I am a Kentucky based USDA Mortgage Lender that has originated over 200 KY Rural Housing Mortgage Loans in Kentucky, Put my expert advice to use. Kentucky Rural Development RHS loans give KY Rural Homebuyers a zero down mortgage loan with a low 30 year fixed rate loan. A Local Kentucky Rural Housing Mortgage Lender offering same day free approvals and credit report. This website is not affiliated with USDA or any other government agency. NMLS#57916 Equal Housing Lender Text or call today 502-905-3708 with your mortgage questions about USDA Rural Housing Loans in Kentucky. Free Pre-Approvals on most applications within the same day. Kentuckyloan@gmail.com
Kentucky USDA loans are mortgages made by lenders and guaranteed by the U.S. Department of Agriculture. They are available to moderate- and low-income borrowers to build, rehabilitate, improve or relocate a primary residence in eligible rural and suburban areas. The income limit is 115 percent of the median income in your area. You can check the income limits for your area here.
It can be closed with zero down. USDA loans do have a monthly insurance requirement, but the upfront fee is significantly lower than on the VA loan and the mortgage premiums are lower than on the FHA loan.
The problem is that the number of buyers who qualify for a USDA loan is much smaller. Unlike on other loans where more income is better, a USDA loan has strict income maximums.
Credit Score Required for Kentucky Rural Housing Loans
There is no minimum credit score for a USDA loan, but you are automatically ineligible if you are presently delinquent on a nontax federal debt.
Automated approval is available if you have two tradelines reported on your credit history and acredit score of 640 or higher.
If you do not have sufficient credit data, the underwriter can assess your creditworthiness other ways, such as by examining your history with rent payments. Applicants with a credit score lower than 640 will undergo additional underwriting steps.
A borrower who has no verifiable employment for 6 months or longer is deemed to have a gap in employment.
Any gaps in employment must be analyzed in order to make a final determination of stable and dependable income. An employment gap does not automatically render an applicant ineligible. Applicants with job gaps due to maternity leave, medical leave, relocation, etc. are considered to have employment continuity. Applicants returning to the workforce after leaving a previous job to care for a child/family member, complete education, etc. will require a 12 month employment history.
A Kentucky USDA home loan is a zero-dollar-down mortgage option provided by USDA’s Department of Rural Development.
This government-backed loan program comes in two types: direct loan, which is reserved for lower-income households and issued by USDA, and the guaranteed loan, which is reserved for low- to moderate-income families. The guaranteed loan is funded by private lenders, and USDA guarantees a portion of the loan against default.
The KY USDA home loan program is generally more beneficial to rural families than a conventional lending program, particularly for first-time homebuyers with lower- to median-level incomes.
Some of the benefits of Kentucky Rural Housing USDA loans include: • zero down payment • competitive interest rates • lower-than-average monthly mortgage insurance • relaxed credit requirements versus conventional loans
• no loan limits
How do I determine eligibility for a Kentucky Rural Housing USDA loan? To be eligible for a USDA home loan, borrowers must meet the program’s basic eligibility requirements. These requirements are relaxed compared to other mortgage options and are in place to ensure borrowers can make their monthly mortgage payments.
Here are a few of the basic Kentucky RHS USDA eligibility requirements:
• Income. Applicants must not have annual adjusted income greater than 115% of the median household income for the area. Check your county’s USDA income limit. This called compliance income.
• Credit. Applicants must have a minimum credit score of 581 to qualify for USDA’s guaranteed underwriting credit requirements. However, most lenders will want a 620 or preferably to get an Automated Approval 640 is the magic number in most cases. With regards to bankruptcy, 3 years is usually the date needed to lapse since your discharge.
• Employment. Applicants must have proof of two years of stable income and employment.
: Income: They will take your gross monthly income and develop two ratios for you: The front end ratio, which is called your housing ratio, and then the back-end ratio or total debt ratio is the house payment plus the total monthly payments listed on the credit report. If you pay child support, this is included in the qualifying ratios but utility bills, car insurance, cell phone bills, water bills etc, is not included. Typically 28% is used for the housing ratio, and
Student Loans: They are pretty tough on student loans and qualifying with your current student loan debts. They will make us use 1% of your outstanding balance on student loans, so sometimes this will cause the loan to get denied because your debt to income ratio is too high. If they are in an Income-Based repayment plan they will still make us use the 1% balance so keep this in mind. For example, let’s say you owe $35k in outstanding student loans, and your IBR plan calls for a $50 monthly payment. RHS will make us use $350, not the $50 IBR payment so you can see where this will cause issue on higher debt to income ratios on some loans.**********
If you are a Kentucky USDA Mortgage applicant who has student loan calculations will be changed to the following Fixed Payment Loans:
A permanent amortized, fixed payment may be used when it can be documented that the payment is fixed, the interest rate is fixed, and the repayment term is fixed.
Non-Fixed Payment Loans (i.e. deferred, income based, graduated, adjustable, etc.): The payment should be calculated as the greater of 0.5% of the loan balance or the actual payment reflected on the credit report. No additional documentation is required.
• Property location. Homes must be located within a rural area, as defined by USDA. Rural areas are any that have a population less than 35,000 depending on the area’s designation. Use this tool from USDA to determine if a specific address is eligible.
• Physical property. Homes must be the borrower’s primary residence, have direct access to a street, and have adequate utilities and water and wastewater disposal, among other things No working fams allowed or properties that income producing livestock or crops.
