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Kentucky Rural Housing Service (RHS) program Mortgage


Kentucky Rural Housing Service (RHS) program Mortgage

Program Descriptions RHS Fixed Rate 2 6/15/2011

The loan must meet the minimum FICO requirement listed in the following grids: Loans must be manually underwritten. Second Homes and Investment properties are not eligible. LTV/CLTV/HCLTV/FICO Primary Residence –

Min Fico 640 Ranges FICO Type Units *LTV CLTV HCLTV Salaried Self-Employed Purchase & Rate/Term Refinance 1 103.5% 100% NA 640 640 1 101% 100% NA 640 640

* Purchase: Maximum LTV is 103.5% of appraised value when guarantee fee is financed. Refinance: Maximum LTV is 101% of appraised value when guarantee fee is financed. Rate & Term refinancing is available on current RHS loans only.

Calculation of the Guarantee Fee: The Guarantee Fee may be calculated in two ways depending on whether the fee will be financed. Transaction Type Guarantee Fee Not Financed Guarantee Fee Financed Purchase Transactions Multiply the loan amount by 3.50% and round to the nearest cent. Example: $100,000 x .035 = $3,500. The fee is calculated as follows: 1. Divide the base loan amount by .965 and round to the nearest cent. 2. Multiply that number by .035 (3.50%) and round to the nearest cent. Example: $100,000 ÷ .965 = $103,626.943005 (rounded to $103,626.94). $103,626.94 x .035 = $3,626.9429 (rounded to $3,626.94). Rate and Term Refinances Multiply the loan amount by 1.00%. Example: $100,000 x .01 = $1,000. Follow steps 1 and 2 above, substituting 99 for .965 and .01 for .035. Example: $100,000 ÷ .99 = $101,010.10. $101,010.10 x .01 = $1,010.10.

Secondary financing may be used if it is approved by RHS and is offered by city or county agencies. SECONDARY FINANCING

Refinance transactions must comply with the following requirements: REFINANCE REQUIREMENTS • The interest rate cannot exceed the interest rate of the existing loan. • The loan security must include the same property as the original loan. The security property must be owner-occupied as the borrower’s primary residence. • Maximum loan amount cannot exceed the balance of the loan being refinanced, plus the guarantee fee and reasonable and customary closing costs (including funds necessary to establish a new tax and insurance escrow account). Subordinate financing, such as home equity lines of credit and down payment assistance “silent” seconds, cannot be included in the new loan amount. Unpaid fees, such as late fees due the servicer, cannot be included in the new loan amount. • Any existing secondary financing must be subordinate to the first lien. • Cash-out is not allowed. • HUD-1 cannot reflect cash back to the borrower except for items prepared by the borrower outside of closing.

PROGRAM DESCRIPTION

The rural Housing Service (RHS) program provides very-low-, low- and moderate-income rural resident with better access to affordable housing finance options with little or no down payment or out-of-pocket costs.

Borrowers may obtain a loan to purchase a new or existing home that is located in a designated rural area. A rural community generally has a population of 10,000 or less; however, a community with a population of 20,000 or less can be considered “rural” if it is located outside a metropolitan statistical area (MSA).

To be eligible for RHS assistance, borrowers must lack sufficient resources (for example, borrower is unable to secure the necessary down payment which is generally 20%, to obtain conventional financing without RHS guarantee assistance). Guidelines for the program follow.

AVAILABLE PRODUCTS AND TERMS

•

30 year fixed rate

LOAN PURPOSE

•

Purchase

• Rate term refinance (only allowed when refinancing a current Rural Housing Guaranteed loan.)

OCCUPANCY

•

Owner occupied only

ELIGIBLE BORROWERS

Borrowers are subject to the following eligibility requirements:

• Borrowers may have only one residence. Borrowers may be the current owner of a structurally sound, functionally adequate house, as long as it is sold prior to or concurrently with the purchase of the new home.

• Borrowers must lack sufficient resources (for example, borrower is unable to secure the necessary down payment which is generally 20%, to obtain conventional financing without RHS guarantee assistance).

• Borrowers must have a valid Social Security Number.

• Borrower may be a permanent or non-permanent resident alien. Refer to the Underwriting Guide for details.

• Title must be in individual names only.

• All borrowers must be screened using CAIVRS (Credit Alert Interactive Voice Response System) to determine if an applicant is delinquent on a federal loan.

