DEFERRED STUDENT LOANS AND DEBT RATIO CALCULATIONS for Kentucky Rural Housing Loans and USDA Loans in KY
RHS Student Loan DTIs
Due to the variable nature of some student loan plans, RHS is standardizing the process of including them in the debt ratio. All student loans will now require documentation verifying the current payment due.
For student loans which are Conventional, Fixed Payment, and/or Deferred:
Account statements will be reviewed and fixed monthly payment will be used with no adjustments.
Deferred student loans not in repayment will use an estimated payment of 1% of the loan balance unless a documented fixed payment from the loan servicer can be provided.
For student loans with Income Based Repayment plans:
If the current payment is greater than $100, that payment can be used.
If the current payment is less than $100 and total loan balance is greater than $10,000, a minimum $100 payment must be included in the debt ratio.
If the current payment is less than $100 and total loan balance is less than $10,000, then the current payment may be used
Please note that documentation of an Income Based Repayment agreement must be provided. Payments of $0 are not eligible to be used in the debt ratio. Verifications are only valid for 120 days, 180 days for new constructions
DEFERRED STUDENT LOANS AND DEBT RATIO CALCULATIONS
. A 100% 30 year fixed interest rate loan with flexible credit and qualifying ratios along with other benefits, will open the door to a new market and new growth possibilities.
We look forward to a long and productive relationship this affordable housing product to the people of Kentucky and to a strong partnership in the Kentucky GRH Program.
For the USDA Rural Development Single Family Housing Guaranteed Loan Program, deferred student loans should be included in the debt ratio calculations for Guaranteed Loans regardless of the deferment period.
Rural Development RD Instruction 1980-D, section 1980.345(c)(1) states:
“Long term obligations include those obligations . . . with a remaining repayment period of more than 6 months and other shorter term debts that are considered to have a significant impact on repayment ability.”
Deferred student loans are long term obligations with remaining repayment periods of more than 6 months, and they must be included as part of the
applicant‟s recurring monthly debt obligations. If the credit report does not reflect a monthly payment due at the end of the deferment period, the lender may request a copy of the applicant‟s payment letter, or utilize the industry standard of estimating student loan payments as 1% of the loan balance. Therefore a deferred student loan balance of $12,000 should have a corresponding monthly payment of $120 if no estimated payment is verified by the lender.
This guidance applies to all manually
DEFERRED STUDENT LOANS AND DEBT RATIO CALCULATIONS Kentucky Rural Housing Loans and USDA Loans in KY
Kentucky Single Family Housing Guaranteed Loan Program
– 25 Frequently Asked Questions
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25 Questions and Answers 1 What is the guarantee? USDA Rural Development 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. Losses exceeding 35% are 85%
reimbursed. 2 What is the advantage to the customer?
100 percent financing, fixed interest rate, low monthly mi fee (.50bps) and upfront mi fee of 2% and no restrictions on size or design are just a few of the advantages. 3 What are the eligibility requirements?
Have adequate and dependable income (up to 115 percent of adjusted area median
income), have acceptable credit, do not own a dwelling in the local commuting area, US
Citizen or permanent resident, have the ability to personally occupy the home on a
permanent basis, and do not have funds for a 20% down payment loan plus closing and
moving expenses. 4 Can a Broker originate Guaranteed loans? Yes, however only Approved lenders may underwrite & submit loans. 5 How long does it take to get an answer?
Our goal is a 2 to 5 day turnaround. Time will be longer in some offices due to the large
number of guarantee requests received. 6 What is the maximum fixed Interest Rate and term? Fannie Mae 90 day delivery rate plus 60 basis points rounded up to nearest quarter of
one percent Or no more than the Lender’s published VA rate for first mortgage loans
with no discount points. The term is 30 years. 7 What is the maximum loan amount? The Loan amount is limited by the market value and repayment ability. 8 What is the maximum Loan to Value? It can be up to 100% LTV plus the Agency guarantee fee.
9 What is the Guarantee Fee? The guarantee fee is 2.0 percent of the “Total” loan amount. 10 What are the qualifying ratios? PITI Ratio 29 percent, TD Ratio 41 percent.
Higher ratios may be approved with compensating factors. 11 Do we show deferred student loans in the debt ratio?
Deferred student loans should be included in the debt ratio calculations for Guaranteed
Loans regardless of the deferment period. 12 What is the minimum credit score?
Under certain criteria, credit score 640 and above no comment required.
For credit score 639 and below document circumstances were temporary in nature
beyond the applicants control and have been removed. In most cases, loans will not be
guaranteed for applicants who have a middle credit score of 580 & below. 13 What about location? The dwelling must be located in eligible rural area (See eligibility site) http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do 14 What about refinancing? Limited to existing USDA Rural Development guaranteed or direct loans. 15 Can loans include acreage?
Possibly. The acreage must not contain any income producing facilities and the value of
acreage may not exceed of the total property value. 16 Can Manufactured Homes be financed? Yes, however they must be new and sold by an approved dealer contractor. We as a lender currently don’t offer these type of loans
17 What about an in-ground swimming pool? Swimming pools are now okay with the recent changes on December 1st, 2014
18 What are the required inspections?Property must meet HUD Handbook 4905.1 & 4150.2 or similar standard. A FHA roster appraiser can verify adequacy/working order of electrical, plumbing, heating, water & waste disposal on existing dwellings. 19 Will USDA Rural Development issue a letter asking the Approved Lender to make a loan? No. This is the Approved Lender‟s loan. They underwrite the loan and decide if it meets their standards and Agency standards before submitting. 20 Is homebuyer education required? Homebuyer education is not required, however it is recommended. 21 Are seller concessions allowed? Yes. Rural Development restricts the amount of seller concessions to 6% of sales price 22 Who approves the Appraiser? The appraiser must be licensed by the State to complete appraisals. 23 Can necessary repairs be included in loan? Yes. An „as improved‟ appraisal will be needed to include cost of repairs. 24 Are alternate verifying income documents allowed
Yes. Paycheck stubs, payroll earnings statements and W-2 tax forms for previous 2 tax
What are the Kentucky USDA Mortgage Loan Requirements?
