Minimum Credit Score Requirements for a Kentucky Mortgage Loan Approval Loan
Here are the most common loan programs and their general guidelines on credit scores:
FHA Loans in Kentucky
FHA mortgage loans are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development. These loans are an attractive option for many borrowers, not just first-time homeowners.FHA loans are available to borrowers with credit scores as low as 500. Borrowers with scores under 580 will need to have a 10% down payment.
VA Loans In Kentucky
VA Loans are designed to offer long-term financing to American Veterans. These loans are issued by federally qualified lenders and are guaranteed by the United States Veterans Administration. The Veterans Administration determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice.The Veterans Administration does not set a minimum credit score; however, lenders do impose their own limits. Some lenders will go down to a 500 credit score and will also do loans for borrowers without a credit score.
Conventional Loans In Kentucky
Conventional loans are mortgage loans offered by private lenders that are not guaranteed or insured by a government agency. These loans may also be referred to as conforming loans.Conventional loans are available to borrowers with credit scores as low as 620.
USDA Loans in Kentucky
The United States Department of Agriculture offers a home loan program designed to help individuals living in small towns or rural areas. This loan program is designed to help qualifying applicants, who may not be able to qualify for other types of mortgage loans, purchase homes as their primary residences.USDA Guaranteed loans are available to borrowers with credit scores as low as 581 and borrowers with no credit scores.
A note for Borrowers with No and Low Credit Scores
While it’s not impossible to qualify for a home loan with a low credit score or no credit score, it does make it harder to qualify. If you have a low credit score or you do not have a credit score, lenders will look more critically at other risk factors that you may have. This includes recent late payments, collection accounts, the amount of funds you have saved up, employment history and the time at your current job, etc.If you do not have a credit score, it means that the credit bureaus do not have enough information about you to give you a score. While there are some options available to borrowers without a credit score, most lenders will require that you provide proof of payment history on “alternative trade lines”. These are lines of credit or utilities that do not report to the credit bureaus, such as rent, cell phone, electric, cable/internet, car insurance, etc. Acceptable “alternative trade line” accounts must meet certain criteria. The account must be in your name, it must be 12 months old, every payment must have been made on time every single month, and proof of payment must be provided on the creditor’s letterhead.
GETTING APPROVED WITH LOW OR NO CREDIT SCORES
You are more likely to be approved with low or no credit scores if you:Make a larger down payment than is required.
Have sufficient reserves in checking and/or savings accounts.
Have low debt-to-income ratios, which is the percentage of your income that needs to be used towards paying your proposed mortgage and other lines of credit such as auto loans, student loans, credit cards, etc. Paying down existing debt will improve your debt-to-income ratio.The best part about credit scores is that they aren’t set in stone! It’s never too late start working on improving your credit. If our team can’t pre-approve you today, we’ll come up with a custom plan to help you get to where you need to be. There’s nothing to lose, so apply today!
Joel Lobb Mortgage Loan Officer NMLS 57916
EVO Mortgage
911 Barret Ave, Louisville, KY 40204
Company NMLS ID # 173846Text/call: 502-905-3708
email: kentuckyloan@gmail.comhttp://www.mylouisvillekentuckymortgage.com/
NMLS 57916 | Company NMLS #173846The 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, (http://www.nmlsconsumeraccess.org).I can answer your questions and usually get you pre-approved the same day.
Call or Text me at 502-905-3708 with your mortgage questions.Email Kentuckyloan@gmail.com
Tag: Rural development
USDA Mobile Home Loans Kentucky: No Money Down Options for Bad Credit
2026 Guide to USDA Rural Housing Loans for Manufactured Homes in Kentucky: No-Money-Down Options, Even with Bad Credit
100% financing available for qualified Kentucky borrower
Table of Contents
- Understanding USDA Mobile Home Loans in Kentucky
- 2026 Game-Changing Updates
- Kentucky USDA Rural Housing Loan Requirements
- Bad Credit Mobile Home Loans in Kentucky
- No Money Down Mobile Home Financing Options
- Kentucky Counties Eligible for USDA Mobile Home Loans
- Foundation and Installation Requirements
- How to Apply for USDA Mobile Home Loans in Kentucky
- Alternative Financing Options
- Frequently Asked Questions
Understanding USDA Mobile Home Loans in Kentucky
The United States Department of Agriculture (USDA) Rural Development program has been quietly revolutionizing homeownership opportunities across Kentucky for decades. Many potential homebuyers don’t realize this. The USDA’s Single Family Housing Guaranteed Loan Program (SFHGLP) extends far beyond traditional stick-built homes. It also includes manufactured and mobile homes. This opens doors for thousands of Kentucky families who previously thought homeownership was out of reach.
Kentucky, with its vast rural landscapes and small-town communities, is well-suited to USDA rural housing programs. Conventional mortgages often demand large down payments and excellent credit. USDA loans, however, are designed for low- to moderate-income families in rural areas. They are an excellent option for mobile home buyers across the Commonwealth.
What Makes USDA Mobile Home Loans Different
- •100% Financing: No money down is required, making it perfect for buyers with limited savings
- •Affordable Terms: Competitive interest rates make monthly payments manageable
- •Rural Housing Opportunities: Ideal for Kentucky homebuyers in small towns and rural areas
- •Flexible Credit Requirements: Holistic approach to creditworthiness evaluation
On March 4, 2025, the USDA officially expanded its Single Family Housing Guaranteed Loan Program. This expansion provides 100% financing for manufactured homes. Industry experts are calling this change the most significant development in rural housing finance in decades.