INELIGIBLE BORROWERS

•

Non-occupant co-borrowers

PREPAYMENT PENALTIES

Prepayment Penalty Option is not available.

MIN/MAX LOAN AMOUNT

The LTV is based on the appraised value. Minimum 80.01% LTV is required on all purchase transactions. The minimum loan amount is $30,000. Loan limits are dictated by the applicant’s income with respect to program eligibility and loan repayment ability. The maximum loan amount is 100% of the conforming loan limit or 103.5% when the Guarantee Fee is financed.

 Program Descriptions RHS Fixed Rate

2 6/15/2011

LTV/CLTV/HCLTV/FICO

The loan must meet the minimum FICO requirement listed in the following grids: Loans must be manually underwritten. Second Homes and Investment properties are not eligible.Primary Residence – Min Fico 640
Ranges  FICO 
Type  Units  *LTV  CLTV  HCLTV  Salaried  Self-Employed 
Purchase & Rate/Term Refinance  1  103.5%  100%  NA  640  640 
1  101%  100%  NA  640  640 
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Kentucky USDA and Rural Housing Underwriting Update for November 2012


Kentucky USDA and Rural Housing Underwriting Update for November 2012

This website is not an Government Agency, and does not officially represent the HUD, VA, USDA or FHA or any other government agency. 

1)  Kentucky USDA loans and rural housing underwriting  is tightening up!  You are going to see us asking for more to make sure we have it to respond to USDA when they ask for it.  We don’t want to be caught shorthanded on these deals and be stuck waiting to get them closed (neither do you!) so to be reactive to the changes with USDA, you will find that we are conditioning for more than we used to.  To help us be on the ball with your USDA loans, be sure to include the following:

1)  30 days most recent paystubs showing a YTD amount

2)  VOE’s if the borrower is NOT employed in the same position for more than 2 years or the borrower has OT, Bonus or commission income.  We will recommend Written VOE’s   for the purpose of showing the borrower is in the same line of work!

3)  Assets – if your 1003 shows bank information and asset information then you must provide the most recent 2 statements to prove this information

4)  Collections & open judgments must show on your liabilities.  Please provide an LOX for all Derogatory credit  this LOX should show that the circumstances were temporary in  nature, beyond the applicant’s control and resolved to the best of their ability

5)  VOR‘s are required for all USDA loans.  USDA has been consistently requesting this information in the past 30 days.  For files above 640, a VOR will suffice.  For files under 640,     we will require 12 months cancelled checks.  If a VOR is not available due to the borrower living with family,  an LOX will be needed

6)  Paystubs for all income in the household regardless if they are on the loan or not. Must be most recent and 30 days worth to help determine actual income

7)  Garnishments or child support shown and if paying it we will require the court order. If receiving it, we need a 12 month history of receipt and court order

8)  W-2’s for the past 2 years for ALL jobs

9)  Tax returns if self employed or unreimbursed expenses are shown

10)  YTD P&L if self employed prepared by tax preparer and signed by borrower.

11)  1980-21 signed by borrowers

12)  Fully executed purchase contract

Remember – we cannot send a file to RD without an appraisal!!!  The appraisal must state that the property meets HUD Handbooks 4150.2 and 4905.1.

2)  Turn times for USDA in several states are extreme.  We understand your frustration with the delays and want to express to you that we are watching diligently for return commitments to push your files to closing.  If you could review your USDA loans with us and insure that all conditions are met….except for the CC…we can expedite these files ASAP when the commitment comes in.  If your file has been with us for over 30 days, please update the paystubs as ours will have expired!!!

Thank you for your attention and please let me know if you need me!

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.comKey Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*
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Kentucky USDA and Rural Housing Credit Scores Guidelines


Kentucky USDA No Score Loan Guides

Map of Kentucky highlighting Jefferson County
Map of Kentucky highlighting Jefferson County (Photo credit: Wikipedia)

DTI: 29/41 Maximum no exceptions.
Rent: 12 months 0 x 30 on Rent. 12 months cancelled checks or VOR if institution. Or a four Non Traditional Trade Lines may be substituted with underwriting
approval.
Credit: No delinquent or derogatory past or current credit. Regardless of size or type.
No open collections or judgments (exceptions granted upon review only
and only based on overall profile of the loan).
Job Time: 2 years of consecutive work/education with no gaps.
Alternative Trades: 3 Non Traditional Trades with Rent or 4 Non Traditional Trades with No Rent. 0 x 30 and must have 12 month history on each trade.
Pricing: 3.00 negative adjustment to price.
Miscellaneous: Required to have 2 months bank statements and/or 401k asset Account with 2 month Reserves. FTHB Education is required.
Minimum Loan: $30,000
Residual Incomer per Family/Geographic: Borrowers must have residual income left over after their loan closes, see table below for what is required:
Family Size
1
$450
2
$755
3
909
4
1,025
5
1,062
Over 5 Add $80 for each additional family member up to 7