To decide if you qualify for an USDA Mortgage Loan, we will look at:
Your income and your monthly expenses. Standarddebt-to-income ratios are 29/41 for USDA Loans. These ratios may be exceeded with compensation factors.
Your credit history (this is important, but USDA’s credit standards are flexible). A FICO score of 640 or above is required for all loans
Your overall pattern rather than to individual problems you may have had.
To be eligible for an Kentucky USDA Mortgage, your monthly housing costs (mortgage principal and interest, property taxes and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. At least a 640 FICO credit score is required to obtain an USDA approval through Lending. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These percentages may be exceeded with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. Maximum USDA Loan income limits for your area can be found at below Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.
Can I get an USDA Mortgage Loan after bankruptcy?
Criteria for USDA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for three years or more, you are eligible to apply for an USDA mortgage. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make an Kentuck USDA Loan application
What are the USDA Down Payment Requirements? USDA Mortgages have no down payment requirement. Other loan programs don’t allow this.
What types of property are eligible?
While USDA Mortgage Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.
What is the maximum amount that I can borrow?
The maximum amount for an Kentucky USDA Mortgage Loans are determined by:
Maximum loan amount: The is no set maximum loan amount allowed for an USDA Mortgage. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Loan income limits for your area can be found at here.
Maximum financing: The maximum USDA Mortgage amount will be 100% of the appraised value of the home.
What kinds of loans does USDA offer?
Fixed rate loans – All Rural Housing and USDA loans are fixed-rate mortgages. In a fixed rate mortgage, your interest rate stays the same during the whole loan period, normally 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your monthly payment will be, and you can plan for it.
What is Considered a 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 at:http://eligibility.sc.egov.usda.gov.
Kentucky USDA Loans
What are USDA Home Loans?
USDA stands for United States Department of Agriculture. A USDA Mortgage provides a low-cost insured home mortgage loan that suits a variety of options. A USDA mortgage is likely the best home loan option if you want to purchase a home with no down payment. If you’re unsure about your credit rating, or have concerns about a down payment when you’re doing a home loan comparison,
What Types of Loans does USDA offer in Kentucky?
Currently, there are two kinds of USDA Homeo Loans available in Kentucky for single family households:
USDA Guaranteed Rural Housing Loans
USDA Guaranteed Kentucky USDA Mortgage are the most common type of USDA loanin Kentucky and allow for higher income limits and 100% financing for home purchases. USDA Guaranteed Loan applicants may have an income of up to 115% of the median household income for the area. Area income limits for this program can be viewed here. All USDA Guaranteed Loans carry 30 year terms and are set at a fixed rate.
USDA Direct Rural Housing Loans
USDA Direct Housing Loans are less common than USDA Guaranteed Loans and are only available for low and very low income households to obtain homeownership, as defined by the USDA. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to see area income limits for this program.
What factors determine if I am eligible for a USDA Loan in Kentucky?
To be eligible for A USDA Kentucky USDA Mortgage Loans | Rural Housing Ky Loans in Kentucky, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. A 620 FICO credit score is required to obtain a USDA Kentucky USDA Mortgage Loans | Rural Housing Ky Loans approval . You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios can be exceeded somewhat with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. Maximum USDA Guaranteed Loan income limits for your area can be found at here. Maximum USDA Direct Loan income limits for your area can be found at here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.
What is the maximum amount that I can borrow?
The maximum amount for an USDA home loan is determined by:
Maximum Loan Amount: The is no set maximum loan amount allowed for USDA Kentucky USDA Mortgage Loans | Rural Housing Ky Loans. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Guaranteed Loan income limits for your area can be found at here.
Maximum financing: The maximum USDA Kentucky USDA Mortgageamount is 102% of the appraised value of the home (100% plus the 2% USDA Kentucky USDA Mortgage RD Loan guarantee fee).
How much money will I need for the down payment and closing costs?
USDA Kentucky USDA Mortgage Loans require no down payment and they allow for the closing costs to be included in the loan amount (appraisal permitting).
What property types are allowed for USDA Rural Loan Mortgages?
While USDA mortgage guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.
Additional offers from other lenders.
This website is not an Government Agency, and does not officially represent the HUD, VA, USDA or FHA
Kentucky USDA Loan Adjusted Maximum Income Limits by County\\\\\\\\\
Kentucky USDA Mortgage Loans | Rural Housing Ky Loans
Why choose a USDA Mortgage?
The loans require no down payment.
There are no prepayment penalties for USDA Kentucky USDA Mortgage Rural Home Loans
A USDA Kentucky USDA Mortgage Rural Housing has no monthly mortgage insurance.
A USDA Kentucky USDA Mortgage Rural Housing 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 Kentucky USDA Mortgage 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.
USDA Loan FAQ’s
Kentucky USDA Mortgage Loans | Rural Housing Ky Loans
What is the Maximum LTV for a USDA Loan?
The maximum USDA rural loan LTV can be up to 100% LTV plus the Agency guarantee fee.
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 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.
Kentucky USDA Mortgage Loans | Rural Housing Ky Loans
USDA Guaranteed Rural Housing Loans
USDA Loan FAQ’s 
Kentucky USDA Mortgage Lender for Rural Housing Loans 