- Annual Qualifying Income – The requirement for calculations to be included on the Income Calculation worksheet have been removed and should now be included on Attachment 9-B, the underwriter transmittal summary, FNMA form 1008/Freddie form 1077, or equivalent
- 4506-T – The requirement for asset statements to be reviewed to ensure borrowers have no additional income sources has been removed.
- Repayment Income – MCC income must now be included in repayment income.
- Boarder Income – USDA now considers a boarder as a household member and a boarder’s income must now be included in annual income calculation. Rent paid by boarders that is reported on tax returns must also be included in annual income.
- Capital Gains – USDA removed requirement from Repayment Income to provide evidence showing borrowers own additional property or assets that may be sold if additional income is needed to support the mortgage obligation
- Commission – The borrower must now show one year history in same or similar line of work to include commission in repayment income.
- Fellowship, Stipend, Scholarship – Scholarship award letters must now provide date of termination and USDA will no longer presume benefits with no expiration date will continue. USDA also added guidelines for GI Bill income and stated it cannot be included in annual or repayment income.
- MCC – This income must now be included in repayment income, but no history is required. A copy of the W-4 from employer is required to verify borrower is taking tax credit on monthly basis. Note: MCC’s are ineligible with FWL as qualifying income.
- Unreimbursed Business Income – only taxable income is allowed to be included in repayment income
- Section 8 – USDA removed requirement for section 8 income to be deducted from the monthly PITI to determine DTI if it is paid directly to the loan servicer when included in the repayment income.
- Self Employed Income – Federal tax returns must now be reviewed to determine gross income for annual calculations. Removed requirement to deduct business loss before entering as repayment income into GUS or on loan application. Clarified documentation requirements as most recent 2 years of federal tax returns / transcripts & YTD P&L may be audited or unaudited
- Social Security Income – clarified documentation options and will allow social security benefit statement or form SSA-1099/1042S to source
- Temporary Leave – The history requirements for repayment income has been changed and now income must be received by loan closing.
- Cash on Hand – The underwriter must review the reasonableness of accumulation based upon income stream, spending habits, etc. and cash on hand can no longer be included in reserves
- Gift Funds – Clarification provided on how gift funds must be sourced when gift funds have been deposited into borrower’s account, not deposited into borrower’s account, or if funds are being wired directly to the settlement agent.
- Large Deposits – USDA no longer addresses lump sum additions.
- 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.
|*Upfront guarantee fee will change from 2.75% to 1.0%
Annual fee will change from 0.50% to 0.35%
Kentucky USDA Loans are not just for small farm communities, but rather they can help many lower-income individuals or households purchase homes in many small cities, towns and townships!
Kentucky RHS USDA Mortgage Insurance Changes Below and Important Dates to Keep in Mind that could affect your loan closing and approval!
On October 1, 2016, both the upfront guarantee fee and annual fee for purchase and refinance loans will decrease. We are reducing the upfront guarantee fee from 2.75% to 1%, and the annual fee from .5% to .35%. The Guaranteed Underwriting System (GUS) will be updated on August 31, 2016, to allow lenders to select and underwrite using either the FY16 or FY17 fee schedule.
Due to the large volume of loan applications received daily, as well as current turn times, Kentucky will begin accepting applications using the new FY17 fee schedule on September 27, 2016
Applications using the new FY17 fee schedule submitted before September 27, 2016 will not be processed before October 1, 2016.
September 27, 2016 will be the last day Kentucky will accept applications using the existing FY16 fee schedule. This will ensure all of these submissions are reviewed by the Agency prior to October 1.
Most are familiar with USDA Rural Housing Loan Program being a great no money down program available and it is not just for Kentucky first time buyers.
But starting with commitments on October 1, the funding fee that is financed is going from 2.75% to only 1%! On a $100,000 loan, a buyer saves about $1750! In addition, the annual fee (like PMI) reduces from .5% to .35% which lowers the monthly payment by $15 a month on an $100,000 loan amount.
Senior Loan Officer
text or call my phone: (502) 905-3708
email me at firstname.lastname@example.org
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). USDA 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.
Kentucky Rural Housing USDA Highlights for 2021
Kentucky USDA Rural Development Guaranteed Lending Program is geared to assist low to moderate income families realize home ownership. Below are some important highlights:
Sites must be modest and developed in accordance with any standards imposed by a State or local government. Therefore, the lender must verify that the following requirements are met at the time of application.