Kentucky Rural Housing and USDA 620-639 Credit Score Loan Guides:

DTI: 29/41 Maximum no exceptions.
Rent: 12 months 0 x 30 on Rent. 12 months cancelled checks or VOR if institution. Or a four Non Traditional Trade Lines may be substituted with underwriting
approval.
Credit: 3 Trade Lines seasoned for 12 months with high balances of a minimum $500. No delinquency in last 12 months regardless of size or type.
No open collections or judgments (exceptions granted upon review only and only based on overall profile of the loan)
Alternative Trades: May be needed if credit is thin or needed to be strengthened overall credit quality.
May require four non-traditional trades if no Rent History.
Job Time: 2 years of consecutive work/education with no gaps.
Pricing: 1.50 negative adjustments to pricing.
Miscellaneous: Required to have 2 months bank statements and/or 401k asset Account with 2
months reserves.
Minimum Loan: $30,000

Kentucky USDA and Rural Housing Manual Underwrite with GUS Refer Scores >=640:

DTI: 29/41 Maximum no exceptions.
Rent: 12 months 0 x 30 on Rent. 12 months cancelled checks or VOR if institution. OR a four Non Traditional Trade Lines may be substituted with underwriting
Approval if no rent history is available.
Credit: 3 Trade Lines seasoned for 12 months with high balances of a minimum $500.
OR if payment shock <=25% and traditional trade lines cannot be supplied we can accept 3 alternative trade lines with 12 month history and 0 x 30.
No delinquency in last 12 months regardless of size or type on any credit.
No open collections or judgments (exceptions granted upon review only and only based on overall profile of the loan)
Job Time: 2 years of consecutive work/education with no gaps.
Pricing: 2.00 negative adjustments to pricing.
Miscellaneous: Required to have 2 months bank statements and/or 401k asset Account with 2
months reserves. May be waived with strong compensating factors.
Minimum Loan: $30,000

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*

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DEFERRED STUDENT LOANS AND DEBT RATIO CALCULATIONS Kentucky Rural Housing Loans and USDA Loans in KY


DEFERRED STUDENT LOANS AND DEBT RATIO CALCULATIONS  for Kentucky Rural Housing Loans and USDA Loans in KY

 

RHS Student Loan DTIs

 

Due to the variable nature of some student loan plans, RHS is standardizing the process of including them in the debt ratio. All student loans will now require documentation verifying the current payment due.

 

For student loans which are Conventional, Fixed Payment, and/or Deferred:

  • Account statements will be reviewed and fixed monthly payment will be used with no adjustments.
  • Deferred student loans not in repayment will use an estimated payment of 1% of the loan balance unless a documented fixed payment from the loan servicer can be provided.

 

For student loans with Income Based Repayment plans:

  • If the current payment is greater than $100, that payment can be used.
  • If the current payment is less than $100 and total loan balance is greater than $10,000, a minimum $100 payment must be included in the debt ratio.
  • If the current payment is less than $100 and total loan balance is less than $10,000, then the current payment may be used

 

Please note that documentation of an Income Based Repayment agreement must be provided. Payments of $0 are not eligible to be used in the debt ratio. Verifications are only valid for 120 days, 180 days for new constructions

 

DEFERRED STUDENT LOANS AND DEBT RATIO CALCULATIONS

. A 100% 30 year fixed interest rate loan with flexible credit and qualifying ratios along with other benefits, will open the door to a new market and new growth possibilities.

We look forward to a long and productive relationship this affordable housing product to the people of Kentucky and to a strong partnership in the Kentucky GRH Program.

For the USDA Rural Development Single Family Housing Guaranteed Loan Program, deferred student loans should be included in the debt ratio calculations for Guaranteed Loans regardless of the deferment period.

Rural Development RD Instruction 1980-D, section 1980.345(c)(1) states:

“Long term obligations include those obligations . . . with a remaining repayment period of more than 6 months and other shorter term debts that are considered to have a significant impact on repayment ability.”

