Kentucky USDA Loans | Rural Housing Loans Kentucky

Kentucky USDA Loans | Rural Housing Loans Kentucky

Kentucky USDA Mortgage 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.

QUICK GUIDE

USDA, RURAL DEVELOPMENT

GUARANTEED RURAL HOUSING LOAN 

Advantages:

  • No Down Payment Required
  • 30 year fixed rate
  • 100% LTV plus the guarantee fee, if financed
  • Finance Closing Costs, if market value is sufficient
  • Expanded Ratios of 29/41%
  • No Mortgage Insurance
  • No cash contribution required from borrower
  • Unrestricted gifts
  • No Maximum Loan Amount – loan amount based on repayment ability of applicant
  • No Reserve Requirement
  • High earnings potential
  • Competitive rates (set by underwriting lenders)
  • Available secondary markets: wholesale lenders as well as Fannie Mae and Freddie Mac.
  • Utilize in Conjunction with State Housing Authorities, if available

 

Rural Development designated rural area:

  • Homes must be located in rural areas.  Rural areas include open country and places with a population of 10,000 or less and-under certain conditions-towns and cities with between 10,000 and 25,000 residents.  See the rural area eligibility site at http://eligibility.sc.egov.usda.gov, click on “property eligibility”.  If you need additional assistance, please contact your local Rural Development office.

 

Acceptable credit history:

  • Have a credit history that indicates a reasonable willingness to meet obligations as they become due
  • Lender underwrites the loan
  • No minimum credit scores
  • Lack of credit is not derogatory
  • Caution for applicant(s) with multiple layers of risk such as:
    • payment shock; low credit scores; ratio waiver; credit waivers; 2-1 buy downs

 

Check maximum income for eligibility:

Applicant(s) have an adjusted 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 jurisdictions, and can provide further guidance on calculating household income.  There is an automated eligibility calculator at: http://eligibility.sc.egov.usda.gov

Applicant(s) repayment ability:

The ratio limits are 29 front (housing, PITI), 41 back (total debt, MOTI).  Rural Development allows expanded repayment ratios if the applicants have sufficient compensating factors. The underwriter must recommend the expanded ratio(s) and provide compensating factors to Rural Development.  Rural Development must concur with the underwriter’s recommendation in order to expand the ratios.

Other eligibility criteria:

  • Do not own a dwelling
  • Insufficient resources to secure conventional financing without the guarantee
  • U.S. citizen or permanent resident or qualified alien
  • Legal capacity
  • Primary residence

 

Loan-To-Value (LTV) and Loan Limit:

  • 100% LTV plus the amount of the guarantee fee, if financed
  • Loan amount can exceed appraised value by the amount of the guarantee fee
  • There is no loan limit

-Limiting factors will be ratios and income limit

Property requirements:

  • New or proposed home construction – stick built, modular, townhouses, condominiums, new manufactured homes.
  • Existing homes: Meet requirements of HUD Handbooks 4905.1 and 4150.2
  • New and existing: Private well water quality must meet local and state code.

 

FHA appraisers in the area can be found on the FHA web site: https://entp.hud.gov/idapp/html/apprlook.cfm

Existing (previously occupied) manufactured home financed under limited circumstances when home presently financed by USDA.

New manufactured homes:  Rural Development will finance new manufactured homes through approved dealer-contractors.  Contact your local Rural Development office for a list of approved dealer-contractors and the specifics of how new manufactured homes can be financed.

Modular homes:  New or existing modular homes can be financed the same as stick built homes.

Condo:  Rural Development can finance if it meets the standards for Fannie Mae, Freddie Mac, VA, or FHA.

Town home:  Same as condo.  A town home must have provisions for maintenance such as HOA.

Flood Zone:

Any existing improvements located in a special flood hazard area must have federal flood insurance coverage.  New construction is not permitted until a Letter of Map Revision/Amendment is issued by FEMA.

 

One time guarantee fee based on the final loan amount

This fee can be financed along with other closing costs.  The first mortgage guaranteed loan cannot exceed appraised value by more than the amount of the fee financed.  No mortgage insurance requirement.

 

Term: 30 year fixed

 

Interest Rate:

  • Fannie Mae 90 day delivery plus 60 basis points rounded to the nearest quarter percent or
  • The lenders published VA rate with no discount points

 

Prohibited Loan Purposes:

  • In-ground swimming pools – unless value is deducted from the loan request
  • