I am a Kentucky based USDA Mortgage Lender that has originated over 200 KY Rural Housing Mortgage Loans in Kentucky, Put my expert advice to use. Kentucky Rural Development RHS loans give KY Rural Homebuyers a zero down mortgage loan with a low 30 year fixed rate loan. A Local Kentucky Rural Housing Mortgage Lender offering same day free approvals and credit report. This website is not affiliated with USDA or any other government agency. NMLS#57916 Equal Housing Lender Text or call today 502-905-3708 with your mortgage questions about USDA Rural Housing Loans in Kentucky. Free Pre-Approvals on most applications within the same day. Kentuckyloan@gmail.com
*Upfront guarantee fee will change from 2.75% to 1.0%
Annual fee will change from 0.50% to 0.35%
Kentucky USDA Loans are not just for small farm communities, but rather they can help many lower-income individuals or households purchase homes in many small cities, towns and townships!
Kentucky USDA Mortgage holders should look to Streamline Refinance for Customers wanting to lower their payments and reduce their mortgage insurance
PROGRAM REQUIREMENTS
Existing Loan Current loan may be a section 502 Guaranteed or Direct loan.
New Interest Rate The new interest rate must meet the following requirements: 1) Fixed, and 2) The interest rate may not exceed the existing rate (that described in RD
440.1)Maximum Interest Rate The maximum interest rate is based on the 90 day FNMA 30 year A/A Remittance rate as of the lock date + 100 basis points and rounded up to the next1/4%. The rates are found on the Fannie Mae website: http://www.efanniemae.com/sf/refmaterials/hrny/index.jsp
Net Tangible Benefit The new principal, interest, taxes, and insurance (PITI) must have at least a $50 reduction compared to the existing PITI. The reduction ($50) must be
independent of any change in the annual fee, which is included in the calculation.
Term The new term must be 30 years only.
Adding/Removing Borrowers Borrowers may be added, but not removed (unless deceased) from the current loan.
Maximum Mortgage Amount The mortgage amount may include the principal balance plus a portion or the full amount of the applicable upfront guarantee fee, accrued interest, funds to establish tax and insurance escrow, and eligible loan closing costs (discount points not permitted see below)
COLLATERAL Appraisal No Appraisal required. A new appraisal is only required for direct loan borrowers that received a subsidy.
Eligible Collateral All dwellings must provide decent, safe, and sanitary at a modest cost (a dwelling with a purchase price not exceeding the FHA Single Family mortgage
limit for its county is considered modest), Owner Occupied Only. 1 Unit, PUD’s, Condos, Ineligible Collateral Mobile homes, single-wide manufactured homes, co-ops, Condo Hotels, State approved medical marijuana producing properties, income producing farms, ranches, mixed use, commercial properties, leaseholds, properties with sink holes, properties served by cisterns, properties serviced by hauled water,
properties with a wastewater stabilization pond/lagoon (aka sewage lagoon), properties with individual water purification systems required to make the
water safe for human consumption (does not include systems installed to improve the taste or softness of the water).
CREDIT CAIVRS and Exclusionary List CAIVR clearance must be obtained for all borrowers on the transaction. GSA/LDP/SAM clearance is required for all parties of the transaction within 30 days of USDA’s Conditional Commitment date.
Bankruptcy Chapter 7 and 13 must be discharged. The borrower(s) may not currently be in bankruptcy. Judgments/Liens All outstanding judgments and liens must be paid. Foreclosure / Deed-in-lieu Subject property may not have an active foreclosure.
Credit Report A tri-merge mortgage only rating for subject property with credit scores will be used. Not required. Mortgage History 0x30 in the previous 12 months. Must have evidence of payment history over the previous 12 months. No exceptions. A mortgage-only credit report or
servicing verification (FiServ) is acceptable
INCOME/ASSETS
Income Documentation Income for all household members is required to determine if household income is under the USDA moderate income area limit. Income documentation is not used to calculate qualifying ratios. Annual Income Limits Annual income is the basis for determining adjusted income. Annual income includes the total gross income of the borrower, co-borrower, and any otheradult (age 18 and up) household members, any amount anticipated to be received from a source outside of the family during the 12-month period, and all
amounts derived during the 12-month period from assets to which any member of the family has access.
If a cost of living allowance or a proposed
increase in income has been estimated to be in effect prior to the first month’s mortgage payment due date, this amount must be included as income. For
annual income, count only the first $480 of earned income from adult full time students who are not the borrower, co-borrower, or spouse.
Rental income is included regardless of duration. Include total rental real estate income reported on most recent IRS form 1040 Schedule E for previous 12
months.
