Ky Rural Housing and USDA Loans Guidelines


USDA/Rural Housing 0 Down




Kentucky Single Family Housing Guaranteed Loan Program


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%
reimbursed.
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
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 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)
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 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







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Kentucky Rural Development Loans




Kentucky Mortgage USDA Loan Requirements

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. Standard debt-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 620 or above is required for all loans

•Your overall pattern rather than to individual problems you may have had.

To be eligible for an 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 620 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 here. 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 Kentucky 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 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, ENG Lending’s USDA Rural Mortgage Loans can give you piece of mind with zero-down, super low closing costs and no monthly mortgage insurance.



What Types of Loans does USDA offer in Kentucky?

Currently, there are two kinds of USDA Home Loans available in Kentucky for single family households:



USDA Guaranteed Rural Housing Loans

USDA Guaranteed Home Mortgage Loans 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 Rural Loan 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 Rural Housing Loan approval through ENG Lending. 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 Rural Home 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 Rural Development Loan amount is 102% of the appraised value of the home (100% plus the 2% USDA RD Loan guarantee fee).



How much money will I need for the down payment and closing costs?

USDA Rural Development 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.



Kentucky USDA Loan Adjusted Maximum Income Limits by County

verything You Need To Know About USDA-Rural Home Loans



 I have put together valuable information and tools to help you gather all of the information that you need to make the most informed decision when shopping for a mortgage. Sometimes the USDA Home Loan Program is not the best option for a Zero Down Purchase. .


Sometimes good credit and a down payment are not enough to qualify for a home loan at a commercial lending institution, such as a bank, savings and loan or with a mortgage broker. That is why the U.S. Department of Housing and Urban Development has provided a loan program that allows more rural families and individuals to be eligible to become homeowners with the help of a USDA guaranteed home loan. The USDA loan program allows:

- 640 min credit score

- Up to 6% seller contributions

- No PMI (private mortgage insurance)

- Zero Down

Borrower Eligibility


USDA Rural Program Guidelines


Borrower Eligibility

U.S. citizens

Permanent resident aliens

First time homebuyers allowed

Maximum 2 borrowers allowed

Non-occupant co-borrowers NOT allowed

Commitment Fee

USDA Rural Developmet charges a 2.0% Commitment Fee

Commitment Fee can be financed into the loan

Example:

Purchase price - $100,000

Loan amount - $102,000

Commitment Fee - $2,000

Maximum financed loan amount = $102,000 ($100,000 [purchase price]/.98)



Downpayment Requirement

No down payment is required

If borrower has adequate assets (i.e. 20% of the property purchase price) to obtain conventional financing the borrower may be ineligible for the USDA Rural Development Loan

Eligible Properties

Must be in an eligible USDA Rural Development Location

Owner-occupied properties

Existing attached & detached single family residences

New construction with permanent financing only

2-4 unit properties

PUD's (i.e. Townhomes)

Condo-units. HUD, VA, FNMA or FHLMC approved project

Ineligible Properties

Co-ops

Mixed-use

Condotels

Manufactured homes

Log cabin homes

Single Family Homes:

The property must be "Modest" residential lot that can't be subdivided

Land value exceeds 30% of the appraised value



Maximum Income Amount

County specific. Reference the USDA website for adjusted household income limits

Maximum Loan-To-Value

Maximum loan-to-value is 103.50%

Maximum Mortgage Amount

None

With in-ground swimming pool

Minimum Credit Score

Middle Credit Score - 640 for each applicant

Monthly Mortgage Insurance Premium (MIP) Requirements

0%. USDA Loan doesn't require a monthly mortgage insurance premium

Multiple Property Ownership

USDA Rural Development primarily doesn't allow applicants to own other properties

Exceptions include when the other property owned is:

Not owned in the local commuting area as the new property; or

Not structurally sound and/or functionally adequate



Occupancy Type

Owner occupied only

Qualifying Ratios

29/41% debt-to-income (DTI) - Target

39/49% debt-to-income (DTI) - With compensating factors such as:

680 or higher credit score

No or low "payment shock" - less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses

Fiscally sound use of credit

Ability to accumulate savings

Stable employment history with 2 or more in current position or continuous employment history with no job gaps

Cash reserves available for use after settlement

Career advancement as indicated by job training or additional education in the applicants profession

Trailing spouse income - as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area

Low total debt



Seller Contribution

Unlimited Contribution towards closing costs, prepaids, discount points, buydown fees, and upfront Commitment Fee

Transaction Types

Purchase

Rate/Term Refinance on existing USDA loan


However, the USDA-RD loan program DOES have 2 main qualifying features:

(1) Eligibility is region or location specific CLICK HERE http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp&NavKey=property@11 to check if an address is USDA Eligible.

(2) Eligibility is income specific. Qualifying income is based on household members and a max income cap. CLICK HERE http://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state&NavKey=income@11 to see if you qualify under the max income cap.



