Get Free Consultation Today
Joel Lobb – Kentucky Mortgage Specialist
Same-day approvals • 1,300+ families helped
Complete Guide to Paying Off Your USDA Rural Development Mortgage Loan in Kentucky
Learn how to pay off your USDA Rural Development mortgage loan in Kentucky. Complete guide covering subsidy recapture, payoff options, required documents, and step-by-step instructions for Kentucky homeowners.
USDA mortgage payoff Kentucky, rural development loan payoff, Kentucky USDA loan, subsidy recapture Kentucky, USDA refinance Kentucky, rural housing loan Kentucky
What You Need to Know About USDA Mortgage Loan Payoffs in Kentucky
If you have a USDA Rural Development mortgage loan in Kentucky, understanding the payoff process is crucial. This is especially important if you are considering paying it off, refinancing, or selling your home. This comprehensive guide will walk you through everything Kentucky homeowners need to know about USDA loan payoffs, including the important subsidy recapture feature that affects most Rural Development loans.
Understanding USDA Subsidy Recapture in Kentucky
Most USDA Rural Development loans approved after October 1, 1979, include a “Subsidy Recapture” feature. When you sell, transfer, or pay off your loan, you may need to repay some government subsidy you received during your loan term. You might need to repay all of it.
Key Facts About Subsidy Recapture:
- The government pays monthly subsidies to help low and moderate-income Kentucky families afford homeownership
- These subsidies accumulate in a separate account over time
- Recapture is triggered when you sell, transfer, or pay off your property
- The maximum recapture is the lesser of total subsidy received OR 50% of the property’s value appreciation
Types of USDA Loan Payoff Statements Available to Kentucky Borrowers
1. Principal and Interest (P&I) Payoff
This basic payoff covers only the principal, interest, and any fees due on your loan. It’s used when:
- Your loan isn’t subject to recapture
- You only need the basic loan balance information
- You have a Section 504 repair loan (these are never subject to recapture)
2. Maximum Payoff Statement
This statement shows the maximum amount you might owe, including:
- 100% of all subsidy recapture funds
- Principal and interest balance
- Any outstanding fees
- Serves as a starting point before final calculations
3. Estimated Payoff (Automated System)
Get a quick estimate by calling 1-800-414-1226 and using the automated Voice Response Unit (VRU). You’ll need:
- Your loan number
- Last 4 digits of your Social Security Number
- Estimated property value
- Estimated closing costs
Important: This is only an estimate and cannot be used for actual payoff.
4. Final Payoff Statement
This is the official payoff amount required for closing, based on:
- Actual account balance on payoff date
- Calculated subsidy recapture amount
- Final documentation you provide
Step-by-Step Guide: Getting Your Kentucky USDA Loan Payoff
Step 1: Determine If Your Loan Has Recapture
Call 1-800-414-1226 (7:00 AM – 5:00 PM, Monday-Friday, Central Time) to confirm if your loan is subject to subsidy recapture.
Step 2: Gather Required Documentation
For Refinancing Your Kentucky USDA Loan:
- Written authorization to release payoff information
- Uniform Residential Appraisal Report (from your lender)
- Good Faith Estimate or estimated settlement statement
- Payoff date
- Capital improvements addendum (if applicable)
For Selling Your Kentucky Home:
- Written authorization to release payoff information
- Signed sales contract showing sales price
- Uniform Residential Appraisal Report (less than one year old)
- Estimated settlement statement from closing agent
- Payoff date
For Paying Off Without Selling/Refinancing:
- Written authorization to release payoff information
- Statement confirming you’re staying in the property
- Current Uniform Residential Appraisal Report
- Payoff date
Step 3: Submit Documentation
Fax all required documents together as a complete package to: 314-457-4433
Important: Write your account number on every page for faster processing.
Kentucky USDA Loan Payoff Options
Option 1: Pay Recapture in Full (Recommended)
If you’re refinancing or paying off your loan but staying in the property, you can:
- Pay the full subsidy recapture amount at closing
- Receive a 25% discount on the recapture amount
- Get a clean title with no future obligations
Option 2: Defer Recapture Payment
Alternatively, you can:
- Defer recapture payment until you sell or move
- Establish a “Subsidy Receivable” account with USDA
- No discount available with this option
- No interest or fees accrue on deferred amount
Reducing Subsidy Recapture with Capital Improvements
Kentucky homeowners can reduce their recapture amount by documenting qualifying capital improvements. These must add value to your property beyond normal maintenance.
Qualifying Capital Improvements Include:
- Room additions
- Enclosed porches or decks
- Fencing installations
- Structural improvements that increase property value
Non-Qualifying Items:
- Routine maintenance (painting, wallpapering)
- Replacement items (roofing, siding, appliances)
- Yard maintenance
- Floor coverings
Important: The appraiser must provide an addendum showing the added value (not cost) of improvements.
USDA Loan Subordination for Kentucky Refinances
If you want to refinance your Kentucky USDA loan and defer recapture, you can request loan subordination. This allows another lender to take first position while USDA maintains a lien for the deferred recapture amount.