- Site size The site size must be typical for the area. (Some acreage is fine as long as it is normal and the appraisal has comparable sales with similar acreage)
- Income-Producing Buildings. The property must not include buildings designed and to be used principally for income-producing purposes. For example barns, silos, greenhouses, or livestock facilities used primarily for income producing agricultural, farming or commercial enterprise are ineligible. However, barn, silos, livestock facilities or greenhouses no longer in use for a commercial operation, used for storage, and outbuildings such as storage sheds are permitted if they are not used primarily for income producing agricultural, farming or commercial enterprise. A minimal income-producing activity, such as maintaining a garden that generates a small amount of additional income, does not violate this requirement. Home-based operations such as childcare, product sales, or craft production that do not require specific features are not restricted. A qualified property must be predominantly residential in use, character and appearance.
- Income-Producing Land. The site must not have income-producing land that will be used principally for income producing purposes. Vacant land or properties used primarily for agricultural, farming or commercial enterprise are ineligible. Sites that have income-producing characteristics (e.g. large tracts of arable land ready for planting) are considered income-producing property. However maintaining a garden for personal use is not in violation of this requirement. A minimal income-producing activity, such as a garden that could generate a small amount of additional income does not violate this requirement. A qualified property must be predominantly residential in use, character and appearance.
- Site Specifications. The site must be contiguous to and have direct access from a street, road, or driveway. Streets and roads must be hard surfaced or all weather surfaced and legally enforceable arrangements must be in place to ensure that needed maintenance will be provided.
- Utilities. The site must be supported by adequate utilities and water and wastewater disposal systems.
Kentucky USDA Rural Development Fee Reduction
USDA has just announced that they are planning to lower both the Guarantee Fee and the Annual Fee for RHS loans in Fiscal Year 2017. Effective for loans receiving commitments from RHS on or after October 1, 2016, the following fee changes will be in effect
There are two types of Kentucky USDA Rural Housing Home loans available to rural Kentucky Home buyers through Rural Development:
Direct homeownership loans and guaranteed home ownership loans.
Let’s first look at the 502 Direct USDA Loan in Kentucky
502 Direct USDA Loan in Kentucky:
With a Kentucky Direct Loan 502, the applicant applies directly to the USDA office serving their location in Kentucky. There are about 13 different locations . They lend the money direct from USDA , 100 percent financing, for the low rate currently at 3 percent on a 33 year term.
For a direct home loan, the purchase, construction, repair and rehabilitation of a single family home in rural areas must be used for the applicant’s permanent residence. “For manufactured housing, only new construction can be funded,” he explained.
Credit scores of 640 or greater are typically acceptable with a minimum number of trade lines (2 usually for 12 months can be opened or closed) that have been open and active.
No down payment typically is required- Loans may be up to 100 percent of the appraised value. Homebuyer education is required prior to closing for the Direct USDA Loan 502 program
February 12, 2016
KY USDA Rural Housing Credit Report Update 2016
Effective immediately, an applicant’s credit score may be validated with at least two eligible trade lines instead of three trade lines as previously required. Such trade lines consist of credit accounts (revolving, installment, etc.) with at least twelve months of repayment history reported on the credit report. Corresponding revisions to the 3555 Handbook will be posted on the USDA Rural Development’s Regulation and Guidance website on March 9, 2016.
At least one applicant whose income or assets are used for qualification must have a valid credit report score or have at least two historical trade line references that have existed for at least 12 months to establish a credit reputation.
For applicants without an established credit history and unable to establish the required number of eligible trade lines to validate the credit score, alternative methods may be used to evidence an applicant’s willingness to pay, such as a non-traditional mortgage credit report or multiple independent verifications of trade references per 7 CFR 3555, Section 3555.151 (i)(6).
Non-traditional credit may not be used to enhance poor payment records or low credit scores. GUS applications receiving an “Accept” underwriting recommendation, but which fail to meet the credit score validation test using a traditional credit report, must be downgraded to a “Refer” by the lender. In these instances the use of a non-traditional credit history will be required in order to proceed.
Joel Lobb (NMLS#57916)
Senior Loan Officer
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Company ID #1364 | MB73346
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