Deferred student loans are long term obligations with remaining repayment periods of more than 6 months, and they must be included as part of the

applicant‟s recurring monthly debt obligations. If the credit report does not reflect a monthly payment due at the end of the deferment period, the lender may request a copy of the applicant‟s payment letter, or utilize the industry standard of estimating student loan payments as 1% of the loan balance. Therefore a deferred student loan balance of $12,000 should have a corresponding monthly payment of $120 if no estimated payment is verified by the lender.

This guidance applies to all manually

DEFERRED STUDENT LOANS AND DEBT RATIO CALCULATIONS Kentucky Rural Housing Loans and USDA Loans in KY

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KENTUCKY RURAL DEVELOPMENT QUICK REFERENCE GUIDE


Logo of the USDA Rural Development office, par...
Logo of the USDA Rural Development office, part of the Department of Agriculture. (Photo credit: Wikipedia)

KENTUCKY RURAL DEVELOPMENT QUICK REFERENCE GUIDE

100% * NO MONEY DOWN LOAN and LOW  “MI” * Seller Can Pay All CC’s
GENERAL INFO
• 29% PITI, 41% TD ratios
• (waivers allowed with good credit)
• Debts with 6 months or more owed will be
counted
• Property must be located in eligible RD areas
• Land value cannot exceed 30% of total value
• In-ground swimming pools may be approved with
waiver
• No substandard homes
• No existing manufactured homes
• CAIVRS number(s) needed
ELIGIBILITY
• First time homebuyer not a requirement
• Income must be within RD limits
• Income must be adequate and stable
• Adequate ability to repay the loan
• Acceptable credit history
• Be without an adequate dwelling
• Cannot obtain conventional financing
• Citizen or permanent resident alien
• Owner occupied
• Legal capacity to incur debt
• Bankruptcy OK if discharged for 36 months
INCOME ELIGIBILITY
• All household income counted
• Overtime, bonuses, and commissions count, if
supported by history
• Child support counts –may be grossed up 25%
• Self-employment – (use IRS net income) – 2 year
history plus current information needed
• Same job or line of work for past 12 months
(some exceptions allowed)
• Written verification of SS, SSI, etc.
• Degree or certification can substitute for job time
• All income must be verified
GROSS INCOME DEDUCTIONS/ADJUSTMENTS
• $480 for each child under 18
• Over 18 counts if full time student living at home
• Actual child care expenses for children 12 or
younger if parents work or attend school
• $400 for applicant or co-applicant if disabled or
elderly
• Medical deductions may be considered for
disabled or elderly applicants (above 3% of gross
income
KEY POINTS
• No Down Payment
• 100% Guaranteed financing
•  LOW  MONTHLY “MI”  of .40 basis points . Much lower than FHA which is 1.25% basis points. —Almost $100 cheaper on Kentucky RHS loan vs FHA loan, plus no 3.5% down payment needed like FHA requires.
• Terms—30 year fixed
• Guarantee fee of 2% of loan amount
• Refinance Fee 2.0 % of loan amount
• Appraised values can be exceeded by amount of
guarantee fee—up to 102% LTV
• Streamlined credit documentation with FICO of
640 or higher
• Unlimited Gifts or Seller Contributions
• Down-payments accepted up to 19%
• Guarantee Fee is fully Tax Deductible in the year
it is paid
• No Loan Limit (Ratio Determined)
• Partner with other Funding Sources
• AUS System – GUS – Being Developed
• Regular Program updates
• Monthly Newsletter by email
EXISTING DWELLINGS
• Satisfactory appraisal
• Thermal certification NOT required
• Well test
• Septic system certification
• Termite letter
NEW CONSTRUCTION
• Satisfactory appraisal
• Thermal certification
• Plan certification
• One year warranty on footings, framing, and final
inspection
• Termite Soil Treatment Certificate
• Well test
LOAN PURPOSES
• Purchase New
– Stick or Modular
– Manufactured (from approved dealer)
• Purchase Existing
• Stick or Modular
• Repairs/Rehab
• Refinance
• RD Direct Loans
• RD Guaranteed Loan
• Typical Loan Closing Costs
USDA Rural Development

RD PROGRAM – WEBSITES

Eligibility Website:
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

http://www.rurdev.usda.gov/rhs/sfh/sfh%20guaranteed%20loan%20in
come%20limits.htm

KY “MAPS”: http://www.rurdev.usda.gov/ky/maps.htm
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

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