Subordination Requirements:
- No cash-out refinancing allowed
- Cannot consolidate other debts
- Loan-to-value plus recapture cannot exceed 100% of current market value
- Must waive the 25% recapture discount
- Complete subordination package required
Contact Information for Kentucky USDA Loan Payoffs
Customer Service Department:
- Phone: 1-800-414-1226
- TDD (Hearing Impaired): 1-800-438-1832
- Hours: 7:00 AM – 5:00 PM, Monday-Friday (Central Time)
- Payoff Documentation Fax: 314-457-4433
Why Work with a Kentucky Mortgage Expert
Navigating USDA loan payoffs can be complex, especially when dealing with subsidy recapture calculations. As a Kentucky mortgage specialist with over 20 years of experience helping Kentucky families, I can:
- Guide you through the payoff process
- Help coordinate with USDA representatives
- Assist with refinancing options
- Ensure all documentation is properly prepared
- Find the best loan programs for your situation
Ready to Pay Off or Refinance Your Kentucky USDA Loan?
Don’t navigate this process alone. Contact me today for expert guidance on your USDA loan payoff or refinancing options.
Joel Lobb – Kentucky Mortgage Loan Officer
- 📞 Call/Text: 502-905-3708
- 📧 Email: kentuckyloan@gmail.com
- NMLS ID: 57916
- Free mortgage applications with same-day approvals
Frequently Asked Questions About Kentucky USDA Loan Payoffs
Q: How long does it take to get a final payoff statement?
A: USDA typically provides final payoff statements within 5 business days of receiving all required documentation.
Q: Can I avoid subsidy recapture on my Kentucky USDA loan?
A: Recapture is required by law for eligible loans. However, you may qualify for the 25% discount if you pay in full while remaining in the property.
Q: What happens if I can’t afford the recapture amount?
A: You can defer the recapture payment until you sell or move, but you won’t receive the 25% discount.
Q: Are all USDA loans subject to recapture?
A: No. Section 504 repair loans and some older loans are not subject to recapture. Call 1-800-414-1226 to verify your loan status.
Related Kentucky Mortgage Resources
- Kentucky First-Time Home Buyer Programs
- Kentucky VA Mortgage Loan Information
- USDA Rural Housing Kentucky Loan Information
- Down Payment Assistance Kentucky 2025
- Kentucky FHA Mortgage Information
External Resources:
This website is not endorsed by the FHA, VA, USDA, or any government agency. The information provided is for educational purposes and should not be considered legal or financial advice.
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How Long to Close a USDA Loan in Kentucky?
USDA Loan Closing Timeline in Kentucky | 30-45 Days Explained
How Long Does It Take to Close on a USDA Rural Development Loan in Kentucky?
Quick Answer: Most USDA Rural Development loans in Kentucky close in 30 to 45 days. Well-prepared files with clean documentation and early USDA submission can close in under 30 days.
If you’re a first-time homebuyer exploring USDA Rural Development loans in Kentucky, understanding the closing timeline helps you plan your move and set realistic expectations. While USDA loans include an extra approval step compared to FHA or VA loans, the delay is typically minimal—usually just 2 to 3 additional business days when the loan is managed properly.
Why USDA Loans Include an Extra Approval Step
Unlike conventional, FHA, or VA loans, USDA Rural Development loans require two approval stages before closing.
In the first stage, your lender completes full underwriting to verify the loan meets USDA Guaranteed Loan Program guidelines. This underwriting process is similar to FHA or VA loans and includes verification of income, assets, credit, and the property appraisal.
Once your lender issues a final approval, the loan file moves to the second stage: USDA Rural Development review. This centralized review ensures compliance with federal rural lending requirements. In most cases, this review is quick and does not materially delay your closing date.
Kentucky USDA Loan Processing: Production Team Two
Kentucky USDA Rural Development loans are processed by Production Team Two, a centralized team based outside the state. This team handles USDA loans for ten states: Arkansas, Kentucky, Louisiana, Minnesota, Missouri, Mississippi, North Dakota, Nebraska, New Jersey, New York, and Oklahoma.
Production Team Two Contact:
SFHGLPTWO@usda.gov
SFHGLPTWO@usda.gov
Production Team Two typically operates on a 2 to 4 business day review cycle. However, timelines can vary based on loan submission volume and seasonal demand. During peak homebuying seasons (spring and summer), review times may extend slightly, while slower periods may see faster approvals.
Current USDA Turn Times for Your Loan
The USDA publishes live updates showing which loan submissions they are currently reviewing. This real-time data is the most accurate way to monitor processing timelines for Kentucky USDA loans.
→ View Current USDA Guaranteed Loan Turn Times
These updates help lenders optimize submission timing and give borrowers realistic closing estimates based on current workload.
What Causes Delays in USDA Loan Closing?
