How do Students Loans affect a Kentucky Rural Housing Mortgage Loan Approval?

Kentucky USDA Rural Housing Guidelines for Student Loans:

 

 Now offering Kentucky Rural RHS USDA loans  We are excited to offer you Kentucky RD USDA loans as our new product offering.   Product Highlights:  620+ FICO 102% LTV including the Guarantee Fee Max DTI and minimum reserves determined by GUS Owner Occupied, 1 unit properties only Up to 6% Seller Concessions allowed

Now offering Kentucky Rural RHS USDA loans
We are excited to offer you Kentucky RD USDA loans as our new product offering.
Product Highlights:
620+ FICO
102% LTV including the Guarantee Fee
Max DTI and minimum reserves determined by GUS
Owner Occupied, 1 unit properties only
Up to 6% Seller Concessions allowed

Kentucky Student loans that are currently in repayment must have documentation to verify the current payment due (e.g. letter from a loan servicer, online account verifications, or other official written documentation). The credit report alone is not acceptable documentation. Verifications are valid for 120 days, 180 days for new construction. A fixed loan payment will not adjust over the repayment term. The payment listed on the documentation may be used for debt ratios.

 

Graduated repayment plans typically start with low payments and then adjust every 12 months or more. Regardless of when payment adjustments occur, lenders must utilize the highest payment documented on the repayment plan agreement in debt ratios.

 

Deferred student loans that are not in repayment status may use an estimated payment of 1% of the loan balance reflected on the credit report, or a verified fixed payment provided by the loan servicer to document the payment that will be due once deferment ends.

 

Kentucky Student loans with Income Based Repayment (IBR) plans of $0 are not eligible to be used in the debt ratio. The borrower must provide documentation of the IBR payment plan from the loan servicer. The following apply:

 

  • If the IBR payment is less than $100 and 1 percent of the total loan balance is more than $100, a minimum payment of $100 must be included in the debt ratios.
  • If the IBR payment is less than $100 and 1 percent of the total loan balance is less than $100, a minimum payment of 1% of the loan balance must be included in the debt ratios.
  • If the current IBR payment is over $100, use that payment amount in the debt ratios.

 mortgage-louisville-ky

Joel Lobb 
Senior  Loan Officer

(NMLS#57916)
 
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223

 phone: (502) 905-3708
 Fax:     (502) 327-9119
 
 Company ID #1364 | MB73346

Kentucky USDA Rural Home Loans : 100% Financing

Kentucky USDA Rural  Home Loans : 100% Financing

Kentucky USDA Rural Development Housing Zero Down
USDA Home Loans : 100% Financing Kentucky USDA Rural Development Housing Zero Down
Kentucky USDA Mortgage Loans
Kentucky Single Family Housing Guaranteed Loan Program

The program’s full name is the Kentucky USDA Rural Development Guaranteed Housing Loan program. Most people call them “USDA loans” or “Rural Housing Loans.” Kentucky USDA loans are insured by the U.S. Department of Agriculture and the program’s most popular feature is its option for “no money down” financing. Via the USDA, you can finance 100% of a home’s purchase price.

It is a common misconception that these loans are only for farm types of properties. In fact, income producing farms are not eligible for the program. 118 of Kentucky’s 120 counties contain areas that are eligible for program (The whole area of Jefferson & Fayette Counties currently are ineligible).  Parts of Bullitt County, McCracken, Christian, Boone, Kenton, Campbell Counties are ineligible.

 

The property cannot be located within the city limits of a municipality with a population level determined by the U.S Census with a limit set by the USDA.

A Kentucky USDA loans are similar to other loan types including loans via Fannie Mae and Freddie Mac. Kentucky USDA loans differ in their down payment requirements (none required) and its simpler loan approval standards. Kentucky Rural loans can be used by first-time buyers and repeat home buyers alike. Homeowner counseling is not required to use the Kentucky USDA program. Mortgage insurance premiums are also often more attractive than many alternative financing types.

Since October 1, 2012, USDA mortgage insurance rates have been :
•For purchases, 2.00% of loan amount upfront fee paid at closing
•For refinances, 2.00% of loan amount upfront fee paid at closing
•For all loans, 0.40% annual fee, based on the remaining principal balance

As a real-life example, then, a homebuyer with a $100,000 loan size in Kentucky would be asked make a $2,000 upfront mortgage insurance premium payment at closing, plus $33.33 in mortgage insurance monthly.