For those with lower incomes, a USDA direct loan provides greater opportunities for lending, as its credit and income requirements are more lax than the guaranteed loan option.
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/
RHS Condos
In order for a condo to be eligible for an RHS loan, it must appear on the FHA, VA, or FNMA approval list. Please see the Condos Guideline for more information.
Income Producing Properties and Outbuildings
Minimal income production from property is allowable within reason (e.g. gardening) as long as the property remains predominantly residential in nature
Outbuildings are permitted as long as they are no longer in commercial use. Interior photographs of all outbuildings will be required to determine usage
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). I lend in the following states: Kentucky
Kentucky USDA Rural Development Guaranteed Lending Program is geared to assist low to moderate income families realize home ownership. Below are some important highlights:
USDA/Rural Development. The Annual Guarantee Fee is set to INCREASE October 1.
Debt Ratios–29/41% on manual underwrites – max to 45% Debt to Income ratios with GUS Approve/Eligible Finding.
ZERO down payment – 100% LTV ok
Income Eligibility Limits do apply. Usually to $86k for a family of four and up to $15k for a household family of five or more.
Lender Credit from the interest rate may be used to pay closing costs.
Gifts ok! Usually not needed for USDA loans because 100% Financing offered. Gift funds cannot be used for reserves to get a GUS approval.
Applicants with > 20% of the sales price in assets (exclude retirement accounts) are not eligible for USDA financing.
Clear CAIVRS required – CAIVRS is a Federal Government-wide data base of information regarding individuals where an insurance claim or guarantee loss was paid.
Student Loan Payments –
Effective immediately for all RHS loans, student loan calculations will be changed to the following
Fixed Payment Loans: A permanent amortized, fixed payment may be used when it can be documented that the payment is fixed, the interest rate is fixed, and the repayment term is fixed.
Non-Fixed Payment Loans (i.e. deferred, income based, graduated, adjustable, etc.): The payment should be calculated as the greater of 0.5% of the loan balance or the actual payment reflected on the credit report. No additional documentation is required.
One borrower must have 3 tradelines that have existed for 12 months. If this requirement cannot be met, an accept decision must be downgraded to a refer and treated as a manual underwrite.
VERIFICATION OF RENT:
Scores 680 and above OR GUS accept = No VOR required.
Scores 679 and below = VOR required.
COLLECTIONS:
Determine if the total outstanding balance of all collections accounts and charge offs of all applicants is equal to or greater than $2,000. Unless excluded by state law, collection accounts and charge offs of a non-purchasing spouse in a community property state are included in the cumulative balance of all collections and charge offs.
Remove all medical collections and medical charge off accounts from the total balance. Medical collections and medical charge off accounts must be clearly identifiable on the credit report.
If the remaining outstanding balance of collection accounts and charge offs are equal to or greater than $2,000, any of the following actions will apply:
Payment in full of all collection accounts and charge offs at or prior to closing.
Payment arrangements are made with each creditor for each collection account and charge offs remaining outstanding. A letter from the creditor or evidence on the credit report is required to validate the payment arrangements. The agreed upon monthly payment for each outstanding collection account and charge off will be included in the borrower’s debt-to-income ratio.
In the absence of a payment arrangement, the lender will utilize in the debt-to-income ratio a calculated monthly payment. For each collection and charge off utilize 5% of the outstanding balance to represent the monthly payment.
Kentucky Rural Housing USDA Important Announcement
USDA Home Loans : 100% Financing Kentucky USDA Rural Development Housing Zero Down Kentucky USDA Mortgage Loans Kentucky Single Family Housing Guaranteed Loan Program
We have been advised by Kentucky Rural Housing USDA that they WILL ACCEPT NO LOAN APPLICATIONS FROM THE CLOSE OF BUSINESS ON NOVEMBER 21, 2014 THROUGH THE START OF BUSINESS DECEMBER 1 2014.
Many USDA offices currently have a significant backlog of cases to review and they will be unable to process applications under two regulations simultaneously. For these reasons the agency determined that this was the most appropriate way to address the upcoming changes and reduce the backlog.
Another recent announcement from USDA identified that they have seen a large increase in applications with missing information. This slows the file review process considerably. USDA has advised lenders that all incomplete files will be returned to the lender.
Criteria for USDA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for three years or more, you are eligible to apply for an USDA mortgage. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make an Kentucky USDA loan application.
RHS Increase in Annual Fee for Rural Housing Mortgage Loans in Kentucky
Kentucky USDA Mortgage Lenders must underwrite the loan using an annual fee of .5 percent and resubmit the application to RD in GUS after October 1, 2014
On Wednesday, October 1, 2014, the annual fee for both purchase and refinance loans will increase from .4 percent to .5 percent. The Guaranteed Underwriting System (GUS) has been updated to allow lenders to select and underwrite at either the .4 percent or .5 percent annual fee structure. Lenders should communicate with Rural Development (RD) offices to understand current processing time-frames.
GUS “Final Submissions” with an annual fee of .4 percent, that areissued a conditional commitment by RD prior to the close of business on Tuesday, September 30, 2014, will not be affected by the annual fee change. Those submissions that are not issued a conditional commitment by RD prior to the close of business on Tuesday, September 30, will be affected by the annual fee change.
Lenders must underwrite the loan using an annual fee of .5 percent and resubmit the application to RD in GUS.