Key Program Changes
Expanded Eligibility
Manufactured homes now receive the same favorable treatment as traditional homes
Age Restrictions Relaxed
Existing manufactured homes up to 20 years old can now qualify
Streamlined Process
Processing times reduced by 30-40% with new guidelines
Better Credit Pathways
Clearer guidelines for borrowers with credit challenges
Kentucky USDA Rural Housing Loan Requirements
Borrower Requirements
- ✓Income cannot exceed 115% of area median income
- ✓Must occupy home as primary residence
- ✓U.S. citizen, non-citizen national, or qualified alien
- ✓Credit score typically 580+ (manual underwriting available)
Property Requirements
- ✓Built to HUD Code standards (post-1976)
- ✓Permanent foundation required
- ✓Minimum 12 feet wide, 400 sq ft living space
- ✓Located in USDA-eligible rural area
Bad Credit Mobile Home Loans in Kentucky
One of the most significant advantages of USDA mobile home loans is their accessibility to borrowers with less-than-perfect credit. Unlike conventional mortgages, which often have rigid credit score requirements, USDA loans offer flexibility. This flexibility recognizes the unique challenges faced by rural borrowers.
Credit Score Guidelines
640+ Credit Score Streamlined Processing
580 and above Credit Score Manual Underwriting
Note: USDA takes a holistic approach to credit evaluation, considering factors beyond just credit scores.
Often Asked Questions
What credit score do I need for a USDA mobile home loan in Kentucky?
While USDA doesn’t set a minimum credit score, most lenders prefer scores of 580 or higher. Borrowers with lower scores may still qualify through manual underwriting, and the program takes a holistic approach to credit evaluation.
Can I buy a used mobile home with a USDA loan?
Yes, existing manufactured homes can qualify if they’re less than 20 years old. They must meet HUD standards. The homes should be properly installed on permanent foundations. Additionally, they need to meet all other USDA requirements.
Do I need to own the land to get a USDA loan for a mobile home?
USDA loans can finance both the manufactured home and land together. They can also finance just the home if you already own suitable land. However, the home must be permanently installed and classified as real property.
What areas of Kentucky are eligible for USDA loans?
Approximately 97% of Kentucky qualifies as rural for USDA purposes. Most areas outside of Louisville, Lexington, and a few other metropolitan centers are eligible. Use the USDA’s online eligibility tool to check specific addresses.
This comprehensive guide provides general information about USDA mobile home loans in Kentucky. It should not be considered as financial or legal advice. Potential borrowers should consult with qualified lenders, real estate professionals, and legal advisors for guidance specific to their situations.
Contact a Kentucky Mobile Home Loan Expert
For personalized guidance on Kentucky USDA mobile home loans, contact a local mortgage specialist. They can help with options for borrowers with bad credit and no down payment. The specialist will understand the unique requirements of manufactured home financing.
Email: kentuckyloan@gmail.com
Call/Text: 502-905-3708
Joel Lobb – Kentucky Mortgage Loan Officer
NMLS ID: 57916 | Company NMLS ID: 1738461
Equal Housing Lender
Helpful USDA Resources for Kentucky Borrowers
- USDA Income & Property Eligibility Tool
- USDA Training & Resource Library
- SFHGLP Technical Handbook
- Loan Origination FAQs
- SFHGLP Contact Information
- Permanent Foundations Guide
Disclaimer: This website is not endorsed by the FHA, VA, USDA, or any government agency. It is an independent platform created to educate and assist Kentucky homebuyers with expert advice and accessible tools.
Can I buy land and a mobile home together with a USDA loan?
USDA loans can finance both the manufactured home and the land in a single transaction. This is possible if both meet USDA eligibility requirements. The combined purchase must not exceed USDA loan limits for your area.
What if my credit score is below 580?
While challenging, approvals are possible with strong compensating factors such as stable employment, low debt-to-income ratios, and cash reserves. Working with an experienced USDA lender who understands manual underwriting is essential. Honestly, best to get score to 620 or 640 range for better changes of loan approval. USDA does not have minimum credit score requirements.
How long does the USDA loan process take?
Typical processing time is 45-60 days from application to closing. Processing is taking longer due to USDA cutbacks. This delay can vary based on property complexity. It also depends on documentation completeness and current USDA processing volumes.
Can I use gift funds for closing costs?
Yes, gift funds from family members are allowed for closing costs and prepaid items. Proper gift documentation and seasoning requirements must be met.
What happens if the home doesn’t appraise for the purchase price?
If the appraisal comes in low, you have several options. You can negotiate with the seller to reduce the price. Another option is to pay the difference in cash. Alternatively, you can cancel the contract if you have an appraisal contingency.
Are there income limits for USDA mobile home loans?
Yes, household income cannot exceed 115% of the Area Median Income for your county. These limits are updated annually and vary significantly across Kentucky.
Can I refinance my existing mobile home with a USDA loan?
USDA offers refinancing options for existing USDA loans, but cannot refinance non-USDA loans. However, if your current mobile home meets USDA requirements, you might qualify for a new purchase loan.
What areas of Kentucky qualify for USDA loans?
Most of Kentucky qualifies as rural under USDA guidelines. Use the USDA eligibility map to verify specific addresses, as eligibility can vary even within the same county.
Resources and Next Steps
Official USDA Resources
- USDA Income & Property Eligibility Tool: eligibility.sc.egov.usda.gov
- USDA Training & Resource Library: rd.usda.gov/resources
- SFHGLP Technical Handbook: rd.usda.gov/resources/directives
- Loan Origination FAQs: rd.usda.gov/media/file
- SFHGLP Contact Information: rd.usda.gov/resources
- Permanent Foundations Guide: huduser.gov/portal/publications
Kentucky Housing Resources
- Kentucky Housing Corporation: kyhousing.org
- Kentucky Cabinet for Economic Development: ced.ky.gov
- Local Housing Authorities: Contact your county government
- HUD-Approved Housing Counseling: hud.gov/findacounselor
Ready to Get Started?
Ready to explore USDA mobile home loan options in Kentucky? Don’t wait, as these programs have annual funding limits. Working with an experienced local lender who understands manufactured home financing is crucial for success.
