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Who is eligible for a Rural Housing Loan in Kentucky?


Rural Housing Loan in Kentucky

Kentucky USDA loans are loans offered by the United States Department of Agriculture to those looking to buy homes in rural areas of Kentucky.

There are a few requirements and restrictions associated with this type of loan however, if you are a first time home buyer in Kentucky with a limited income, no down payment and are looking to live in a rural part of Kentucky, this may be a good option for you to purchase a home going no money down and getting a 30 year fixed rate loan.

Income Requirements for USDA Loans in Kentucky

The Rural Housing USDA website provides an income eligibility calculator depending on where you are looking for housing in the state of Kentucky. Because it is a nationally funded loan by the United States Government, the income restrictions will vary county-by-county but the loan recipient cannot make more than 115% of the median income for the area in which they are applying. There is also a chart you can consult that provides Kentucky USDA county income limits depending on the number of people in your home. Most Kentucky counties allow up to $122,800 for a household of one to four people, and up to $162,100 for a household of five to eight. The Northern Kentucky counties of Boone, Bracken, Campbell, Gallatin, Kenton and Pendleton allow more: $128,600 for one to four people and $169,800 for five to eight. These limits took effect July 13, 2026.

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.

Kentucky Score Requirements for a USDA Loan in Kentucky

USDA does not publish a minimum credit score anywhere in Handbook HB-1-3555. What actually drives your file is the underwriting recommendation USDA’s automated system, GUS, gives it. A 640 middle score will typically get a GUS Accept. Below 640 the file gets manually underwritten, which is still possible. Most lenders set a 640 floor as their own overlay, but that is the lender’s rule, not a USDA rule.

If the potential borrower has declared bankruptcy or foreclosure within the last 36 months, they would be ineligible for this type of loan.

If the mortgage was included in the Bankruptcy, sometimes the 36 month hold is ignored and you just have to make sure the property is out of your name before applying for a USDA loan

Can you get a USDA loan in Kentucky with a Previous Bankruptcy?

Chapter 7 bankruptcy, the bankruptcy must have been discharged at least 3 years prior to becoming eligible for a Kentucky USDA home loan.

Borrowers must be in a Chapter 13 bankruptcy for a minimum of 12 months, with documentation of 12 months of on time payments and a letter of authorization from the bankruptcy trustee authorizing you to enter into new debt.

In order to qualify for a USDA home loan after filing a Chapter 13 bankruptcy, additional documentation may be requested/required stating that the reason for the Chapter 13 filing was due to extenuating circumstances beyond the borrower’s control, temporary in nature and not likely to re-occur.

Home must be primary Residence.

Recipients must be U.S. Citizens, U.S. non-citizen nationals or Qualified Aliens to apply for this program. They must also agree to use the home as their primary residence and not as a rental property.

The property has to be residential. That covers single family homes, townhouses, condominiums, new construction, and manufactured homes. A condo project can be approved by FHA, VA, Fannie Mae or Freddie Mac, and it does not have to already be sitting on one of those lists. It can also qualify by being shown to meet one of those agencies’ standards. An attached townhome that is not part of a condominium regime does not need any project approval at all.

What areas of Kentucky Qualify for the USDA Loan Program?

The USDA provides a map of the where you can apply a USDA loans are eligible in Kentucky. The major metro areas of Jefferson County and Fayette County Kentucky are not eligible for Rural Housing Loans in Kentucky, along with some parts of Northern Kentucky next to Cincinnati; parts of Owensboro, Paducah, Bowling Green, Richmond, Frankfort, Winchester, Radcliff, Hopkinsville and Henderson Kentucky are not eligible.

If you have a property in mind, you can head over to the eligibility map to see if the home you are considering qualifies.

What are the advantages of USDA loans in Kentucky?

