USDA Loans in Kentucky.
What is Kentucky USDA Rural Development Guarantee?
Kentucky USDA Rural Development Guarantee USDA loans offer 100% financing options on home purchases in rural areas of Kentucky. Properties though can be located within city limits and in subdivisions depending on population density of that particular County of Kentucky. Jefferson and Fayette Counties, the two largest counties of Kentucky are not eligible for Rural Development Loans.
The Kentucky Rural Development 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 counties will allow up to $82,700 for a family of four and up to $109,200 for a family of five or more for household incomes to be eligible for RHS loans.
Some areas of Northern Kentucky you can make more than that: see below
- 1-4 member household: $82,700
- 5-8 member household: $109,150
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:
|Household income of 5 or more:
|All Other Areas||$82,700||$109,150|
Some highlights of the KY Rural Housing loan program are:
- 100% financing on purchases with no down payment
- Low 30 year fixed rates. No prepayment penalty.
- Rural Housing monthly guarantee fee of .35%
- Upfront Rural Housing funding fee of 1% of the loan amount and is financed into new loan
- Minimum credit scores are 581 but helpful to have 620 or higher with most USDA lenders with a 640 and get an automated underwriting approval thru Rural Housing’s underwriting engine – GUS-GUS Stands for the automated Underwriting system they use online to pre-approve you for a loan.
- Each lender will set their own credit and debt to income criteria
- No rental verification needed with GUS approval
- No foreclosures in the last 24 months, but need explanation if < 36 months
- Bankruptcy discharged at least 24 months
- Must have two tradelines on the credit report for at least 12 months.
For a USDA eligible areas in Kentucky, see the property and income eligibility search, please click HERE.
Things to look for in your Rural Housing property search in Kentucky below:
- Avoid homes in flood zones – RD is very restrictive for homes in flood zones. They will do them in flood zones just watch out for the costly premiums.
- Avoid homes with cisterns – they are extremely difficult to get financed
- Be aware that homes with wells and septic systems needed extra tests for contamination
- 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.
- Manufactured homes or doublewides must be brand new. No used mobile homes are allowed.
- Must meet FHA standards on appraisals so watch out for this on older homes with crawl spaces.
- Must have a permanent heat source and no wood stoves as permanent heat sources
- Homes that are in need of major repairs.
Put my experience of originating KY USDA loans to work for you. I have successfully originated over 200 Rural Housing Mortgage Loans in Kentucky. I offer free pre-approvals and will help you from start to finish and I usually attend all my closings in Kentucky.
Mortgage Loan Officer
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). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.