For personalized guidance on Kentucky USDA mobile home loans:
Contact Joel Lobb – Kentucky Mortgage Specialist
- Email: kentuckyloan@gmail.com
- Phone/Text: 502-905-3708
- Experience: 20+ years helping Kentucky families
- Track Record: Over 1,300 successful Kentucky home purchases and refinances
- Specialization: USDA, FHA, VA, and Kentucky Housing Corporation loans
NMLS Personal ID: 57916 | Company NMLS ID: 1738461
Equal Housing Lender
Kentucky USDA Home Loan Guide: Qualifying Criteria Explained
The Kentucky Rural Housing USDA home loan program offers an excellent opportunity for eligible homebuyers in rural and suburban areas of Kentucky to secure affordable financing with no down payment. To qualify, applicants must meet specific requirements related to credit score, income, work history, bankruptcy, foreclosure, debt-to-income ratio, property requirements, and mortgage insurance. Here’s a detailed guide to help you understand these qualifications:
Credit Score Required For Kentucky Rural Housing Approval
No minimum credit score but a 580 to 640 is generally required to qualify for a USDA loan. This score allows for streamlined processing through the Guaranteed Underwriting System (GUS). Applicants with scores below 640 may still qualify but will need to undergo manual underwriting, which requires additional documentation and scrutiny.
Income Requirements for Kentucky USDA Rural Housing Approval
USDA loans have income limits that vary by county and household size. These limits are designed to ensure the program assists low- to moderate-income families. Generally, your household income should not exceed 115% of the median income for your area. The USDA provides an online tool to check income eligibility based on your location and household size.
Work History requirements for Kentucky USDA loan Approval
A stable work history is essential for Kentucky USDA loan approval. Lenders typically look for at least two years of consistent employment. Any gaps in employment need to be explained and documented. For self-employed applicants, a minimum of two years of tax returns is required to verify income stability.
Kentucky USDA Rural Housing Bankruptcy and Foreclosure Guidelines
While past financial difficulties like bankruptcy or foreclosure can affect your eligibility, they do not automatically disqualify you. Here are the typical waiting periods:
- Chapter 7 Bankruptcy: At least three years from the discharge date.
- Chapter 13 Bankruptcy: At least one year of the payout period must be completed with satisfactory payment history and court approval for a new loan.
- Foreclosure: At least three years from the completion date.
Kentucky USDA Debt-to-Income Ratio (DTI) Requirements
The Kentucky USDA loan program has specific DTI requirements to ensure borrowers can manage their mortgage payments. The front-end ratio (housing expenses) should not exceed 29% of your gross monthly income, and the back-end ratio (total monthly debt obligations) should not exceed 45%. Exceptions can be made for borrowers with compensating factors, such as higher credit scores or additional cash reserves.
Kentucky USDA Property Requirements
USDA loans are intended for properties in designated rural areas. The USDA provides an online tool to check property eligibility. The home must be used as the primary residence and meet certain quality standards according to Kentucky FHA Appraisal HUD Guidelines including:
- Adequate and functional heating, plumbing, and electrical systems
- Structurally sound foundation and roof
- Safe water supply and waste disposal systems
- Must have an undamaged exterior, foundation and roof
- Must have safe and reasonable property access
- Must not contain loose wiring and exposed electrical systems
- Must have all relevant utilities, including gas, electricity, water and sewage functioning properly.
- Must have a working, permanent heating system that can heat the property adequately
- Must have surfaces free of chipping or peeling lead-based paint
- Must have adequate access to attic spaces and natural ventilation in crawl spaces
- Must have access to potable water
- Must be free from wood-destroying insect infestations
- Must not have interior and exterior health and safety hazards, such as no handrails on steep staircases
- Must be a marketable property
Mortgage Insurance Required For Kentucky USDA loan Approval
Kentucky Rural Housing USDA loans require mortgage insurance, which includes an upfront guarantee fee and an annual fee. The upfront fee is typically 1% of the loan amount, which can be financed into the loan. The annual fee, usually 0.35% of the loan balance, is paid monthly as part of the mortgage payment. These fees help protect lenders and the USDA in case of borrower default.
Summary
Qualifying for a USDA home loan in Kentucky involves meeting specific criteria in several areas:
- Credit Score: No Minimum score but a 620-640 for streamlined processing; lower scores may require manual underwriting down to 580 with some lenders but few and far between
- Income Requirements: Must not exceed 115% of the median income for your area.
- Work History: At least two years of stable employment.
- Bankruptcy and Foreclosure: Waiting periods of 1-3 years depending on the situation.
- Debt-to-Income Ratio: 29% for housing expenses, 41% for total debt; exceptions possible.
- Property Requirements: Must be in a designated rural area and meet quality standards.
- Mortgage Insurance: Includes an upfront guarantee fee and an annual fee.
By understanding and meeting these requirements, you can take advantage of the USDA loan program to achieve homeownership in Kentucky’s rural areas. For personalized assistance, consider consulting with a mortgage broker or lender experienced in USDA loans, like Joel Lobb in Louisville, who can guide you through the process and help you qualify.
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Joel Lobb
Mortgage Broker – FHA, VA, USDA, KHC, Fannie Mae
EVO Mortgage • Helping Kentucky Homebuyers Since 2001
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 Call/Text: 502-905-3708 Email: kentuckyloan@gmail.com Website: www.mylouisvillekentuckymortgage.com  Address: 911 Barret Ave, Louisville, KY 40204NMLS #57916 | Company NMLS #1738461 |
| Free Info & Homebuyer Advice → |
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Kentucky Mortgage Loan Expert
FHA | VA | USDA | KHC Down Payment Assistance | Fannie Mae
Equal Housing Lender. This is not a commitment to lend. All loans are subject to credit approval and program requirements.