The upfront mortgage insurance is not required to be paid as cash and the amount is often added to your loan balance even above the purchase price and appraised value of the home. USDA is one of the only loan types that allows you to also finance in other closing costs and prepaid items above the purchase price up the appraised value if it is greater than the purchase price of the home.

Also similar to the FHA, the USDA requires mortgage insurance premiums to be paid until the loan is paid-in-full, or until the home is sold. USDA mortgage insurance rates are lower than those for a comparable FHA mortgages.assess a 1.75% upfront mortgage insurance premium and charge as much as 1.55% in MIP annually.

 
Joel Lobb
Senior  Loan Officer

(NMLS#57916)
 
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223
 Fax:     (502) 327-9119
 
 Company ID #1364 | MB73346

ualifying.

 

 

Mortgage News

For home buyers today, there are two mortgage programs which offer 100% financing. The first is the VA loan from the Department of Veterans Affairs. It’s available to most active military personnel and veterans nationwide.

The other program is the U.S. Department of Agriculture’s Rural Development Single Family Housing Loan Guarantee Program.

Sometimes called a “Rural Housing Loan” or a “Section 502” loan, today’s USDA financing isn’t just for farms. Because of the way the USDA defines “rural”, there are plenty of exurban and suburban neighborhoods nationwide in which USDA loans can be used.

Home buyers who buy a home in a qualified USDA area, and who meet USDA income eligibility requirements, can take advantage of the USDA’s low interest rate, no downpayment mortgage program..

What Are The Benefits Of A USDA Home Loan?

USDA mortgages are structured just like conventional ones via Fannie Mae and Freddie Mac. Where they…

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Kentucky Rural Housing USDA Loan Changes for October 1, 2014 to Annual Guarantee Fee MI

USDA/Rural Development.  The Annual Guarantee Fee is set to INCREASE October 1.
USDA/Rural Development. The Annual Guarantee Fee is set to INCREASE October 1.

The Kentucky USDA/Rural Development loan Annual Guarantee Fee is set to INCREASE October 1. 2014.  Mark your calendar and prepare your processors for this change.  Any loans that will be sent to Kentucky Rural Housing  USDA for Commitment 10/1/14 or after will need to have this fee showing properly.  Which translates to loans that you start in September that are anticipating a conditional commitment being issued October 1 or after, will need the proper fee disclosed for us to send to USDA.  Please understand that this may hold up the file from being sent to USDA in a timely manner.

Please note that the Kentucky Rural Development Upfront Guarantee Fee is not changing and will remain at the current 2% rate.  The new Annual Fee will be increased to .50%.  The terms currently in place regarding the fee remain the same.  It will continue to be based on the unpaid principal balance and remain for the life of the loan.

In the case that a loan was obligated prior to October 1, but there is a change to the loan requiring it to go back to RD for a new Commitment, the borrowers will be subject to the new annual guarantee fee amount. 

Adverse credit is listed in section 1980.345(d)(1). If a manually underwritten loan
is approved by the underwriter with any indicators of adverse credit, the underwriter
must document a credit waiver on the underwriting analysis to establish the
applicant’s intent for good credit. The applicant must provide the lender with
evidence to explain how the circumstances of the adverse credit meet the
requirements of 1980.345(d)(3)(i).

The evidence must support the adverse credit
was:

1.) temporary in nature,

2.) beyond the applicant’s control and

3.) the circumstances contributing to the adverse credit have been removed . Evidence
presented by the applicant must be retained in the lender’s permanent loan file. A
properly documented credit waiver will explain the details surrounding the adverse
credit to support the rational of the underwriter for their loan approval decision.
Exception: Manually underwritten loan files and GUS loans that receive a “Refer”
or “Refer with Caution” underwriting recommendation:

Credit scores of 680 and above: A documented credit waiver from the lender must
be submitted to RD. The supporting documentation from the applicant(s) is not
required to be submitted to RD. This documentation must be retained in the
lender’s permanent case file, available for future compliance reviews.

Credit scores of 679 to 581: The documented credit waiver and supporting
documentation must be submitted to RD and retained in the lender’s permanent case
file.
Credit scores for 580 and below: Lenders should not approve loans with credit
scores of 580 and below if the loan exhibits any of the indicators of unacceptable
credit listed in section 1980.345(d)(1).