If no schedule E, cancelled checks, money order receipts, bank statements, or other documents may be used to support rent amounts received
The USDA has announced effective October 1, 2016:
Reduction in the Upfront Guarantee Fee: the upfront guarantee fee for purchase and refinance transactions will decrease from 2.75% of the loan amount to 1.00% of the loan amount.
Reduction in the Annual Fee: The 0.50% annual fee will also decrease to 0.35%.
The new fee structure must be used for loans submitted in GUS on or after, Thursday, September 1, 2016.
Contact your Account Executive for more information on the fee changes or our USDA Streamline Assist Program.
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.
Good News for Kentucky First Time Home Buyers Using the USDA Rural Housing Loan Program!
Kentucky RHS USDA Mortgage Insurance Changes Below and Important Dates to Keep in Mind that could affect your loan closing and approval!
On October 1, 2016, both the upfront guarantee fee and annual fee for purchase and refinance loans will decrease. We are reducing the upfront guarantee fee from 2.75% to 1%, and the annual fee from .5% to .35%. The Guaranteed Underwriting System (GUS) will be updated on August 31, 2016, to allow lenders to select and underwrite using either the FY16 or FY17 fee schedule.
Due to the large volume of loan applications received daily, as well as current turn times, Kentucky will begin accepting applications using the new FY17 fee schedule on September 27, 2016
Applications using the new FY17 fee schedule submitted before September 27, 2016 will not be processed before October 1, 2016.
September 27, 2016 will be the last day Kentucky will accept applications using the existing FY16 fee schedule. This will ensure all of these submissions are reviewed by the Agency prior to October 1.
Most are familiar with USDA Rural Housing Loan Program being a great no money down program available and it is not just for Kentucky first time buyers.
But starting with commitments on October 1, the funding fee that is financed is going from 2.75% to only 1%! On a $100,000 loan, a buyer saves about $1750! In addition, the annual fee (like PMI) reduces from .5% to .35% which lowers the monthly payment by $15 a month on an $100,000 loan amount.
Joel Lobb
Senior Loan Officer
(NMLS#57916 text or call my phone: (502) 905-3708 email me at kentuckyloan@gmail.com
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). USDA Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.
Site size The site size must be typical for the area. (Some acreage is fine as long as it is normal and the appraisal has comparable sales with similar acreage)
Income-Producing Buildings. The property must not include buildings designed and to be used principally for income-producing purposes. For example barns, silos, greenhouses, or livestock facilities used primarily for income producing agricultural, farming or commercial enterprise are ineligible. However, barn, silos, livestock facilities or greenhouses no longer in use for a commercial operation, used for storage, and outbuildings such as storage sheds are permitted if they are not used primarily for income producing agricultural, farming or commercial enterprise. A minimal income-producing activity, such as maintaining a garden that generates a small amount of additional income, does not violate this requirement. Home-based operations such as childcare, product sales, or craft production that do not require specific features are not restricted. A qualified property must be predominantly residential in use, character and appearance.
Income-Producing Land. The site must not have income-producing land that will be used principally for income producing purposes. Vacant land or properties used primarily for agricultural, farming or commercial enterprise are ineligible. Sites that have income-producing characteristics (e.g. large tracts of arable land ready for planting) are considered income-producing property. However maintaining a garden for personal use is not in violation of this requirement. A minimal income-producing activity, such as a garden that could generate a small amount of additional income does not violate this requirement. A qualified property must be predominantly residential in use, character and appearance.
Site Specifications. The site must be contiguous to and have direct access from a street, road, or driveway. Streets and roads must be hard surfaced or all weather surfaced and legally enforceable arrangements must be in place to ensure that needed maintenance will be provided.
Utilities. The site must be supported by adequate utilities and water and wastewater disposal systems.
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.
USDA has just announced that they are planning to lower both the Guarantee Fee and the Annual Fee for RHS loans in Fiscal Year 2017. Effective for loans receiving commitments from RHS on or after October 1, 2016, the following fee changes will be in effect
The Upfront Guarantee Fee will be lowered from 2.75% to 1.00% of the loan amount
The Annual Fee will be lowered from 0.50% to 0.35% of the average scheduled unpaid principal balance for the life of the loan
There are two types of Kentucky USDA Rural Housing Home loans available to rural Kentucky Home buyers through Rural Development:
Direct homeownership loans and guaranteed home ownership loans.
Let’s first look at the 502 Direct USDA Loan in Kentucky
502 Direct USDA Loan in Kentucky:
With a Kentucky Direct Loan 502, the applicant applies directly to the USDA office serving their location in Kentucky. There are about 13 different locations . They lend the money direct from USDA , 100 percent financing, for the low rate currently at 3 percent on a 33 year term.
