Kentucky USDA Rural Housing Changes for Below

USDA Advance Copy Notice HB-1-3555 Chapter 11
USDA has announced that Chapter 11 of the HB-1-3555 will be updated and an advanced copy has been provided.  Changes will become effective after USDA issues a Special Procedure Notice.

  • Clarification was added that revolving accounts with no outstanding balance are not required to be closed.
  • USDA eliminated guidelines provided that a retained property that has been rented for 24 months or longer may be omitted from the DTI, and
  • Added guidance that the income received from rents may only be included in the repayment calculation if the property has been rented for 24 mo. or more.
  • Guidelines were added that monthly payment for borrowers in debt management plans must be included in the DTI.
  • The calculation guidelines for Non-Fixed Student Loan Payments were updated removing the requirement for the greater of calculation to be used and added guidance for when the payment amount is zero.
  • Additional guidance was added that compensating factors supporting Debt Ratio Waivers for manually underwritten loans must be documented.
  • Clarification was added that federal, state and local taxes don’t need to be included in the DTI unless there is a payment plan in place.

Refer to the Advance Copy Notice HB-1-3555 Chapter 11 and Chapter 11: Ratio Analysis

Kentucky Rural Housing USDA Program Mortgage Insurance Requirements


*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!

USDA Loan Payment Calculator: Calculate Loan Guarantee Eligibility ...



Kentucky Rural Housing USDA Guarantee Upfront and Annual Fee Changes October 2016


Human hand with a pot watering growing money tree
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.

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Joel Lobb
Senior Loan Officer
text or call my phone: (502) 905-3708
email me at

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, ( 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.



Kentucky based USDA Mortgage Lender
Kentucky based USDA Mortgage Lender


Sites must be modest and developed in accordance with any standards imposed by a State or local government. Therefore, the lender must verify that the following requirements are met at the time of application.

  •  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.



Kentucky based USDA Mortgage Lender
Kentucky based USDA Mortgage Lender


Kentucky USDA Rural Development Fee Reduction

Kentucky USDA Rural Development  Fee Reduction
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


502 Direct USDA Loan in Kentucky:

NMLS 57916


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. KY RD Offices_August2014.jpg 

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.

KY USDA Rural Housing Update 2016

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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
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:
THROUGH 9/30/2015
All Transactions
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:
  • Zero percent down
  • CLTV up to 102.04%
  • 6% seller contributions allowed
  • Credit scores as low as 640
  • No reserves required









Joel Lobb
Senior  Loan Officer
 Fax:     (502) 327-9119

KY USDA Homes for Sale

Address Bed/Bath Price  
274 SHELBY HURST RD 3/2 $28,000.00
WILLIAMSBURG, KY 40769   Real Estate Owned
2217 Brent Ann Drive 0/0 $10,000.00
Flatwoods, KY 41139   Real Estate Owned
390 Boggs Rd 3/1 $41,000.00
Oliver Hill, KY 41164   Real Estate Owned
111 Sun Valley Drive 3/1 $26,000.00
Edmonton, KY 42129   Real Estate Owned
168 Cedarbrook Ct 3/1 $58,000.00
Cynthiana, KY 41031   Real Estate Owned
14699 Hwy 460 W 3/1 $63,000.00
Ezel, KY 41425   Real Estate Owned
712 Falls Lane 2/1 $43,000.00
Grayson, KY 41143   Real Estate Owned
30 WELLS CT 3/1 $35,000.00
MONTICELLO, KY 42633   Real Estate Owned
127 Lewis Lane 3/1 $27,000.00
Grayson, KY 41143   Real Estate Owned
111 Pelfrey Rd 4/2 $108,000.00
Morehead, KY 40351   Real Estate Owned
14773 Highway 460 3/1 $56,000.00
Ezel, KY 41425   Real Estate Owned
217 W Lynn Street 3/2 $98,000.00
Georgetown, KY 40324   Real Estate Owned
6300 Bull Fork Rd 3/2 $118,000.00
Morehead, KY 40351   Real Estate Owned
205 Evergreen Drive 3/1 $84,000.00
Irvine, KY 40336   Real Estate Owned
526 Bailey Rd 3/1 $35,000.00
Annville, KY 40402   Real Estate Owned
207 McArthur Street 3/1 $42,000.00
Russelville, KY 42276   Real Estate Owned
12 S Jackson Street 3/1 $40,000.00
Sturgis, KY 42549   Real Estate Owned
1785 Hwy 882 3/1 $50,900.00
Ezel, KY 41425   Real Estate Owned
7342 State Rt 5 3/1 $26,000.00
Ashland, KY 41102   Real Estate Owned
6125 Springbrook 3/2 $100,000.00
Paducah, KY 42001   Real Estate Owned
29 Sylvan Drive 3/1 $108,000.00
Independence, KY 41051   Real Estate Owned
229 Paul Nora 3/2 $85,000.00
Campbellsburg, KY 40011   Real Estate Owned
2 Smith 3/1 $36,180.00 – GovtBid
Monticello, KY 42633   Foreclosure Sale
108 Morgan Lane 3/2 $49,580.00 – GovtBid
Hopkinsville, KY 42240   Foreclosure Sale
2610 SR 564 3/2 $25,125.00 – GovtBid
Mayfield, KY 42066   Foreclosure Sale
167 Crestview Dr 3/1 $16,750.00 – GovtBid
Mayfield, KY 42066   Foreclosure Sale
6465 Cherry Lane 3/1 $41,540.00 – GovtBid
Utica, KY, KY 42376   Foreclosure Sale
3580 State Route 125 3/2 $26,800.00 – GovtBid
Hickman, KY 42050   Foreclosure Sale
1015 Walnut Creek Dr 3/2 $84,090.00 – GovtBid
Barstown, KY 40004   Foreclosure Sale
410 Hillside Drive 3/1 $23,450.00 – GovtBid
Mayfield, KY 42066   Foreclosure Sale
124 Brookview Dr 3/1 $36,850.00 – GovtBid
Nicholasville, KY 40356   Foreclosure Sale
120 Alder Drive 3/2 $89,185.00 – GovtBid
Bardstown, KY 40004   Foreclosure Sale
107 Cedar Street 3/1 $13,400.00 – GovtBid
Fulton, KY 42041   Foreclosure Sale
271 Mildred Rd. 3/2 $39,530.00 – GovtBid
McKee, KY 40447   Foreclosure Sale
70 Little Cabin Creek Rd. 3/2 $55,370.00 – GovtBid
Vanceburg, KY 41179   Foreclosure Sale
225 Forest Hill Road 3/1 $53,985.00 – GovtBid
Greenville, KY 42345   Foreclosure Sale
1215 Shepard Way 3/2 $68,900.00 – GovtBid
Shelbyville, KY 40065   Foreclosure Sale
103 Rose Lane 3/2 $45,560.00 – GovtBid
Nicholasville, KY 40356   Foreclosure Sale

Joel Lobb
Senior  Loan Officer

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

Kentucky USDA Rural Home Loans : 100% Financing

Kentucky USDA Rural  Home Loans : 100% Financing

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

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

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


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

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

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

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

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

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

Joel Lobb
Senior  Loan Officer

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




Mortgage News

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

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

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

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

What Are The Benefits Of A USDA Home Loan?

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

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