GUS “Accept” loans that have adverse credit accounts selected as “omit” by the
underwriter do not require a documented credit waiver to be submitted to RD.
Lenders are responsible to retain documentation provided by the applicant to
support their data entries in GUS. Lenders should enter comments in the “Notes”
section to support the omission of any debts on the “Asset and Liabilities”
application page.

Joel Lobb
Senior  Loan Officer

(NMLS#57916)
 
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223
 Fax:     (502) 327-9119
 
 Company ID #1364 | MB73346

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Kentucky USDA Loans | Rural Housing Loans Kentucky

Kentucky USDA Loans | Rural Housing Loans Kentucky.

via Kentucky USDA Loans | Rural Housing Loans Kentucky.

An Introduction to Rural Housing Development Guaranteed Rural Housing Program

 

An Introduction to Rural Housing Development  Guaranteed Rural

Kentucky USDA Guaranteed Rural Housing Home Loans
USDA guaranteed loans are designed to make home ownership possible for low- and moderate-income families. Offered through USDA Rural Development, these loans feature:
  • No down payment requirement
  • Low monthly mortgage insurance premiums
  • Flexible credit and qualifying guidelines
Eligibility requirements include (but are not limited to):
  • Borrowers must not currently have adequate housing
  • Borrowers must occupy the purchased home
  • Homes must be in a residential Rural Development eligible area
For more information and to apply for an Kentucky FHA, VA, USDA or other type of Kentucky mortgage, contact one of our and take the next step toward home ownership today!

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Housing Program

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RHD has several online resources to assist you with learning the eligibility rules and the calculations for the guarantee fees.
· Income and property eligibility: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=…
· USDA Lender Interactive Network Connection (LINC) website for training and job aids: https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do
· The Guaranteed Underwriting System (GUS): https://www.eauth.usda.gov/MainPages/index.aspx
· Underwriting and Loan Closing Documentation Matrix: http://www.rurdev.usda.gov/SupportDocuments/PR_UW_Loan_Closing_Matrix_Do…
· Rural Development Administrative Notices (ANs), which are RHD’s updates to their guidelines: http://www.rurdev.usda.gov/rd-an_list.html

The GRH program is similar to a mortgage insurance program. The borrower may purchase a home at 100% LTV based on the appraised value on a 30 year fixed rate loan. The one time, upfront guarantee fee can be added to the loan as well. As a result, the total LTV on GRH loans is often between 100% – 103%. In addition to this upfront fee, the borrower will have monthly insurance premiums that are added to their qualifying housing expenses.

INCOME ELIGIBILITY FOR KENTUCKY USDA LOANS AND RURAL HOUSING DEVELOPMENT RHS

INCOME ELIGIBILITY

502-905-3708
ACCEPTABLE INCOME FOR A KENTUCKY USDA AND RURAL HOUSING LOAN FOR THE 502 GUARANTEE LOAN

 

 

 

 

 

 
• For the Guaranteed Loan Program, the borrower’s adjusted income may not exceed 115% of the U.S. median income
• An income calculator is available on the Rural Development Web site at
http://eligibility.sc.egov.usda.gov. From the home page, click “Single Family Housing” under “Income  Eligibility.”
• The following are included in annual income to qualify for an RHS guaranteed loan:
− Gross amount of wages, salaries, overtime pay, commissions, fees, tips, bonuses and other compensation for personal services of all adult members of the household
Net income from the operation of a farm, business or profession, interest, dividends and other net income of any kind from real or personal property
− Payments from social security, annuities, insurance policies, pensions, unemployment, workers compensation, alimony and/or child support and other types of periodic receipts.
− All regular pay, special pay and allowances of a member of the armed forces who is the
borrower or spouse whether or not that family member lives in the unit
− All rental income, regardless if using to qualify, must always be considered when calculating total household income for program eligibility as follows:

• The following sources are not included in annual income but will be considered in determining the ability to repay the loan:
− Income from minors
Food stamp allotment
− Payments from foster care
− Irregular cash gifts
Lump sum additions, such as capital gains, etc.
− Medical reimbursements
− Educational benefits
− Hazardous duty pay for military person exposed to hostile fire Note: Not every situation can be thoroughly addressed and this sellers guide is not all-encompassing. At
underwriter discretion, additional documentation may be required on any loan.

