In order to get you pre-approved for your max loan amount, I will need the following items from you. This is a free process and I will give you a copy of your credit report for free!
Mortgage Pre-Approval Checklist:
- One full month’s or 30 days worth of pay stubs
- Last 2 years W-2′s
- Last 2 years tax returns
4. Last two months bank statements for all accounts including 401 k or retirement account if you have one
if you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.
Text or call phone: (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 views of my employer. Not all products or services mentioned on this site may fit all people
This program once accounted for almost all the Section 502 loans, but the number of guaranteed loans has greatly increased in the last few years. In Fiscal Year 2001, the guaranteed program obligated approximately $2.3
billion for 29,326 loans, while the direct program obligated approximately $1.07 billion for a total of 14,789 loans. The important differences between the Section 502 guaranteed and direct loan programs are as follows:
The lender for Section 502 guaranteed loans is a private savings and loan institution, bank, or mortgage company which also handles all the loan servicing. The lender for the direct program is the Rural Housing Service; Rural Development handles the servicing.
Income levels for Section 502 guaranteed borrowers are capped at 115 percent of the area median income. Income levels for the direct program must be no more than 80 percent of the AMI. Payment assistance subsidy is not available
through the guaranteed program. Payment assistance, which can reduce the interest paid on the mortgage to as low as 1 percent, is available for borrowers in the direct program and is based on the borrower’s income as a percent of AMI.
Borrower protections differ between the programs. Applicants for guaranteed loans do not have the rights of moratorium or of appeal that accompany the direct program. Also, in the case of default, Section 502 guaranteed loans are liquidated by
the commercial lender, while direct loans are liquidated by the government
Kentucky USDA Rural Development Mortgage Overview
|Down Payment is not required||Borrowers without savings, or who wish to retain their savings qualify|
|100% financing||More Americans become homeowners|
|No reserves are required||Buyers do not need to provide bank statements|
|Expanded qualifying ratios||Buyers with satisfactory credit may qualify with higher Debt-to-Income ratios to accommodate high cost housing areas, etc|
|Seller is allowed to pay Buyer’s Closing Cost (ask Kentucky USDA Specialist for details)||Reduces out of pocket costs for Buyers|
|Low minimum credit score (no minimum credit score required but lenders will have overlays up to 620 to 640 minimums)||Buyers with non-traditional or no credit histories may qualify|
|Streamlined processing with 640 credit score||No explanations on credit with 640+ score|
|Generous income limits based on 115% US median (not HUD)||Deductions are available for dependents, daycare, elderly households, etc. to assist more individuals and families in qualifying|
|No maximum purchase price limit||Buyers choose the home that meets their needs and repayment ability|
|NOT just for first time buyers||All home buyers are eligible for benefits|
|Modular Homes may be eligible||Purchases only (Manufactured Homes are NOT Eligible)|
|Education/training substitute for job tenure||Income history for ratios is waived.|
|USDA is the lowest payment loan option for buyers wanting a FIXED Rate||Low upfront and monthly MI, very low 30 YEAR FIXED rates and very easy to qualify|
Kentucky Guaranteed Rural Housing Loans
To be eligible, applicants must:
- Have an adequate and dependable income;
- Be a U.S. Citizen, qualified alien, or be legally admitted to the United States for permanent residence;
- Have an adjusted annual household income that does not exceed the moderate income limit established for the area. A family’s income includes the total gross income of the applicant, co-applicant and any other adults in the household. Applicants may be eligible to make certain adjustments to gross income – such as annual child care expenses and $480 for each minor child – in order to qualify.USDA Rural Development field offices can provide information on the moderate income limits for the areas that fall within their jurisdiction, and can provide further guidance on calculating household income.
- Have a credit history that indicates a reasonable willingness to meet obligations as they become due;
- Have repayment ability based on the following ratios: Principle, Interest, Taxes, and Insurance (PITI) divided by gross monthly income must be equal to or less than 29 percent. Total debt divided by gross monthly income must be equal to, or less than, 41 percent.
A Kentucky USDA Guaranteed Loan is a Government Insured 100% Purchase Loan. These loans are only offered in rural areas.
USDA Loans require no down payment.
There are no prepayment penalties for USDA Rural Home Loans.
A USDA Rural Development Loan has low monthly mortgage insurance.
A USDA Rural Development Mortgage is available all rural areas of the country, provided a market exists for the property and the home meets HUD’s minimum property standards.
A USDA Rural Housing Loan can be used to purchase a new or existing one family home in rural areas.
USDA RD Loans are offered at terms of 30 years with a fixed interest rate.
Kentucky USDA Loan FAQ’s
What is Considered a Kentucky Rural Area by the USDA?
Rural areas include open country and places with population of 10,000 or less and—under certain conditions—towns and cities. There is an automated rural area eligibility calculator for USDA home loans at: http://eligibility.sc.egov.usda.gov.
What is the Maximum Loan Amount for a Kentucky USDA Loan?
There is no maximum loan amount for a USDA rural mortgage. However, it is limited by the appraised value and repayment ability (determined by your household income).
Can Closing Costs be Financed into the Loan?
Yes, any difference between the contract price and the appraisal value can be used to finance normal closing costs for a Kentucky USDA mortgage.
What is a Kentucky USDA Loan Guarantee?
USDA Rural Development Single Family Housing Program serves as a safety net for mortgage lenders. The USDA provides the full faith and assurance of the U.S. government that any financial loss resulting from servicing the loan will be reimbursed in full up to an amount not exceeding 90% of the original loan amount.
All loss up to an amount not exceeding 35% of the original loan is fully reimbursed. Any loss amount exceeding the 35% is 85% reimbursed. This leaves the lender only 15% exposed on the loss amount above the 35% of original loan.