For many people in a low to middle-income bracket, saving for a down payment can be difficult. A USDA loan does not require the purchaser to put any money down toward the purchase price of a home. The government insures the loan in this case, should the borrower default, therefore the borrower is required to carry mortgage insurance during the life of the loan. The mortgage insurance for the USDA loan is provided at a more discounted rate than that required by traditional loans.

On USDA loans the mortgage insurance is 1% upfront, called a guarantee fee, and .35% monthly called an annual mortgage insurance fee to USDA. The beauty of USDA, is that it does not matter if you have a credit score of 640, or a credit score of 740, everyone pays the same premiums, unlike conventional loans.

They only offer 30 year fixed rates with no prepayment penalty, and usually the rates are very low and compare to FHA rates and much lower than conventional loans.

USDA loans take on average about 30 days to close, and the appraisal must meet FHA requirements. Home inspections are not required. Manufactured homes are allowed, and since May 5, 2025 that includes existing used units, not just brand new ones off a dealer lot. An existing manufactured home has to have been built within 20 years of your closing date, sit on a permanent foundation, never have been installed at another homesite, be at least 400 square feet, still carry both the HUD certification label and the HUD data plate, and have no alterations made after it left the factory other than an engineered porch or deck.

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Joel Lobb


Mortgage Loan Officer

EVO Mortgage

911 Barret Ave

Louisville, KY 40204

NMLS #57916 | Company NMLS #1738461

Equal Housing Lender


Text/call 502-905-3708

kentuckyloan@gmail.com

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

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#57916 http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

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Northern Kentucky Mortgage Guidelines for the USDA Rural Housing Loan Home Program


If you are looking to buy a home in Northern Kentucky, to either own a home on acreage in the country with 100% financing on your home loan with zero down, then you need to look at the Kentucky USDA Rural Housing Loan Program.

How Does the USDA Home Loan Work in Northern Kentucky?

Here are some of the Key Financial Elements of the USDA Home Loan in Northern Kentucky:

  • Low to Middle-Income Households are generally eligible – If the Household Income is too high, you may be ineligible.
  • 30 Year Fixed Term Loans at Today’s Low Interest Rates compared to FHA, USDA and other government mortgage loans
  • On a manually underwritten file the qualifying ratios are 29% for housing and 41% for total debt. Those caps can be waived to 32% and 44% when every applicant has a credit score of 680 or higher and the file has a strong compensating factor. If your file gets a GUS Accept, those ratio caps do not apply.
  • Rural Development Loan Guarantee Fee applies, currently 1% USDA funding fee and .35% monthly mi premium
  • Zero Cash required for the Down Payment. If access to 20% down payment, then you cannot use this program.
  • Flexible Credit Guidelines, where non-traditional histories may be accepted. USDA will do a no score loan, but it is very difficult to qualify for so your best bet is to get your credit scores to 620 to 640 range and go from there. You will need two trade lines on the credit report for last 12 months, so no limited credit history is allowed on this program.
  • Eligible properties include existing homes, new construction, modular homes, eligible condos, and manufactured homes that are either new or already existing. Since May 5, 2025, an existing used manufactured home is eligible in Kentucky as long as the unit was built within 20 years of your closing date, sits on a permanent foundation, has never been installed at another homesite, is at least 400 square feet, still carries both the HUD certification label and the HUD data plate, and has no alterations made after it left the factory other than an engineered porch or deck.
  • Eligible Repairs may be included in the loan as well! If home appraises for more than sales price, sometimes you can finance these repairs into the loan.
  • They’re are two income tests. Compliance income and repayment income. See pic below for answers about Northern Kentucky Counties with max income limits for household
  • Home must be in an eligible area. See map below of Northern Kentucky Eligibility for USDA Rural Housing Loans

What Parts of Northern Kentucky Are Eligible for the USDA Home Loan?