USDA Guidelines

− Income exempted by Federal Statute (details noted in 1980-D Exhibit F). Adjustments to reduce
annual income include $480.00 for each minor child, full time student or a disabled member of
the family. $400.00 may be deducted from annual income for each family member over 62
years of age. An additional deduction may be calculated for certain expenses when added
together exceed 3% of gross annual income

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

 

 

 

USDA Rural Development No Money Down USDA Rural Housing Loan Program for Shelby County Kentucky

income limits for usda rural housing loan program for shelby county kentucky

USDA Rural Development No Money Down USDA Rural Housing Loan Program for Shelby County Kentucky

 

For Shelby County Kentucky USDA Rural Mortgage buyers, there are certain income limits you must meet for the Shelby County Rural Housing homebuyers Program:

Section 502 Guaranteed Rural Housing Loan Program
 income limits for usda rural housing loan program for shelby county kentucky
Maximum Adjusted Household Income for Selected State and County :  $83,950.00
Section 502 Direct Rural Housing Loan Program
 
Maximum Adjusted Household Income for Selected State and County :  $58,400.00

 

Secretary Announces Refinancing Help for Rural USDA Home Loan Borrowers in Select States | The White House

Secretary Announces Refinancing Help for Rural USDA Home Loan Borrowers in Select States | The White House.

via Secretary Announces Refinancing Help for Rural USDA Home Loan Borrowers in Select States | The White House.

10 Tips for a Top Credit Score

10 Tips for a Top Credit Score.

via 10 Tips for a Top Credit Score.

Kentucky Rural Development and Rural Housing USDA Loan Program

Kentucky Rural Development and Rural Housing USDA Loan Program

    1. General Information

The Rural Housing Service (RHS) provides a number of housing and community facility programs in rural areas. The direct rural housing programs provide subsidy for home ownership, rental housing, home repairs, and rehabilitation. Only one of 16 direct programs is not subsidized. RHS also has two unsubsidized loan guarantee programs. All RHS housing, except Section 514/516 Farm Labor Housing, must be located in rural areas as defined in this guide. The programs are carried out by the Department of Agriculture’s Rural Development staff through a network of local, area, and state offices. Offices can be located through Rural Development’s website.

RHS’s funding priorities have gradually shifted from a focus on making direct loans to an emphasis on guaranteeing loans made by private lenders and/or partnering with states and the private sector to make leveraged loans. This change is intended to extend limited federal appropriations.

Most applications for the direct single-family housing programs are received, processed, and approved by Rural Development employees, primarily in local offices (previously known as county offices). Local office staff also provide counseling, supervision, and site inspection, in addition to assisting with multifamily applications. Loan servicing is now centralized at an office in St. Louis, Mo. Applications for multifamily assistance are processed in the area or state offices depending on the structure approved in each state. Rural Development staff also serve as field staff for the two other Rural Development agencies – the Rural Utilities Service and the Rural Business-Cooperative Service.

Program instructions and applicable forms are available at the Rural Development website at http://rdinit.usda.gov/regs or at Rural Development offices.

It is useful to understand the following general information before discussing RHS housing programs.