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USDA Loan Payoff Guide for Kentucky Homeowners
MORTGAGE LOAN PAYOFFS
FOR USDA RURAL DEVELOPMENT DIRECT HOUSING LOANS
What is this? After a loan is closed, the subsidized portion of a borrower’s monthly payment will accrue as a separate account. The Government pays this subsidy each month to help very low and low income household
afford to own a home. This account is subject to being repaid or “recaptured” at the time a borrower
sells or transfers the property to another owner, no longer occupy the property, or pays the loan in full.
The maximum amount of recapture due will be the lesser of the amount of subsidy received or up to
50 percent of the Adjusted Value Appreciation in the property.
The Value Appreciation is based on appraised value and/or sales price at time of sale, refinance, or when the principal and interest balances are paid in full. This value excludes any of the borrower’s original equity or any value that resulted from eligible Capital Improvements that were made by the borrower. Borrowers who
refinance their Rural Development loan and want to pay off the principal and interest balance, have the
option to defer the final amount of Recapture due, or pay it off at closing. (See section below“Deferring
Payment of Recapture Due”).
Understanding your need for getting a payoff.
There are different options provided by our Centralized Service Center (CSC) for payoffs. These are:
The Principal and Interest Payoff (P & I) is based on the anticipated principal, interest and
fee balance (if any fees have been added) for the requested date. This form of payoff is used
when the borrower’s account is not subject to recapture or if the borrower is only concerned
with the principal and interest balances due on their loan(s). As a note, all RD Section 504
repair loans are not subject to any recapture due.
The Maximum Payoff statement indicates the Maximum amount the borrower may be
required to pay as of a requested date. It includes 100% of all Subsidy Recapture funds
including Principal and Interest and any fees that are due. This statement advises borrowers to
submit additional information to CSC so that Subsidy Recapture can be properly calculated for a
Final Payoff statement.
The Estimated payoff is an estimated figure only. The Agency offers an automated Voice
Response Unit (VRU) by calling our toll-free number (1-800-414-1226). It provides an accurate
P&I balance and an estimated Subsidy Recapture amount based on a hypothetical sales price or
appraised value. Please follow the directions (below) for an “Estimated Payoff”.
The Final Payoff statement is based on the account balance on the requested payoff date, and
the actual Subsidy Recapture Amount due is calculated based on the final documentation
provided by the borrower/settlement agent. This statement indicates the actual amount the
borrower will be required to pay at loan closing.
“USDA is an equal opportunity provider, employer and lender.”
To file
Getting the Estimated Payoff — (Recommended but not required).
Please note: This is an Estimated Figure AND CANNOT BE USED TO PAYOFF AN ACCOUNT. It
is calculated as of the date of your call. The Subsidy Recapture amount does not include any
value deductions for Capital Improvements.
CALL: 1-800-414-1226 (This is an automated Voice Response Unit (VRU).
You will need the customer’s loan number and the last 4 digits of their Social Security Number
Choose: 1 Touchtone – Then: 1 English Speaking – Then: 2 Payoff Information
Then: You will be asked to input the customer’s loan number and the last four digits
of their Social Security Number. Stay on the line and listen to the entire
explanation of the different types of payoff figures.
Then: Go to Calculated Payoff, “Estimated Loan Balance” – Choice Number 2. You will be
asked to input the Estimated Market Value and the Estimated Closing Costs in
whole dollars.
Getting a Final Payoff—applies to all transactions (ex. sale, refinance, pay in full)
1. A copy of the Residential Appraisal Report and/or a copy of the Signed Contract.
2. A copy of the Estimated Settlement Statement. A Good Faith Estimate from the lending
institution is
3. The Date of the Payoff. Funds are to be received at Rural Development on this date.
4. The reason for paying off the loan: selling, refinancing, pay in full, and paying the recapture, or
refinancing and deferring the Recapture (Subordination).
5. Capital Improvements that the borrower has made to the property can help to reduce the
amount of subsidy that is subject to recapture. If a borrower has made any improvements to the
property, he/she should request that the appraiser provide an addendum to the
appraisal to indicate the value of the improvements. Capital Improvements are additions that
add value to the property above and beyond repairs that maintain the property. General
maintenance to keep the property in good condition is not considered a Capital Improvement.
Examples of Capital Improvements that do not qualify: yard maintenance, painting,
wallpapering, floor coverings, roofing, siding, wells, septic systems, appliances, furnaces or
water heaters. The value of a Capital Improvement must be determined by an appraiser, based
on the increase in the property’s value because of the improvement. The cost of making the
Capital Improvement is not considered when making this assessment, only the value that the
Capital Improvements have added to the property. A copy of the original appraisal can be
requested by the borrower(s) to assist the appraiser in Capital Improvement Determinations.
6. Borrowers who refinance or wish to pay off their loan(s) and subsidy recapture in full
and remain in the property will receive a 25 percent discount on the recapture amount if it is
included in the final payment. Please be aware that the 25 percent discount only applies if the
borrower refinances the loan, or pays the loan in full and continues to occupy and retain title to
the property.
7. Borrower(s) can defer recapture and pay it off later. A mortgage discharge
Borrower(s) can defer recapture and pay it off later. A mortgage discharge is not provided,
however, the Agency can subordinate it’s lien to another lender for the new loan (see below).
8. For unpaid or deferred subsidy, the borrower will establish a “Subsidy Receivable” account
with the Agency which will not be due and payable until the borrower transfers title or
vacates the property. The borrower cannot obtain the 25 percent discount if they voluntarily
decide to pay off the balance at a later date. The “Subsidy Receivable” account will not accrue
any interest or fees.
Deferring Payment of Recapture due.
When a borrower initially refinances their RD loan(s), they have the option to defer their Recapture
payment, or pay it in full. As mentioned above and under current rules, if it is paid in full they will
receive a 25% discount in the amount of recapture owed. A Loan Subordination of the RD debt to
allow another lender to make a loan can be requested by a borrower who wishes to refinance their
Rural Development loan and payoff the principal, interest, and fees (if any) and defer the Subsidy
Recapture Amount. The borrower can receive no “cash out” or consolidate additional debt (including
other liens against the property). Modest real estate improvements may be considered as long as the
Loan to Value for the new loan and the Recapture Receivable Amount are at or below 100% of the
Current “as improved” Market Value of the property. Requests can include reasonable closing costs.