Most USDA loans close on schedule when documentation is complete and submitted correctly. However, common causes of delays include:
Incomplete Income Documentation: Missing W-2s, tax returns, pay stubs, or verification letters often require back-and-forth communication and can add 5–7 days.
Appraisal Issues: If the property appraises below the purchase price or has condition issues, renegotiation or repairs may be required before closing.
Credit or Employment Changes: Any significant credit inquiry, new debt, job change, or employment gap discovered during underwriting requires explanation and may trigger additional review.
Seasonal Volume Spikes: During peak buying seasons, USDA production teams experience higher submission volumes, which can extend review times by a few business days.
Pro Tip: Submit complete, accurate documentation upfront. Have your lender submit your loan to USDA as soon as lender approval is issued. Early submission often means your loan is in queue when USDA begins their next review cycle, speeding up the overall timeline.
Can USDA Loans Close in Under 30 Days?
Yes—while not guaranteed, a clean file with complete documentation, early USDA submission, and no appraisal conditions can close in under 30 days. This typically requires:
All income and asset documentation submitted with the initial application, a property appraisal with no issues or conditions, no employment changes or credit inquiries during underwriting, and early submission to USDA immediately after lender approval.
If these conditions are met, some Kentucky borrowers have closed USDA loans in 25–28 days.
USDA vs. FHA vs. VA Closing Timelines
While USDA loans do take slightly longer than FHA or VA loans, the difference is minimal:
FHA Loans: 30–40 days (no extra federal review step)
VA Loans: 28–38 days (VA review is faster and often parallel to underwriting)
USDA Loans: 30–45 days (includes two approval stages, but second stage is typically quick)
In practice, the 2–3 day difference rarely impacts your ability to meet contract deadlines, especially if your lender submits to USDA early.
Bottom Line: USDA Loan Closing Timeline in Kentucky
USDA loans in Kentucky are not slow—they are simply structured differently. The extra approval step is built into the process and, when managed correctly, adds minimal delay.
When income, assets, and credit are documented properly and the appraisal is clean, most Kentucky USDA homebuyers close within standard 30–45 day timelines. The deciding factors are early submission and strong file preparation.
Frequently Asked Questions About USDA Loan Closing Times
How long does a USDA loan take to close in Kentucky?
Most USDA loans in Kentucky close in 30 to 45 days. Clean files with early USDA submission can close in under 30 days.
Do USDA loans take longer than FHA or VA loans?
Yes, but typically only by 2–3 business days. USDA loans require an additional final review by Rural Development after lender approval, while FHA and VA loans may not have the same secondary approval step.
Which USDA team handles Kentucky loans?
Kentucky USDA loans are processed by Production Team Two, which serves ten states. They typically operate on a 2–4 business day review cycle.
What causes the most delays with USDA loans?
Incomplete documentation, appraisal issues, credit changes, and seasonal volume spikes are the most common causes of delays. Submitting complete paperwork upfront and early USDA submission help avoid these delays.
Can I track my USDA loan approval status in real time?
Yes. The USDA publishes live turn time updates at rd.usda.gov, showing which submissions they are currently reviewing.
Does Kentucky have slower USDA turn times than other states?
No. Kentucky is handled by the same Production Team Two as nine other states, and turn times are consistent across all ten states—typically 2–4 business days.
What’s the fastest USDA loan I’ve heard of closing in Kentucky?
Some well-prepared files have closed in 25–28 days. This requires complete documentation, a clean appraisal, and early submission to USDA, but it’s achievable.
USDA Loan Closing Timeline
Kentucky Homebuyers: What to Expect
1
Application & Pre-Qual
Days 1-3
2
Lender Underwriting
Days 4-14
3
Lender Approval
Days 15-20
4
USDA Review
Days 20-24
5
Clear to Close
Days 25-45
Loan Program Closing Times Compared
USDA Loans
30-45 Days
Includes USDA Production Team review (2-4 business days extra)
FHA Loans
30-40 Days
Faster federal review process
VA Loans
28-38 Days
Parallel VA review speeds approval
⚠️ Common Delay Factors
📄 Incomplete Docs
Missing W-2s, tax returns, or pay stubs
🏠 Appraisal Issues
Low appraisals or property conditions
💳 Credit Changes
New inquiries or unexpected debt
🏢 Employment Changes
Job changes during underwriting
📊 High Volume
Peak season delays (spring/summer)
📝 Request for More Info
Lender or USDA questions
✓ Speed Up Your USDA Closing
Submit Complete Docs
Have everything ready from day one
Have everything ready from day one
Early USDA Submission
Submit immediately after lender approval
Submit immediately after lender approval
Clean Appraisal
No property conditions or repairs needed
No property conditions or repairs needed
Stay Responsive
Answer lender questions immediately
Answer lender questions immediately
Avoid Credit Changes
No new debt or inquiries during process
No new debt or inquiries during process
Know Your Timeline
Check USDA turn times regularly
Check USDA turn times regularly
Kentucky USDA Mortgage Lender for Rural Housing Loans 