      1. Definitions
        1. Rural Areas. With the exception of its farm labor housing program (Sections 514/516), which is also available in urban areas, RHS/Rural Development makes housing loans and grants only in rural areas. Each Rural Development local office maintains a map delineating eligible rural areas. Different definitions of “rural” apply to USDA’s community facility (e.g., water and waste disposal) and business loan programs. These programs are discussed in later sections of this guide. For all housing programs, RHS defines rural as: 1) open country that is not part of or associated with an urban area, or 2) any town, village, city, or place, including the immediately adjacent densely settled area, that:
          • has a population not in excess of 2,500 and is not part of or associated with an urban area;
          • has a population under 10,000 and is rural in character;
          • has a population under 20,000, is outside a Metropolitan Statistical Area (MSA), and has a serious lack of mortgage credit for low-income families, as agreed to by the Secretaries of Agriculture and Housing and Urban Development (Rural Development district or local offices provide a listing of eligible areas with populations under 20,000); or
          • was determined to be rural prior to October 1, 1990 and whose population after the 1990 decennial Census did not exceed 25,000 (this provision may be changed – either to update it when data from the 2000 Census become available or, as proposed in Congress in 2000, to maintain eligibility based on the 1980 Census through 2010).
          • Specifically accepted as rural are Pajero, Calif.; Guadalupe, Ariz.; Plainsview, Texas; and Altus, Okla.
        2. Income Limits. Very low-, low-, and moderate-income families or individuals may be eligible for RHS housing. Funding for new loans is currently limited to very low- and low-income applicants, with the exception of Section 502 guaranteed loans and Section 515 rental projects, for which moderate-income households are also eligible. A family’s adjusted income determines both its eligibility for RHS housing assistance and the level of assistance provided. RHS uses HUD’s determinations of low and very low income levels, which are established by county or by Metropolitan Statistical Area. RHS has a unique definition of moderate income, however; generally moderate income is $5,500 over the area’s low-income ceiling. Income limits are available at http://www.huduser.org/datasets/il.html or from Rural Development offices.
        3. “Credit Elsewhere” Conditions. In general, an applicant for an RHS housing loan must be unable to obtain credit elsewhere on reasonable terms and conditions. The restriction does not apply, however, to public housing agencies or to any other public body applicant. This requirement is clearest in the case of home mortgage borrowers. The “credit elsewhere” criterion for Section 515 rental project loans refers to the project sponsor’s ability to obtain credit enabling it to provide housing with rents affordable to eligible households.
        4. Housing Types and Costs. Housing or public facilities built under RHS programs must be modest and must meet the minimum standards for the voluntary national model building codes adopted in each state, as well as RHS thermal and site standards. The housing may be located on scattered sites or in a subdivision.

         

      2. Programs for Persons with DisabilitiesTitle V of the Housing and Community Development Act of 1977 and the Americans with Disabilities Act extended the use of RHS programs for elderly people to include persons with disabilities. Regulations for each program specify the benefits for which persons with disabilities are eligible. Provisions of the 1988 Fair Housing Act apply.
      1. DemonstrationsRHS/Rural Development will consider applications to demonstrate housing design, systems, financing mechanisms, etc. that do not conform to agency regulations but do adhere to the law. Demonstrations are authorized through the RHS National Office. Administrative Notices describing how to apply for demonstration funding are usually published each fiscal year.
      1. Housing LocationRHS has rules covering housing location. The primary regulation is Instruction 1924-C, which contains a site approval process. The agency environmental regulations (Instruction 1940-G) and specific program instructions also regulate housing location within eligible rural areas.
      1. AppealsMost adverse decisions may be appealed administratively. USDA has a separate appeal staff that conducts hearings and has the authority to overturn decisions. The appeal staff central office may also review decisions made by hearing officers. The covering regulations are presently in 7 CFR Part 11 and Instruction 1900-B. A separate grievance and appeal procedure (Instruction 1944-L) is maintained for tenants in RHS-financed rental housing, including that for farmworkers. Decisions made in connection with Section 502 guaranteed loans are essentially not appealable.
      1. AuthorizationThe RHS housing programs are authorized in Title V of the Housing Act of 1949, as amended. The number cited for each program (502, 504, etc.) refers to the section in Title V.
      1. Targeted AreasRHS annually sets aside a percentage of Section 502 direct, 504 loan and grant, 515, and Rental Assistance funds for areas targeted due to the extent of poverty and deficient housing. These implement the specific percentage set-aside of funds to counties required in Section 509(f) of the law. Specific set-aside information can be found in annual exhibits to Instruction 1940-L. A packaging grant program is operated as a capacity building component of Section 509(f) and is available to 300 counties whose occupied substandard housing is 10 percent or higher and whose poverty rate is 20 percent or more.
    1. HAC ManualsHAC has developed and maintains manuals to assist in understanding and using the RHS rural housing programs. These publications are periodically updated as regulations are amended and include:

      Section 502 Homeownership Direct Loans
      Section 504 Very Low-Income Repair Loans and Grants
      Section 514/516 Farm Labor Housing Program
      Section 515 Rural Rental Housing
      Section 515 Rural Cooperative Housing
      Section 533 Rural Housing Preservation Grants
      Section 538 Guaranteed Rural Rental Housing
      Environmental Regulations
      Appealing RHS/Rural Development Decisions
      Preventing Displacement in RHS/Rural Development Rural Rental Housing

      Where links appear in this list, the guides are available free on HAC’s website. Print copies of any of the guides may be ordered, for the cost of copying and postage, from HAC’s Washington, D.C. office.