A Subordination Package for refinancing and/or making improvements to the property must be
completed and returned to the Agency for review.
The following must also be included:
If Improvements are being done, a Contractor’s Bid must be provided to the agency for
review prior to approval.
A signed, dated authorization from the borrower(s) waiving the 25 Percent Recapture
Discount in lieu of a Subordination must be provided to Rural Development. This form is
included in the Subordination Package.
A copy of a recent Uniform Residential Appraisal Report (Pages 1 and 2).
A copy of the Estimated Settlement Statement from either a lender or a closing
agency. A Good Faith Estimate is acceptable if it includes the proposed loan
amount.
If this account is a previously established Recapture Receivable Account, we will also need
a Principal and Interest payoff on the first mortgage.
After the Subordination has been approved and prior to the issuance of the Subordination, the
proposed lienholder must complete Form RD 1927-8, Agreement with Prior Lienholder, which
requires the proposed lienholder to provide at least 30 written days notice to Rural Development,
before any foreclosure actions on the proposed lien are initiated. This form is also included in the
Subordination Package.
TO COMPLETE A FINAL PAYOFF FOR
TO COMPLETE A FINAL PAYOFF FOR THE USDA/RURAL DEVELOPMENT
Date: _____________
Company:______________________________
Fax Number___________________
Attention: ____________________
Your payoff request for borrower(s):_____________________________
Account Number(s)______________________ Phone Number:____________
FOR SALES, PLEASE FAX THE FOLLOWING DOCUMENTS: THE ACCOUNT NUMBER MUST BE
WRITTEN ON EACH PAGE:
• Sales Contract that includes the sales price (establishing market value) and signatures of both
buyer and seller AND/OR Pages 1 and 2 of the Uniform Residential Appraisal Report (with 1st page
as property description, 2nd page to include comparison approach, the estimated market value and
the appraiser’s signature. The appraisal must be less than one year old).
• Estimated Settlement Statement detailing our borrower’s (the sellers) closing costs. THIS MUST BE
COMPLETED BY THE SETTLEMENT/ESCROW AGENT. AN ESTIMATE FROM A REAL ESTATE AGENT IS
NOT ACCEPTABLE.
• Authorization to release information signed by the borrower(s). If the request is from a lender or its
agent, Social Security Number(s) and Account Number(s) are acceptable.
• Effective date of payoff requested.
When the above documentation is received together as a package, a Final Payoff will be
calculated. If you are notified by the Centralized Servicing Center (CSC) that additional
information is needed to calculate the payoff, please fax the entire package together again.
Also, please be sure that the account number is written on every piece of paper. This will
expedite your payoff request.
To complete a Final Payoff Statement: PLEASE FAX ALL REQUIRED DOCUMENTATION
TOGETHER AS A PACKAGE TO: 314-457-4433.
For Questions, you may call the Customer Service Department Toll Free at 1-800-414-1226
or TDD (hearing impaired only 1-800-438-1832) 7:00 a.m. to 5:00 p.m. Monday – Friday,
Central Time.
“USDA is an equal opportunity provider, employer and lender.”
To file a complaint of discrimination write USDA, Office of Civil Rights, Programs, 300 7th Street SW, Room 400 (Stop 9430),
Washington, DC 20024 or call (866)632-9992 (Voice), (202) 401-0216 (TDD/TTY Hearing Impaired Only) or (202)720-8046 (FAX
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Subsidy Recapture |
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Payment subsidies received on loans approved after October 1, 1979 are subject to recapture. This means that when the property is sold, transferred, or no longer occupied by the customer, all or part of the subsidy granted must be repaid to the government. The amount of subsidy recapture will be determined by the increase in property value since the loan originated. Subsidy recapture must be calculated when the loan is paid off. Not all USDA Rural Development Loans are subject to recapture. Please call our Customer Service Department at 1-800-414-1226 or 1-800-438-1832 (TDD/TTY Hearing Impaired Only) to find out if your loan is subject to recapture or to receive payoff information. We are available from 7:00 A.M. to 5:00 P.M. Central Standard Time (CST), Monday through Friday. |
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Subsidy Recapture Payment |
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Subsidy recapture must be paid when the property is sold, transferred, or no longer occupied by the customer. If the loan is being paid off but the customer continues to live in the property there are two payment options:
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Statement of Loan Balance(s) for Loans Subject to Recapture |
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With a touch-tone telephone, call 1-800-414-1226, and select option #2 from the Main Menu, and select option #1 from the Payoff Information Menu. Through our Interactive Voice Response system you can request a Statement of Loan Balance be mailed to the homeowner of record. The Statement of Loan Balance(s) provides the current outstanding balances of the loan, which includes principal, interest, fees, late charges, and escrow (if applicable). The statement also includes the total amount of payment assistance (subsidy) granted. The amount of subsidy can be quite large, but in many cases this amount is reduced when subsidy recapture is calculated. |
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Verbal Estimated Payoff Quotes |
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With a touch-tone telephone, call 1-800-414-1226, and select option #2 from the Main Menu, and select option #2 from the Payoff Information Menu. Our Interactive Voice Response (IVR) system can provide a verbal estimated payoff amount based on the information you enter. The IVR is easy to use and will provide instructions when you call. To calculate the estimated payoff amount you will need to enter the estimated value of the property and estimated closing costs that may be incurred as a result of selling or refinancing the loan. This information is necessary to estimate the subsidy recapture to be paid. The estimated payoff should not be used to pay off your loan. |
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How to Receive a Final Payoff Statement |
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In order to calculate subsidy recapture and provide a payoff statement, certain documents need to be submitted to our Payoff Department. The type of transaction (refinancing, selling, or paying off) will determine the documents needed. The payoff statement will be faxed or mailed to the address of record within 5 business days of receipt. Refinancing
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Capital Improvements |
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If certain improvements, referred to as capital improvements, are made to the property, the value of the improvements added may be used to reduce subsidy recapture owed. To receive credit for capital improvements, the appraiser should submit an addendum to the appraisal. Instruct the appraiser that an itemized list of the improvements or additions and the value the improvements or additions added to the property should be submitted along with the appraisal. The cost of the improvements or additions should not be submitted and will not be used. Replacement items such as kitchen cabinets, floor coverings, roofing, siding, furnaces, appliances, and water heaters are not considered capital improvements. Maintenance items or repairs that maintain the property in good condition, such as yard maintenance, painting, and wallpapering, are also not considered capital improvements in our calculation of subsidy recapture. Examples of capital improvements include, but are not limited to, room additions, adding a fence, deck or enclosed porch. |
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🏠 Kentucky USDA Loan Payoff Guide
Your Complete Step-by-Step Process for Rural Development Mortgage Payoffs
💰 Understanding Subsidy Recapture
Important: Most USDA Loans Have Recapture
Loans approved after October 1, 1979, require repayment of government subsidies when you sell, transfer, or pay off your property. The recapture amount is the lesser of total subsidy received OR 50% of property value appreciation.
25%
Discount if paying in full
50%
Max recapture of appreciation
5
Business days for payoff
📋 4 Types of Payoff Statements
Principal & Interest
Basic loan balance only. Used for loans not subject to recapture or Section 504 repair loans.
Maximum Payoff
Shows maximum possible amount including 100% of subsidy recapture. Starting point for calculations.
Estimated Payoff
Quick estimate via phone (1-800-414-1226). Cannot be used for actual payoff transactions.
Final Payoff
Official amount required for closing. Based on actual documentation and final calculations.
📞 Quick Estimate Process
Call USDA
Dial 1-800-414-1226 and follow prompts: 1 → 1 → 2
Enter Information
Provide loan number and last 4 digits of SSN
Get Estimate
Choose option 2 for “Calculated Payoff” and enter property value
📄 Required Documents by Transaction Type
R
Refinancing
• Written authorization
• Uniform Residential Appraisal
• Good Faith Estimate
• Payoff date
• Capital improvements addendum
• Uniform Residential Appraisal
• Good Faith Estimate
• Payoff date
• Capital improvements addendum
S
Selling
• Written authorization
• Signed sales contract
• Settlement statement from agent
• Payoff date
• Current appraisal report
• Signed sales contract
• Settlement statement from agent
• Payoff date
• Current appraisal report
P
Paying Off
• Written authorization
• Statement staying in property
• Current appraisal report
• Payoff date
• No transfer of title
• Statement staying in property
• Current appraisal report
• Payoff date
• No transfer of title
🏗️ Capital Improvements Can Reduce Recapture
✅ Qualifying Improvements
- Room additions
- Enclosed porches/decks
- Fencing installations
- Structural improvements
❌ Non-Qualifying Items
- Routine maintenance
- Appliance replacements
- Painting/wallpapering
- Roofing/siding replacement
💳 Two Payment Options for Kentucky Homeowners
🎯 Option 1: Pay in Full (Recommended)
- 25% discount on recapture
- Clean title with no liens
- No future obligations
- Best for refinancing
⏳ Option 2: Defer Payment
- Pay when you sell/move
- No discount available
- USDA maintains lien
- No interest or fees accrue
Need Help with Your Kentucky USDA Loan Payoff?
Over 20 years helping Kentucky families with mortgage solutions
Get Free Consultation Today
Joel Lobb – Kentucky Mortgage Specialist
Same-day approvals • 1,300+ families helped
Complete Guide to Paying Off Your USDA Rural Development Mortgage Loan in Kentucky
Learn how to pay off your USDA Rural Development mortgage loan in Kentucky. Complete guide covering subsidy recapture, payoff options, required documents, and step-by-step instructions for Kentucky homeowners.
USDA mortgage payoff Kentucky, rural development loan payoff, Kentucky USDA loan, subsidy recapture Kentucky, USDA refinance Kentucky, rural housing loan Kentucky
What You Need to Know About USDA Mortgage Loan Payoffs in Kentucky
If you have a USDA Rural Development mortgage loan in Kentucky, understanding the payoff process is crucial. This is especially important if you are considering paying it off, refinancing, or selling your home. This comprehensive guide will walk you through everything Kentucky homeowners need to know about USDA loan payoffs, including the important subsidy recapture feature that affects most Rural Development loans.
Understanding USDA Subsidy Recapture in Kentucky
Most USDA Rural Development loans approved after October 1, 1979, include a “Subsidy Recapture” feature. When you sell, transfer, or pay off your loan, you may need to repay some government subsidy you received during your loan term. You might need to repay all of it.
Key Facts About Subsidy Recapture:
- The government pays monthly subsidies to help low and moderate-income Kentucky families afford homeownership
- These subsidies accumulate in a separate account over time
- Recapture is triggered when you sell, transfer, or pay off your property
- The maximum recapture is the lesser of total subsidy received OR 50% of the property’s value appreciation
Types of USDA Loan Payoff Statements Available to Kentucky Borrowers
1. Principal and Interest (P&I) Payoff
This basic payoff covers only the principal, interest, and any fees due on your loan. It’s used when:
- Your loan isn’t subject to recapture
- You only need the basic loan balance information
- You have a Section 504 repair loan (these are never subject to recapture)
2. Maximum Payoff Statement
This statement shows the maximum amount you might owe, including:
- 100% of all subsidy recapture funds
- Principal and interest balance
- Any outstanding fees
- Serves as a starting point before final calculations
3. Estimated Payoff (Automated System)
Get a quick estimate by calling 1-800-414-1226 and using the automated Voice Response Unit (VRU). You’ll need:
- Your loan number
- Last 4 digits of your Social Security Number
- Estimated property value
- Estimated closing costs
Important: This is only an estimate and cannot be used for actual payoff.
4. Final Payoff Statement
This is the official payoff amount required for closing, based on:
- Actual account balance on payoff date
- Calculated subsidy recapture amount
- Final documentation you provide
Step-by-Step Guide: Getting Your Kentucky USDA Loan Payoff
Step 1: Determine If Your Loan Has Recapture
Call 1-800-414-1226 (7:00 AM – 5:00 PM, Monday-Friday, Central Time) to confirm if your loan is subject to subsidy recapture.
Step 2: Gather Required Documentation
For Refinancing Your Kentucky USDA Loan:
- Written authorization to release payoff information
- Uniform Residential Appraisal Report (from your lender)
- Good Faith Estimate or estimated settlement statement
- Payoff date
- Capital improvements addendum (if applicable)
For Selling Your Kentucky Home:
- Written authorization to release payoff information
- Signed sales contract showing sales price
- Uniform Residential Appraisal Report (less than one year old)
- Estimated settlement statement from closing agent
- Payoff date
For Paying Off Without Selling/Refinancing:
- Written authorization to release payoff information
- Statement confirming you’re staying in the property
- Current Uniform Residential Appraisal Report
- Payoff date
Step 3: Submit Documentation
Fax all required documents together as a complete package to: 314-457-4433
Important: Write your account number on every page for faster processing.
Kentucky USDA Loan Payoff Options
Option 1: Pay Recapture in Full (Recommended)
If you’re refinancing or paying off your loan but staying in the property, you can:
- Pay the full subsidy recapture amount at closing
- Receive a 25% discount on the recapture amount
- Get a clean title with no future obligations
Option 2: Defer Recapture Payment
Alternatively, you can:
- Defer recapture payment until you sell or move
- Establish a “Subsidy Receivable” account with USDA
- No discount available with this option
- No interest or fees accrue on deferred amount
Reducing Subsidy Recapture with Capital Improvements
Kentucky homeowners can reduce their recapture amount by documenting qualifying capital improvements. These must add value to your property beyond normal maintenance.
Qualifying Capital Improvements Include:
- Room additions
- Enclosed porches or decks
- Fencing installations
- Structural improvements that increase property value
Non-Qualifying Items:
- Routine maintenance (painting, wallpapering)
- Replacement items (roofing, siding, appliances)
- Yard maintenance
- Floor coverings
Important: The appraiser must provide an addendum showing the added value (not cost) of improvements.
USDA Loan Subordination for Kentucky Refinances
If you want to refinance your Kentucky USDA loan and defer recapture, you can request loan subordination. This allows another lender to take first position while USDA maintains a lien for the deferred recapture amount.
Subordination Requirements:
- No cash-out refinancing allowed
- Cannot consolidate other debts
- Loan-to-value plus recapture cannot exceed 100% of current market value
- Must waive the 25% recapture discount
- Complete subordination package required
Contact Information for Kentucky USDA Loan Payoffs
Customer Service Department:
- Phone: 1-800-414-1226
- TDD (Hearing Impaired): 1-800-438-1832
- Hours: 7:00 AM – 5:00 PM, Monday-Friday (Central Time)
- Payoff Documentation Fax: 314-457-4433
Why Work with a Kentucky Mortgage Expert
Navigating USDA loan payoffs can be complex, especially when dealing with subsidy recapture calculations. As a Kentucky mortgage specialist with over 20 years of experience helping Kentucky families, I can:
- Guide you through the payoff process
- Help coordinate with USDA representatives
- Assist with refinancing options
- Ensure all documentation is properly prepared
- Find the best loan programs for your situation
Ready to Pay Off or Refinance Your Kentucky USDA Loan?
Don’t navigate this process alone. Contact me today for expert guidance on your USDA loan payoff or refinancing options.
Joel Lobb – Kentucky Mortgage Loan Officer
- 📞 Call/Text: 502-905-3708
- 📧 Email: kentuckyloan@gmail.com
- NMLS ID: 57916
- Free mortgage applications with same-day approvals
Frequently Asked Questions About Kentucky USDA Loan Payoffs
Q: How long does it take to get a final payoff statement?
A: USDA typically provides final payoff statements within 5 business days of receiving all required documentation.
Q: Can I avoid subsidy recapture on my Kentucky USDA loan?
A: Recapture is required by law for eligible loans. However, you may qualify for the 25% discount if you pay in full while remaining in the property.
Q: What happens if I can’t afford the recapture amount?
A: You can defer the recapture payment until you sell or move, but you won’t receive the 25% discount.
Q: Are all USDA loans subject to recapture?
A: No. Section 504 repair loans and some older loans are not subject to recapture. Call 1-800-414-1226 to verify your loan status.
Related Kentucky Mortgage Resources
- Kentucky First-Time Home Buyer Programs
- Kentucky VA Mortgage Loan Information
- USDA Rural Housing Kentucky Loan Information
- Down Payment Assistance Kentucky 2025
- Kentucky FHA Mortgage Information
External Resources:
This website is not endorsed by the FHA, VA, USDA, or any government agency. The information provided is for educational purposes and should not be considered legal or financial advice.
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How to Get Approved for a USDA Mortgage Loan in Kentucky
Kentucky USDA Mortgage Loan Guide
Your Complete Roadmap to Zero-Down Financing in 2026
Quick Navigation
What Is a USDA Mortgage Loan?
The USDA Rural Development Guaranteed Loan Program is designed to help Kentucky families purchase homes in eligible rural areas. With over 20 years of experience assisting more than 1,300 Kentucky families, I’ve successfully guided hundreds through USDA loans across all 120 counties.
✓ 100% financing (zero down payment)
✓ Below-market fixed interest rates
✓ Flexible credit requirements
✓ Low mortgage insurance (0.35%)
✓ Financing of closing costs possible
✓ Seller concessions allowed
If you’re a first-time homebuyer looking for a true no-money-down option without VA benefits, USDA is your strongest choice.
Property Eligibility
The property must be located in a USDA-eligible rural zone. The excellent news for Kentucky buyers: most of the state qualifies. While Louisville and Lexington city centers are ineligible, surrounding suburban areas typically qualify.
Typically Eligible Areas
- Most of Hardin, Meade, Breckenridge, Grayson, Nelson, Spencer, and Shelby Counties
- Large portions of Bullitt County outside immediate Louisville limits
- Nearly all of Eastern and Western Kentucky
- Suburban pockets around Lexington, Georgetown, Winchester, and Nicholasville
Check Eligibility: Use the USDA property eligibility map to verify any address before making an offer. This step saves time and ensures you’re pursuing viable properties.
Income Limits for 2026
Your total household income must not exceed the USDA county limit for your family size. USDA counts all household income, including spouses, adult children, part-time earnings, and bonuses.
| Household Size | 2026 Income Limit Range |
|---|---|
| 1–4 People | Up to approximately $119,850 for 1-4 members and $158,250 for 5-8 members |
| 5–8 People | Up to approximately $ $119,850 for 1-4 members and $158,250 for 5-8 members |
Note: Limits vary by county. Contact me for your specific county’s limits.
Credit Score Requirements
While USDA doesn’t publish a minimum credit score, Kentucky lenders follow these general guidelines:
640+ Credit Score — Easiest Path to Approval
- Eligible for automated approval through GUS (USDA’s system)
- More flexible debt-to-income ratios
- Faster underwriting timeline
580–639 — Possible With Manual Underwriting
Approvals in this range require strong supporting documentation:
- Perfect rental history
- No late payments in the past 12 months
- Low overall debt
- Stable employment history
Below 580 — Case-by-Case Review
Not impossible, but uncommon. Success requires significant compensating factors and strong manual underwriting review.
Employment Rules
Underwriters typically require a 2-year work history, though it doesn’t need to be at the same job. USDA is flexible about career transitions within reason.
USDA Accepts
- Job changes within the same field or industry
- Recent graduates working in their trained field
- 12+ months of consistent income
- Self-employed borrowers (with 2 years of tax returns)
Red Flags to Avoid
- Job gaps longer than 60 days
- Declining income trends over time
- Multiple unrelated job switches
Debt-to-Income Ratio Requirements
Your DTI is calculated as a percentage of your gross monthly income.
| DTI Type | Standard Limit | With Strong Credit (GUS Approve) |
|---|---|---|
| Front-End (Housing Only) | 29% | Up to 29–34% |
| Back-End (All Debt) | 41% | 44%+ |
Manual underwriting files must stay closer to standard limits, while automated approvals offer more flexibility.
Bankruptcy & Foreclosure Waiting Periods
If you’ve experienced financial hardship, USDA has established waiting periods before approval:
| Credit Event | Waiting Period |
|---|---|
| Chapter 7 Bankruptcy | 3 Years from Discharge |
| Chapter 13 Bankruptcy | 12 Months of On-Time Payments + Trustee Approval |
| Foreclosure | 3 Years from Sale Date |
| Short Sale | 3 Years (Typical) |
Medical collections and older accounts rarely require payoff. Your individual circumstances matter—let’s review your specific situation.
Property Condition & Appraisal Requirements
Your home must be safe, sound, and sanitary. The USDA appraiser evaluates:
- Roof condition and remaining lifespan
- Foundation stability and integrity
- Electrical system safety
- Plumbing functionality
- Adequate heating system for the entire home
- Absence of active termite damage
- No peeling lead-based paint
Most repairs can be handled by the seller before closing. This is a negotiation point in your offer.
The USDA Loan Process
1Pre-Qualification
Credit check, income estimate, DTI calculation, and review of eligible areas
2Full Pre-Approval
Gather pay stubs, W-2s, tax returns, bank statements, and photo ID
3Find Your Home
Use eligibility maps to confirm the property qualifies before making an offer
4Loan Application & Underwriting
Rate lock, appraisal order, document review, and GUS findings
5USDA Final Approval
Conditional Commitment issued (typically 2–7 days)
6Closing Day
Sign final paperwork, receive keys, and move into your new home
Timeline: Most Kentucky USDA loans close within 30–45 days from application.
Frequently Asked Questions
Do I need a down payment?
No—USDA loans provide 100% financing with zero down payment required.
Can I buy in Louisville or Lexington?
City centers are ineligible, but many surrounding suburbs qualify. Always verify the property address on the USDA eligibility map before making an offer.
What credit score do I need?
640+ is ideal for streamlined approval. Manual underwriting may consider scores down to 580 with strong compensating factors.
Can the seller help with closing costs?
Yes—USDA allows seller concessions, and some closing costs can be financed if the appraisal supports it.
How long does the process take?
Most Kentucky USDA loans close in 30–45 days from application.
Are there down payment assistance programs?
Yes. Kentucky Housing Corporation (KHC) programs offer additional assistance for qualified first-time homebuyers to further reduce upfront costs.
Ready to Get Pre-Approved?
Let’s explore your USDA lending options with personalized guidance and same-day approvals.
Call or Text: 502-905-3708
Email: kentuckyloan@gmail.com
Serving qualified homebuyers across all 120 Kentucky counties
Joel Lobb, Mortgage Loan Officer | Specialist in Kentucky FHA, VA, USDA, KHC & Fannie Mae Loans
EVO Mortgage — Helping Kentucky Homebuyers Since 2001
NMLS Personal ID: 57916 | Company NMLS ID: 1738461 | Equal Housing Lender
This website is not endorsed by the USDA, FHA, VA, or any government agency. It is an independent educational resource.
This is not a commitment to lend. All loans subject to credit approval and USDA program guidelines.
Kentucky USDA Mortgage Lender for Rural Housing Loans 