With Northern Kentucky being part of the metro area of Cincinnati, the USDA has provided a map of the Ineligible Northern part of the Counties of Boone, Kenton, Campbell counties which means, the remaining southern part of the counties of Boone, Kenton, Campbell being eligible. Here is the Northern Kentucky rural housing map courtesy of the USDA:

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What Parts of Northern Kentucky Are Eligible for the USDA Home Loan?

What are the income limits for a Rural Housing Loan in Northern Kentucky?

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. The limits below are the ones effective July 13, 2026.

Northern Kentucky Counties
Boone, Kenton, Campbell, Bracken and Pendleton, Gallatin ***		 Cincinnati (OH, KY, IN FMR) Household income of 4 or less:

***$128,600
 Household income of 5 or more:

***$169,800
All Other Areas $122,800 $162,100

Here are a few more items to check off before looking into this loan or at a particular property:

  • Must be Owner Occupied as the Primary Residence;
  • Home must not be used to produce Income, nor can there be Income Producing Buildings or other Accessories that produce Income on the property; i.e. no working farms or cows, livestock, crops etc. Can be a small hobby farm.
  • No foreclosed homes that that need a lot of work.
  • Home must be structurally sound and in reasonably good repair and pass FHA standards on an appraisal.
  • Home cannot be used for a Rental Property or, be a major fixer




Joel Lobb
Mortgage Loan Officer
EVO Mortgage
911 Barret Ave
Louisville, KY 40204
NMLS #57916 | Company NMLS #1738461
Equal Housing Lender


Text/call 502-905-3708
kentuckyloan@gmail.com

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#57916 http://www.nmlsconsumeraccess.org/
— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.
Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans Current USDA and RHS Guidelines, GUS Accept Findings USDA, Property/Appraisal Requirements for USDA Loan, refinance USDA loan, Self-employed USDA Loans, Swimming Pools for USDA Loans, tradelines on USDA lanos, Uncategorized, USDA, USDA REVISIONS TO HB-1-3555, USDA/RHS Income limits by Ky Counties

Kentucky Rural Development Loans 100% Financing.


USDA Loans in Kentucky. Updated Qualifying Guidelines

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 the 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.

Full Credit Guidelines below ….click on link for USDA Mortgage Credit Guidelines

👇

https://www.rd.usda.gov/files/RD-SFH-CreditNotes.pdf

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
  • No Minimum credit scores 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 36 months,
  • A bankruptcy discharged at least 36 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 and doublewides are allowed, new or used. Since May 5, 2025, USDA finances existing manufactured homes in Kentucky as long as the unit was built within 20 years of your closing date, sits on a permanent foundation, has never been installed at another homesite, is at least 400 square feet, and still carries both the HUD certification label and the HUD data plate, with no alterations made after it left the factory other than an engineered porch or deck. A lot of lenders still refuse these loans, but that is their own overlay, not a USDA rule. We do originate them at EVO Mortgage.
  • 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.

Get Qualified for a Kentucky USDA Loan Now!

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
EVO Mortgage
911 Barret Ave
Louisville, KY 40204
Company NMLS #1738461
Equal Housing Lender

Text or call: 502-905-3708

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.



https://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu
Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans 40 year term loan, 502 Guaranteed Loan, Appraisals, Bankruptcy, credit reports, Credit Waiver, Current USDA and RHS Guidelines, fico scores, Foreclosures, Guarantee Fee and the Annual Fee for RHS loans, Guaranteed Section 502 Loans, GUS Accept Findings USDA, Homes for Sale (Foreclosures owned by USDA/RHS KY, Homes for Sale in Kentucky by USDA, INCOME ELIGIBILITY, ineligible areas, kentucky first time home buyer, MAPS, Property Eligibility Cities, Property Eligilibity, Property/Appraisal Requirements for USDA Loan, rural development, Rural Development loan, tradelines on USDA lanos, USDA, USDA /Rural Housing Loan Offices in Ky, USDA RURAL DEVELOPMENT DIRECT HOUSING LOANS, USDA/RHS Income limits by Ky Counties