  1. Homeownership Direct Loan Program (Section 502 Direct) (CFDA 10.410)The Section 502 program has two major parts: direct loans and guaranteed loans. The two share a single CFDA number, but are described separately here.
      1. PurposeSection 502 direct mortgage loans enable low- and very low-income households to purchase, build, repair, renovate, or relocate houses, including manufactured homes. These loans are also used to purchase and prepare sites and/or to provide water supplies and sewage disposal for sites. Section 502 loans may be used to refinance debts when necessary to avoid losing a home or when required to make necessary rehabilitation of a house affordable.
      2. EligibilityEligible applicants must have very low or low incomes. Adjusted income ceilings are the same as for the HUD Section 8 Housing Choice Voucher program, and are available at http://www.huduser.org/datasets/il.html or from Rural Development or HUD offices. Families must be without adequate housing; able to afford the mortgage payments, taxes and insurance, typically within 22 to 26 percent of their incomes; and unable to obtain credit elsewhere. They must have reasonable credit histories. Priority is provided to families with hardships, including those living in deficient housing; to participants in mutual self-help housing; to servicing loans; and to participation loans.
      1. TermsLoans are for terms up to 33 years (38 years for those with incomes below 60 percent of the area median and who cannot afford 33-year terms, or 30 years for manufactured homes). No down payment is required. The promissory note interest rate is set by RHS. Payment assistance subsidy is provided and is directly related to the applicant/borrower’s adjusted income as a percentage of area median income. Families without leveraged loans must pay a minimum of 22, 24, or 26 percent of their income (the percentages depend again on their income as a percent of area median) for principal, interest, taxes, and insurance (PITI) up to an amount not exceeding the promissory note rate. Families with leveraged (participation) loans are not required to meet the 22, 24, or 26 percent of adjusted income conditions.
      1. StandardsHousing built under the Section 502 program must be modest. As of March 24, 2003, a modest home is defined as one with a market value below the limit established for its state. The limit for a state can be established by a formula that takes cost into account, or it may be a limit set by the state housing finance agency or by HUD’s Federal Housing Administration for Section 203(b) loan guarantees. Check with a Rural Development office to find the limits applicable in a particular place. Houses constructed, purchased, or rehabilitated must comply with the voluntary national model building code adopted for the state as well as with RHS thermal and site standards. Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and RHS thermal standards.
      1. CommentsRHS is authorized to compensate Section 502 borrowers for construction defects.
      1. Variationsi) Deferred Mortgage Payment Demonstration. For very low-income applicants unable to afford payments at 1 percent for 38 years, up to 25 percent of the required payment may be deferred. This option can reduce required incomes by 10 to 20 percent. However, the program has not been re-authorized or funded since FY 1995.

        ii) Rural Housing Demonstration Program. This program finances innovative housing that does not meet existing published standards, rules, regulations, or policies, provided that the housing is not constructed contrary to law and does not present an impediment to health or safety. Ten million dollars is available annually for this purpose. RHS issues an annual Notice of Funding Availability, usually in December.

        iii) Guaranteed Homeownership Loans. The Section 502 guaranteed program is discussed in more detail below.

        iv) Conditional Commitments. For a fee of $350, which includes appraisal and inspection, builders or manufactured home contractors may receive a commitment by Rural Development to finance a given house, conditioned on sale to a qualified applicant and the availability of funds.

        v) Homeownership Loan Inventory Program. From time to time, RHS/Rural Development has homes for sale that have been acquired through liquidation of loans. These homes may be purchased with Section 502 credit. Priority is given to those eligible for the program and to applicants for the purchase of these “inventory” homes. When no eligible applicants apply, the homes are available for others. Following price reductions, the homes are again first available only to households eligible for Section 502.

