- Annual Qualifying Income – The requirement for calculations to be included on the Income Calculation worksheet have been removed and should now be included on Attachment 9-B, the underwriter transmittal summary, FNMA form 1008/Freddie form 1077, or equivalent
- 4506-T – The requirement for asset statements to be reviewed to ensure borrowers have no additional income sources has been removed.
- Repayment Income – MCC income must now be included in repayment income.
- Boarder Income – USDA now considers a boarder as a household member and a boarder’s income must now be included in annual income calculation. Rent paid by boarders that is reported on tax returns must also be included in annual income.
- Capital Gains – USDA removed requirement from Repayment Income to provide evidence showing borrowers own additional property or assets that may be sold if additional income is needed to support the mortgage obligation
- Commission – The borrower must now show one year history in same or similar line of work to include commission in repayment income.
- Fellowship, Stipend, Scholarship – Scholarship award letters must now provide date of termination and USDA will no longer presume benefits with no expiration date will continue. USDA also added guidelines for GI Bill income and stated it cannot be included in annual or repayment income.
- MCC – This income must now be included in repayment income, but no history is required. A copy of the W-4 from employer is required to verify borrower is taking tax credit on monthly basis. Note: MCC’s are ineligible with FWL as qualifying income.
- Unreimbursed Business Income – only taxable income is allowed to be included in repayment income
- Section 8 – USDA removed requirement for section 8 income to be deducted from the monthly PITI to determine DTI if it is paid directly to the loan servicer when included in the repayment income.
- Self Employed Income – Federal tax returns must now be reviewed to determine gross income for annual calculations. Removed requirement to deduct business loss before entering as repayment income into GUS or on loan application. Clarified documentation requirements as most recent 2 years of federal tax returns / transcripts & YTD P&L may be audited or unaudited
- Social Security Income – clarified documentation options and will allow social security benefit statement or form SSA-1099/1042S to source
- Temporary Leave – The history requirements for repayment income has been changed and now income must be received by loan closing.
- Cash on Hand – The underwriter must review the reasonableness of accumulation based upon income stream, spending habits, etc. and cash on hand can no longer be included in reserves
- Gift Funds – Clarification provided on how gift funds must be sourced when gift funds have been deposited into borrower’s account, not deposited into borrower’s account, or if funds are being wired directly to the settlement agent.
- Large Deposits – USDA no longer addresses lump sum additions.
What are the eligibility requirements for a Kentucky USDA loan?
The Kentucky Rural Housing USDA loan program has certain eligibility requirements .
Must be located in a eligible USDA Rural Housing Area.
The home would be your primary residence, not a rental property
Household income requirements beginning around $86,850 for a family of four and up to $115,400 for a family of five or more
Clear Cavirs Numbers.
No minimum credit score requirement but most lenders that offer USDA loans will want a 620 credit score or higher
What are USDA loan fees in Kentucky for 2020?
The upfront guarantee fee for fiscal year 2020 is 1 percent of the loan amount. This fee can often be rolled into the mortgage, instead of paying it out of pocket. The annual fee for is .35 percent of the loan amount.
It’s important to check the maximum income limits for your family size and where you live to get the most accurate data.
Advantages of USDA Loans
Zero Down Payment
Low Credit Score Requirements
Can finance closing costs up to appraised value
Streamline refinance an existing USDA with less documentation
No max loan amount
Disadvantages of USDA Loans
only eligible in rural areas
Must be 3 years removed from bankruptcy or foreclosure
Limited to Income Requirements
Debt to income ratios tighter qualifying guidelines than FHA, Fannie Mae
Mortgage Loan Officer
Originally posted on Louisville Kentucky Mortgage Loans:
via Credit Scores for Kentucky Mortgages
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!
What is a Kentucky USDA Rural home loan?
A Kentucky USDA home loan is a zero-dollar-down mortgage option provided by USDA’s Department of Rural Development.
This government-backed loan program comes in two types: direct loan, which is reserved for lower-income households and issued by USDA, and the guaranteed loan, which is reserved for low- to moderate-income families. The guaranteed loan is funded by private lenders, and USDA guarantees a portion of the loan against default.
Is a Kentucky USDA loan more beneficial than a Kentucky conventional loan?
The KY USDA home loan program is generally more beneficial to rural families than a conventional lending program, particularly for first-time homebuyers with lower- to median-level incomes.
Some of the benefits of Kentucky Rural Housing USDA loans include:
• zero down payment
• competitive interest rates
• lower-than-average monthly mortgage insurance
• relaxed credit requirements versus conventional loans
• no loan limits
How do I determine eligibility for a Kentucky Rural Housing USDA loan? To be eligible for a USDA home loan, borrowers must meet the program’s basic eligibility requirements. These requirements are relaxed compared to other mortgage options and are in place to ensure borrowers can make their monthly mortgage payments.
Here are a few of the basic Kentucky RHS USDA eligibility requirements:
• Income. Applicants must not have annual adjusted income greater than 115% of the median household income for the area. Check your county’s USDA income limit. This called compliance income.
|Kentucky Counties||Cincinnati (OH, KY, IN FMR)||Household income of 4 or less:||Household income of 5 or more:|
|All Other Areas||$86,700||$114,150|
• Credit. Applicants must have a minimum credit score of 581 to qualify for USDA’s guaranteed underwriting credit requirements. However, most lenders will want a 620 or preferably to get an Automated Approval 640 is the magic number in most cases. With regards to bankruptcy, 3 years is usually the date needed to lapse since your discharge.