County Name 1-4 Person Households

(Guaranteed Loans) 5-8 Person Households

(Guaranteed Loans)

NON-METRO ADAIR $73,600 $97,150

NON-METRO ALLEN $73,600 $97,150

FRANKFORT, KY (MICRO) ANDERSON $73,600 $97,150

PADUCAH, KY-IL (MICRO) BALLARD $73,600 $97,150

GLASGOW, KY (MICRO) BARREN $73,600 $97,150

MOUNT STERLING, KY (MICRO) BATH $73,600 $97,150

MIDDLESBOROUGH, KY (MICRO) BELL $73,600 $97,150

CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA) BOONE $73,600 $97,150

LEXINGTON-FAYETTE, KY (MSA) BOURBON $73,600 $97,150

HUNTINGTON-ASHLAND, WV-KY-OH (MSA) BOYD $73,600 $97,150

DANVILLE, KY (MICRO) BOYLE $73,600 $97,150

CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA) BRACKEN $73,600 $97,150

NON-METRO BREATHITT $73,600 $97,150

NON-METRO BRECKINRIDGE $73,600 $97,150

LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA) BULLITT $73,600 $97,150

NON-METRO BUTLER $73,600 $97,150

NON-METRO CALDWELL $73,600 $97,150

MURRAY, KY (MICRO) CALLOWAY $73,600 $97,150

CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA) CAMPBELL $73,600 $97,150

NON-METRO CARLISLE $73,600 $97,150

NON-METRO CARROLL $73,600 $97,150

NON-METRO CARTER $73,600 $97,150

NON-METRO CASEY $73,600 $97,150

CLARKSVILLE, TN-KY (MSA) CHRISTIAN $73,600 $97,150

LEXINGTON-FAYETTE, KY (MSA) CLARK $73,600 $97,150

NON-METRO CLAY $73,600 $97,150

NON-METRO CLINTON $73,600 $97,150

NON-METRO CRITTENDEN $73,600 $97,150

NON-METRO CUMBERLAND $73,600 $97,150

OWENSBORO, KY (MSA) DAVIESS $73,600 $97,150

BOWLING GREEN, KY (MSA) EDMONSON $73,600 $97,150

NON-METRO ELLIOTT $73,600 $97,150

NON-METRO ESTILL $73,600 $97,150

LEXINGTON-FAYETTE, KY (MSA) FAYETTE $73,600 $97,150

NON-METRO FLEMING $73,600 $97,150

NON-METRO FLOYD $73,600 $97,150

FRANKFORT, KY (MICRO) FRANKLIN $73,600 $97,150

UNION CITY, TN-KY (MICRO) FULTON $73,600 $97,150

CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA) GALLATIN $73,600 $97,150

NON-METRO GARRARD $73,600 $97,150

CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA) GRANT $73,600 $97,150

MAYFIELD, KY (MICRO) GRAVES $73,600 $97,150

NON-METRO GRAYSON $73,600 $97,150

NON-METRO GREEN $73,600 $97,150

HUNTINGTON-ASHLAND, WV-KY-OH (MSA) GREENUP $73,600 $97,150

OWENSBORO, KY (MSA) HANCOCK $73,600 $97,150

ELIZABETHTOWN, KY (MSA) HARDIN $73,600 $97,150

NON-METRO HARLAN $73,600 $97,150

NON-METRO HARRISON $73,600 $97,150

NON-METRO HART $73,600 $97,150

EVANSVILLE, IN-KY (MSA) HENDERSON $73,600 $97,150

LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA) HENRY $73,600 $97,150

NON-METRO HICKMAN $73,600 $97,150

MADISONVILLE, KY (MICRO) HOPKINS $73,600 $97,150

NON-METRO JACKSON $73,600 $97,150

LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA) JEFFERSON $73,600 $97,150