      1. ApprovalRural Development local managers have authority to approve most Section 502 loans. Decisions on applications should be made within 30 to 60 days if no backlog exists.
      1. Availability of FundsAppropriated funds are apportioned for use by quarter for each fiscal year. After national and designated reserves are deducted, the balance is allocated to states by formula. RHS pools its unused money each fiscal year, usually in mid-summer. The demand for funds normally exceeds supply and RHS may choose to make all unused funds available on a first come, first served basis. Over-subscription in the program has resulted in more restricted, computerized pooling, but eligible applicants with viable applications should request processing even if a local or state office has used its initial allocation.
      1. Basic Instruction7 CFR Part 3550 subparts A, B, D and E and HB-1-3550
    1. ContactContact a Rural Development office.
  2. Homeownership Guaranteed Loan Program (Section 502 Guaranteed) (CFDA 10.410)
      1. PurposeLike direct loans, Section 502 guaranteed mortgage loans may be used to purchase, build, repair, renovate, or relocate houses, including manufactured homes; to purchase and prepare sites and/or to provide water supplies and sewage disposal for sites; and in some circumstances to refinance debts. A guaranteed loan is made by a bank or another private lender rather than by RHS/Rural Development, and RHS/Rural Development guarantees repayment if the borrower defaults.
      1. Eligibilityi) Borrower. Eligible applicants must have incomes below 115 percent of area median income. Like Section 502 direct borrowers, families must be without adequate housing; able to afford the mortgage payments, taxes and insurance; and unable to obtain credit elsewhere. They must have reasonable credit histories.

        ii) Lender. Lenders must be approved by RHS/Rural Development.

      1. TermsLoans are for terms up to 30 years. The promissory note interest rate is set by the lender. No down payment is required. Currently, the program is limited to unsubsidized loans. The subsidy, when available, provides interest assistance and is based solely on income.
      1. StandardsThis program previously used the HUD 203(b) limits to denote “modest,” but had to stop using them due to an adverse legal ruling. For this program, then, a “modest” home is one whose price the applicant/borrower can afford to pay. Like those financed by Section 502 direct loans, houses constructed, purchased, or rehabilitated with Section 502 guaranteed loans must comply with the voluntary national model building code adopted for the state as well as with RHS thermal and site standards. Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and RHS thermal standards.
      1. CommentsBecause of the differences in interest rate and subsidy, the guaranteed program serves a much higher income level than the direct loan program.
      1. ApprovalRural Development local managers have authority to approve most Section 502 guaranteed loans. Decisions on applications should be made within 30 to 60 days if no backlog exists.
      1. Basic Instruction7 CFR Part 1980
    1. ContactContact a Rural Development office.
  3. Very Low-Income Housing Repair Loans and Grants (Section 504) (CFDA 10.417)
      1. PurposeLoans up to $20,000 and grants up to $7,500 (loans and grants can be combined up to $27,500) are provided to very low-income homeowners to repair, improve or modernize their dwellings or to remove health and/or safety hazards, and to make dwellings accessible for household members with disabilities.
      1. Eligibilityi) Loans. Eligible homeowner-occupants must have incomes below 50 percent of area median and be unable to obtain affordable credit elsewhere. Applicants must need to make repairs and improvements to make their dwellings more safe and sanitary or to remove health and safety hazards.

        ii) Grants. Grants are available only to those homeowners 62 years of age or older who cannot repay part or all of Section 504 loans. Grant funds may be used only to pay for repairs and improvements resulting in removal of health and/or safety hazards. If a person can pay part of the cost, a combination grant and loan is made.

      1. TermsLoans are for a period of up to 20 years at 1 percent interest. A grant may be recaptured if the property is sold in less than three years.
      1. SecurityReal estate mortgages are required for loans of $7,500 or more. Full title services are required for loans of $7,500 or more.
      1. StandardsRepaired properties do not need to meet other RHS code requirements, except that installation of water and waste systems and related fixtures must meet local health department requirements. Water supply and sewage disposal systems should normally meet RHS requirements. All work must meet local codes and standards.
      1. ApprovalThe Rural Development local office should make a decision on an application within 30 to 60 days if no backlog exists.
      1. CommentsNot all the health and safety hazards in a home must be removed with Section 504 funds, provided major health and safety hazards are removed. The covering regulations provide for a liberal interpretation of the term “owner.”
    1. Basic Instruction7 CFR Part 3550 Subpart A, C, D and E and HB-1-3550

Kentucky Rural Housing USDA Guidelines

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not officially represent the HUD, VA, USDA or FHA or any other government agency.