• Employment. Applicants must have proof of two years of stable income and employment.
: Income: They will take your gross monthly income and develop two ratios for you: The front end ratio, which is called your housing ratio, and then the back-end ratio or total debt ratio is the house payment plus the total monthly payments listed on the credit report. If you pay child support, this is included in the qualifying ratios but utility bills, car insurance, cell phone bills, water bills etc, is not included. Typically 28% is used for the housing ratio, and
Student Loans: They are pretty tough on student loans and qualifying with your current student loan debts. They will make us use 1% of your outstanding balance on student loans, so sometimes this will cause the loan to get denied because your debt to income ratio is too high. If they are in an Income-Based repayment plan they will still make us use the 1% balance so keep this in mind. For example, let’s say you owe $35k in outstanding student loans, and your IBR plan calls for a $50 monthly payment. RHS will make us use $350, not the $50 IBR payment so you can see where this will cause issue on higher debt to income ratios on some loans.**********
Effective immediately for all Kentucky USDA Rural Housing Mortgage Loans.
If you are a Kentucky USDA Mortgage applicant who has student loan calculations will be changed to the following Fixed Payment Loans:
A permanent amortized, fixed payment may be used when it can be documented that the payment is fixed, the interest rate is fixed, and the repayment term is fixed.
Non-Fixed Payment Loans (i.e. deferred, income based, graduated, adjustable, etc.): The payment should be calculated as the greater of 0.5% of the loan balance or the actual payment reflected on the credit report. No additional documentation is required.
• Property location. Homes must be located within a rural area, as defined by USDA. Rural areas are any that have a population less than 35,000 depending on the area’s designation. Use this tool from USDA to determine if a specific address is eligible.
• Physical property. Homes must be the borrower’s primary residence, have direct access to a street, and have adequate utilities and water and wastewater disposal, among other things No working fams allowed or properties that income producing livestock or crops.
For those with lower incomes, a USDA direct loan provides greater opportunities for lending, as its credit and income requirements are more lax than the guaranteed loan option.
Senior Loan Officer
- For military personnel, a POA may only be used for one of the applications (initial or final), but not both:
- when the service member is on overseas duty or on an unaccompanied tour;
- when the Mortgagee is unable to obtain the absent Borrower’s signature on the application by mail or via fax;
- where the attorney-in-fact has specific authority to encumber the Property and to obligate the Borrower. Acceptable evidence includes a durable POA specifically designed to survive incapacity and avoid the need for court proceedings.
- For incapacitated Borrowers, a POA may only be used where:
- a Borrower is incapacitated and unable to sign the mortgage application;
- the incapacitated individual will occupy the Property to be insured;
- the attorney-in-fact has specific authority to encumber the Property and to obligate the Borrower. Acceptable evidence includes a durable POA specifically designed to survive incapacity and avoid the need for court proceedings.
- Households whose gross annual income does not exceed $40,000.
- An existing or new construction property (purchase price limit $130,000) in a county not receiving HHF DAP funds*.
- 640 minimum credit score.
- FHA, VA, or RHS first mortgage options.
- Households who meet one of the following criteria:
- At least one of the home buyers is age 62 or older.
- At least one member of the household is disabled and receiving disability income.
- A single-or two parent household with at least one dependent child under the age of 18 living in the household.
Senior Loan Officer
Ky Rural Housing and USDA Loans Guidelines
USDA/Rural Housing 0 Down
Kentucky Single Family Housing Guaranteed Loan Program
– 25 Frequently Asked Questions
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%
2 What is the advantage to the customer?
100 percent financing, fixed interest rate, no MIP/PMI, 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
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 3.5 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)
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 30% of the total property value.
16 Can Manufactured Homes be financed? Yes, however they must be new and sold by an approved dealer contractor.
17 What about an in-ground swimming pool? Waivers may be granted (on a case by case basis)
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 does not restrict the amount of seller concessions.
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
years, and telephone verification of employment.
25 Who buys Guaranteed Housing Loans? JP Morgan , FHLB, Fannie Mae, Ginnie Mae, and other
firstname.lastname@example.orgKey Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*
- Kentucky USDA Rural Housing Loan Program (kentuckyusdaloan.com)
- Kentucky USDA Rural Development Single Family Housing Guaranteed Loan Program (kentuckyusdaloan.com)
- Student Loans and Kentucky USDA Rural Development Mortgage Loans Guidelines (mylouisvillekentuckymortgage.com)
- New Rural Housing and USDA Property Eligibility guidelines for Kentucky Cities (kentuckyusdaloan.com)
- Kentucky USDA Rural Housing Loans : Kentucky USDA and Rural Housing Home Loan Map Chan… (mylouisvillekentuckymortgage.com)
- Kentucky USDA Rural Development Single Family Housing Guaranteed Loan Program (mylouisvillekentuckymortgage.com)
- Louisville Ky Mortgage Lender FHA/VA KHC USDA Kentucky Mortgage: Louisville Kentucky First Time Home Buyer Programs… (louisvillekentuckyvamortgage.blogspot.com)
- Kentucky Rural Housing and USDA Property Eligibility Requirement Changes March 27,2013 (mylouisvillekentuckymortgage.com)
- The Rural Housing Bubble (mylouisvillekentuckymortgage.com)
- Kentucky USDA Rural Housing Loans : Kentucky USDA and Rural Housing Home Loan Map Chan… (louisvillekentuckyvamortgage.blogspot.com)