LEXINGTON-FAYETTE, KY (MSA) JESSAMINE $73,600 $97,150

NON-METRO JOHNSON $73,600 $97,150

CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA) KENTON $73,600 $97,150

NON-METRO KNOTT $73,600 $97,150

NON-METRO KNOX $73,600 $97,150

ELIZABETHTOWN, KY (MSA) LARUE $73,600 $97,150

LONDON, KY (MICRO) LAUREL $73,600 $97,150

NON-METRO LAWRENCE $73,600 $97,150

NON-METRO LEE $73,600 $97,150

NON-METRO LESLIE $73,600 $97,150

NON-METRO LETCHER $73,600 $97,150

MAYSVILLE, KY (MICRO) LEWIS $73,600 $97,150

DANVILLE, KY (MICRO) LINCOLN $73,600 $97,150

PADUCAH, KY-IL (MICRO) LIVINGSTON $73,600 $97,150

NON-METRO LOGAN $73,600 $97,150

NON-METRO LYON $73,600 $97,150

RICHMOND-BEREA, KY (MICRO) MADISON $73,600 $97,150

NON-METRO MAGOFFIN $73,600 $97,150

NON-METRO MARION $73,600 $97,150

NON-METRO MARSHALL $73,600 $97,150

NON-METRO MARTIN $73,600 $97,150

MAYSVILLE, KY (MICRO) MASON $73,600 $97,150

PADUCAH, KY-IL (MICRO) MCCRACKEN $73,600 $97,150

NON-METRO MCCREARY $73,600 $97,150

OWENSBORO, KY (MSA) MCLEAN $73,600 $97,150

LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA) MEADE $73,600 $97,150

MOUNT STERLING, KY (MICRO) MENIFEE $73,600 $97,150

NON-METRO MERCER $73,600 $97,150

GLASGOW, KY (MICRO) METCALFE $73,600 $97,150

NON-METRO MONROE $73,600 $97,150

MOUNT STERLING, KY (MICRO) MONTGOMERY $73,600 $97,150

NON-METRO MORGAN $73,600 $97,150

CENTRAL CITY, KY (MICRO) MUHLENBERG $73,600 $97,150

LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA) NELSON $73,600 $97,150

NON-METRO NICHOLAS $73,600 $97,150

NON-METRO OHIO $73,600 $97,150

LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA) OLDHAM $73,600 $97,150

NON-METRO OWEN $73,600 $97,150

NON-METRO OWSLEY $73,600 $97,150

CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA) PENDLETON $73,600 $97,150

NON-METRO PERRY $73,600 $97,150

NON-METRO PIKE $73,600 $97,150

NON-METRO POWELL $73,600 $97,150

SOMERSET, KY (MICRO) PULASKI $73,600 $97,150

NON-METRO ROBERTSON $73,600 $97,150

RICHMOND-BEREA, KY (MICRO) ROCKCASTLE $73,600 $97,150

NON-METRO ROWAN $73,600 $97,150

NON-METRO RUSSELL $73,600 $97,150

LEXINGTON-FAYETTE, KY (MSA) SCOTT $73,600 $97,150

LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA) SHELBY $73,600 $97,150

NON-METRO SIMPSON $73,600 $97,150

LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA) SPENCER $73,600 $97,150

CAMPBELLSVILLE, KY (MICRO) TAYLOR $73,600 $97,150

NON-METRO TODD $73,600 $97,150

CLARKSVILLE, TN-KY (MSA) TRIGG $73,600 $97,150

LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA) TRIMBLE $73,600 $97,150

NON-METRO UNION $73,600 $97,150

BOWLING GREEN, KY (MSA) WARREN $73,600 $97,150

NON-METRO WASHINGTON $73,600 $97,150

NON-METRO WAYNE $73,600 $97,150

EVANSVILLE, IN-KY (MSA) WEBSTER $73,600 $97,150

CORBIN, KY (MICRO) WHITLEY $73,600 $97,150

NON-METRO WOLFE $73,600 $97,150

LEXINGTON-FAYETTE, KY (MSA) WOODFORD $73,600 $97,150


Kentucky USDA Rural Development Mortgage

Kentucky USDA Rural DevelopmentMortgage Overview

FeaturesBenefits
Down Payment is not requiredBorrowers without savings, or who wish to retain their savings qualify
100% financingMore Americans become homeowners
No reserves are requiredBuyers do not need to provide bank statements
Expanded qualifying ratiosBuyers with satisfactory credit may qualify with higher Debt-to-Income ratios to accommodate high cost housing areas, etc
Seller is allowed to pay Buyer’sClosing Cost (ask KentuckyUSDA Specialist for details)Reduces out of pocket costs for Buyers
Low minimum credit score (640 minimum credit score required)Buyers with non-traditional or no credit histories may qualify
Streamlined processing with 640 credit scoreNo explanations on credit with 640+ score
Very low monthly PMINo monthly mortgage insurance means a lower monthly payment for the Buyers and additional cash each month
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 limitBuyers choose the home that meets their needs and repayment ability
NOT just for first time buyersAll homebuyers are eligible for benefits
Modular Homes may be eligiblePurchases only (Manufactured Homes are NOT Eligible)
Education/training substitute for job tenureIncome history for ratios is waived.
USDA is the lowest payment loan option for buyers wanting aFIXED RateNo 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).
What is the Maximum LTV for a Kentucky 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 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.



Changes to RHS Guarantee and Annual Fee
Effective on October 1, 2012, RHS will revise the Up-Front Guarantee Fee and Annual Fee structure as follows:

Up-Front Guarantee Fee
Through
Sept. 30, 2012
Effective
Oct. 1, 2012
Purchase Transactions (no change)
2%
2%
Refinance Transactions
1.5%
2%

Annual Fee
Through
Sept. 30, 2012
Effective
Oct. 1, 2012
Purchase Transactions
.30%
.40%
Refinance Transactions
.30%
.40%

Loan guarantee requests submitted to RHS by September 30, 2012, in which a conditional commitment has not been issued, will be subject to the new, October 1, fee structure.  Lenders are encouraged to plan for the changes because, as mentioned previously, some RHS offices are experiencing extreme backlogs in loan guarantee delivery.