Kentucky USDA Rural Housing Development Eligible Properties and Income Limits for 2017


Updated July 2026: The figures below are from 2017 and are kept here for reference. Here is where things stand now. Income limits effective July 13, 2026 allow up to $122,800 for a household of 1 to 4 people and $162,100 for a household of 5 to 8 people in most Kentucky counties, and up to $128,600 and $169,800 in Boone, Bracken, Campbell, Gallatin, Kenton and Pendleton counties. The upfront guarantee fee is 1.00% and the annual fee is 0.35%. USDA also sets no age limit on a site-built home, so the note further down about homes older than 100 years no longer applies. The home only has to appraise and meet the minimum property requirements in HUD Handbook 4000.1. For the current guide, see https://kentuckyusdaloan.com/.

usda-rural-housing-wisconsin-2

Search for Kentucky USDA Eligible Properties

A property must be located in an eligible area in order to use a USDA loan to purchase a home. Contrary to belief, Rural Development loans are not only for farms or very rural homes.

Actually, a property with an operating and income producing farm is not eligible for these loans!

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Kentucky USDA Rural Max Income Limits:

  • The total household income must be within the county limits for household size. Typically a family household of 4 can make up to around $75,650 and a family of five or more can make up to $99,850 for a household- Some KY counties allow for higher like Shelby County, and the Northern Kentucky Counties of Boone, Kenton, Campbell allow $82,000 (household income of four) up to $108,250 (household income of five or more)

Check Your Kentucky County for USDA Rural Housing Income Limits

Some More Facts about a Kentucky USDA loan:


It’s a two step approval process. The chosen USDA lender must first underwrite the file and get it approved based on the income, assets, and credit report submitted. Then, the lenders must submit to USDA for a “conditional commitment”. This conditional commitment is the final loan approval paperwork you are looking for.


Even though the lender may have approved the file, it still must go to USDA office in Lexington for an assignment to SFH underwriter for the final approval process. They typically are checking the appraisal and income at this stage. There have been instances where the lender would approve the file but USDA would not due to appraisal issues or income and job history.
This is very rare instances, so keep that in mind when it comes to final loan approval.

This two-step approval process usually adds 4-6 days to the final loan approval process, so keep that in mind when you are writing up your contract because it takes a little longer to close these loans vs FHA, VA, and Fannie Mae loans.

Well Test Treatments: Properties with a well as the primary drinking source will require a well water test. There are local labs to perform this test and the water must pass.

Septic Test: Sometimes they will require the septic tank to be inspected if called for in the appraisal report or home inspection.

Older Homes: As a general rule, USDA does not like homes older than 100 years old. They will sometimes require a home inspection in addition to the mandatory appraisal on older homes.

USDA Loan After a Short Sale: A short sale is not the end of the world. So it is very possible to obtain a USDA loan if 3 years have passed after the short sale. But a buyer would need re-established good rent and other credit history.

Bankruptcy and Foreclosure: If the mortgage debt that was foreclosed, was included in a Bankruptcy – then the USDA Home Loan waiting periods after foreclosure “waiting period” of 3 years, starts from the date of the discharge of the Bankruptcy. Because it can take 6 months or more for Banks to process the Foreclosure, and transfer title, this is a tremendous plus.

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.

Get Qualified for a Kentucky USDA Loan Now!

Text or call 502-905-3708
Text or call 502-905-3708

Joel Lobb
Mortgage Loan Officer

NMLS #57916 | Company NMLS #1738461

EVO Mortgage

911 Barret Ave

Louisville, KY 40204

text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com
Equal Housing Lender

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.

Posted by joel lobb at 2:35:00 PM

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Labels: bankruptcy, debt ratio, first time buyer kentucky usda, foreclosure, GUS approval, Kentucky Rural Housing and USDA Loans, Kentucky USDA Rural Development For 2017 Guide, rd, rhs