In the majority of cases, the total loss does not exceed 35% of the original loan and the lenders are fully reimbursed. This guarantee provides lenders an expanded level of protection against losses. The quality of this guarantee allows lenders to easily sell the loans on the secondary market.
Rural Housing and USDA Loans in Kentucky
When searching for home loan options in the Kentucky , you do not want to overlook the possibility of a USDA and Rural Home Loans . Designed to help encourage economic growth throughout the state of Kentucky, a USDA Loan is a great alternative to a traditional home loan. With no down payment required and flexible credit guidelines, a government backed USDA Loan can help your dream of home ownership become a reality in Kentucky.
- 100% Financing Up to the Appraised Value
- New and Existing Homes are Eligible
- No Maximum Loan Amount
- Low Fixed Interest Rates
- No Minimum score and 3 years removed from Bankruptcy and Foreclousre
- Maximum Income Limits Per Kentucky Household
- Low mortgage insurance on USDA loans in Kentucky
- Seller can pay all closing costs and prepaids
- No Termite report or Home Inspection Needed
- Low 30 year fixed Rates on Kentucky Home Loans
Kentucky Areas that Qualify for a USDA Loan
Kentucky’s USDA Loan Income Limits by County
In addition, because they are designed for families with moderate to lower incomes, the income of home-buyers looking into a Kentucky USDA Home Loan cannot exceed their county’s set limit:
Rural Refinance Pilot Loan
Brief Pilot Description: The Rural Refinance Pilot is available to eligible borrowers who qualify to refinance their current USDA mortgage loans.
Under the Rural Refinance Pilot program, a lender does not need to submit a new credit report, new appraisal, any HUD Handbook minimum property determinations, or any additional property inspections.
Eligible “Hardest Hit” States: The following states may participate in the Rural Refinance Pilot: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, and Tennessee. Additional States are not eligible at this time.
Eligible Borrowers: Current Section 502 Direct or Guaranteed Loan borrowers must:
1. Meet current income eligibility requirements;
2. Reside in an eligible rural area or an area that was eligible at the time of the original loan closing; and
3. Have made timely mortgage payments for the 12-month period prior to the refinance. Overview of Rural Refinance Pilot Guidelines: 1. The existing loan must be a Section 502 Direct or Guaranteed loan. 2. The new interest rate must be a fixed rate 100 basis points below the current interest rate. 3. The new term of the refinance loan may not exceed thirty years from the date of closing
. 4. A Rural Refinance Pilot loan may only include the principal balance of the loan plus a portion of or the full upfront guarantee fee. The applicable upfront refinance guarantee fee is 1.5 percent. No cash out is permitted to the borrower. Accrued interest, closing costs, lender fees, and late fees are not eligible to be part of the refinance loan.
5. An annual fee also applies. For FY 2012 the applicable annual fee is .3 percent.
6. A new appraisal, new credit report, HUD Handbook determination and additional property inspections are not required. The original appraisal amount may be used from Guaranteed Loan System to process the loan.
7. Ratio calculations are not required. Therefore debt ratio waiver requests will not be necessary.
8. Rural Refinance Pilot loans must be manually underwritten. They cannot be processed through the Guaranteed Underwriting System.
9. Customary and reasonable closing costs and other fees may be collected from the borrower by the lender. Such charges may not exceed the cost paid by the lender or charged to the lender by the service provider. An origination fee of up to one percent of the total loan amount may be charged to the borrower.
10. All the following documentation is required:
a. Form RD 1980-21 “Request for Single Family Housing Loan Guarantee”.
b. Income verifications for all adult household members.
c. Uniform Residential Loan Application.
d. Evidence of qualified alien status, if applicable.
e. FEMA Form 81-93 “Standard Flood Hazard Determination.” Appropriate flood insurance must be obtained if the property is in a flood zone at the time of the new loan closing, even if the area was not in a flood zone at the time of the original loan closing. A flood elevation survey is not required.
f. Evidence of previous 12 month mortgage payment history. The lender must secure evidence to document the borrower(s) has paid the loan on time for the previous 12 months. The lender may utilize a Verification of Mortgage obtained from or provided directly by the loan servicer that lists the payment history for each of the previous 12 months. As an alternative, the lender may submit a credit report which reflects a satisfactory mortgage payment history over the past 12 months.
If the lender submits a credit report to Rural Development as proof of payment history, only the payment history of the current mortgage will be considered.
Credit waivers or explanations for adverse credit that may be present on the report are not required.
11. All additional requirements of RD Instruction 1980-D and applicable Administrative Notices continue to apply. Rural Development Responsibilities:
1. Request funding for the refinance if necessary by sending an email request to: email@example.com. Please include the State and the amount of funding needed.
2. Retrieve original appraisal amounts in GLS when processing Rural Refinance Pilot transactions.
3. Review the previous 12-month mortgage payment history. If a credit report is submitted, only review the 12-month mortgage payment history.
If the mortgage account is currently delinquent or has been reported delinquent in the previous 12 months, the borrower is not eligible. Agency staff should use the “Borrower ID” with GLS Report “GLSST01: Status of a GRH Loan Account” to ensure the loan is currently active and not in default.
4. Enter 0 in the “FICO Score” data field when processing a Rural Refinance Pilot application. 5. Enter the repayment income calculation in GLS, but do not include any “Additional Liabilities” amounts.
In the event the new mortgage payment results in ratios above 29 and/or 41 percent, check the box that indicates a debt ratio waiver has been issued by the Agency. 6.
In the “Agency Notes” section of the GLS Application screen enter “Rural Refinance Pilot Loan.” This will identify the loan as part of this pilot in the event of a loan review. 7.