For a direct home loan, the purchase, construction, repair and rehabilitation of a single family home in rural areas must be used for the applicant’s permanent residence. “For manufactured housing, only new construction can be funded,” he explained.
Credit scores of 640 or greater are typically acceptable with a minimum number of trade lines (2 usually for 12 months can be opened or closed) that have been open and active.
No down payment typically is required- Loans may be up to 100 percent of the appraised value. Homebuyer education is required prior to closing for the Direct USDA Loan 502 program
Mortgage payments are based on what the applicant can afford to pay. USDA offers payment assistance/subsidies to make it affordable. When you go to payoff the USDA Direct loan, you may incur a subsidy recapture fee.
Student Loans and their Impact in the Total Debt Ratio
Recent updates to the 3555 Handbook intended to simplify guidance for the delivery of the guaranteed loan program have caused some misperception in regards to total debt ratio calculations, specifically in the subject of student loans. The Agency is working on revisions to Chapter 11: Ratio Analysis; however, we want to further clarify the subject at this time.
Total debt includes monthly housing expenses plus any other credit obligations incurred by the applicant. Student loan payments must be included in the calculation of the total debt-to-income ratio and captured under liabilities on the application. Student loan payments should be treated as described below:
Fixed payment loans: A fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed. There must be no future adjustments to the terms of the student loan payments.
Non-Fixed payment loans: Payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed cannot be used in the total debt ratio calculation. One percent of the loan balance reflected on the credit report must be used as the monthly payment. No additional documentation is required.
Effective for all loan commitments issued on or after March 9th, Kentucky USDA Rural Housing Loan Program is publishing an updated version of their 3555 handbook. The new handbook includes additional guidance and clarification on many previously vague subjects, including the following changes
RHS considers a loan as qualifying for conventional credit if all of the following are true
Borrower has eligible assets to meet a 20% down payment AND reasonable closing costs; AND
The loan meets all current FNMA guidelines
Assets should be calculated using the lesser of a two month average balance or the current bank statement/recent VOD.
Debts omitted in GUS now require that reason for omission be listed in the “Notes” section.
Military applicants are no longer required to provide evidence of pending discharge.
The following are now considered part of the Household income when determining income eligibility
Documented pay raise/cost of living raise to occur on or prior to closing
Income from spouse living apart less than 3 months, unless divorce or legal separation proceedings have been commenced
Continuance is automatically assumed on Social Security income unless the benefit letter specifically states an expiration date.
Payments for the care of foster children or adults cannot be used as income.
Authorized User accounts can be used to meet tradeline requirements if 12 months payment can be documented by the borrower.
30 day accounts paid each month do not have to be included in the DTI.
Previous mortgage liabilities disposed of without release of liability (i.e. divorce, assumed, etc.) can be excluded from the debt calculation if the transaction can be fully documented along with 12 months of mortgage payments by the remaining party
Judgments accounts may be excluded from the debt calculation if less than 10 months remain on the repayment plan.
Charge-off accounts should not be included as a liability or a debt.
Debts incurring a significant impact on repayment are now defined as being 5% or more of the gross monthly income.
USDA does not have to be added to the appraisal as an intended user.
Use the greater of one percent (1%) of the outstanding loan balance or the verified fixed payment as reflected on the credit report.
Income Based Repayment (IBR) plans, graduated plans, adjustable rates, interest only and deferred plans are examples of repayment plans that are subject to change. These types of repayment plans are unacceptable to represent a long term fixed payment plan.
As announced by Rural Development, the upfront Guarantee Fee for purchase and refinance loans will increase as follows for Rural Housing USDA loans in Kentucky:
UPFRONT GUARANTEE FEE
THROUGH 9/30/2015
EFFECTIVE 10/1/15
All Transactions
2.0%
2.75%
The new fee structure is applicable to all Conditional Commitments issued by Rural Development on or after October 1, 2015. Loan guarantee requests submitted to Rural Development (RD) on which a conditional commitment has not been issued by September 30, 2015, will be subject to the new, higher guarantee fee structure.
Kentucky USDA Guaranteed Rural Housing Loans are one of the only “no money down” options available to home buyers today. Kentucky USDA loans aren’t just in the country. Many other areas fall within the USDA Kentucky Rural Housing designated areas, so opportunities may be closer than you think. To view eligible rural areas near you, CLICK HERE to access the USDA lookup tool on their website.
This program is very attractive to low-to-moderate income buyers:
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.
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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?
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