Credit History
USDA or Rural Housing loans are not available in the more highly populated counties in Kentucky . The counties of Jefferson and Fayette Counties are not eligible for USDA loans.
USDA loans require no down payment and are subject to income and property eligibility requirements by County..
Check Kentucky USDA Income Limits Here”—–>>>>
Check Kentucky USDA Property Eligibility Limits Here—>>>>
All Kentucky Rural Housing Loans are ran through GUS, Guarantee Underwriting System, an online to determine your loan approval
The Automated Underwriting engine will come back with an Accept, Refer, or Ineligible.
Most USDA mortgage investor want an Accept on the initial underwriting approval to do the loan.
USDA does not publish a minimum credit score in HB-1-3555. What drives your file is USDA’s automated underwriting recommendation from GUS. A 640 middle score typically gets a GUS Accept. Below 640 the file is manually underwritten, which is still possible. Most lenders impose a 640 floor as their own overlay, not because USDA requires it.
If you have a score below 640 and trying to go USDA, work on getting your credit scores up first.
Applicants must have a credit history that indicates a reasonable ability and willingness to meet obligations as they become due. A credit history reflecting any or all of the following is considered unacceptable credit history:
More than one 30-day late within the past 12 months.
Bankruptcy or foreclosure discharged less than 36 months
Outstanding judgments within the past 12 months
Two or more rent payments 30 days late within the past 3 years.
Outstanding non-medical collection accounts totaling more than $2,000 with no payment arrangements. When those collections have to be counted, USDA uses an imputed payment of 5% of the balance. Medical collections and charge-off accounts are both excluded.
Outstanding tax liens or delinquent federal debt with no payment arrangements
Accounts converted to collections in the past 12 months.
Mitigating Factors to Unacceptable Credit:
Adverse credit waivers may be granted for mitigating factors to establish the applicant’s intent to good credit. Lenders must document these circumstances which were beyond the borrower’s control and have been removed:
Circumstances for adverse credit were temporary in nature, beyond the applicant’s control and have been removed. Examples: increased expenses due to illness and/or medical expenses, injury, death, etc.
Tri-merge credit reports are required and must be no more than 90 days old at the time the Conditional Commitment is issued
Applicants must not be delinquent on any debts owed to the Federal Government
CAIVRs must be checked and documented in the loan submission package.
To qualify for a USDA Rural Development loan in Kentucky, credit history plays a critical role, especially when evaluating applicants without strong compensating factors.
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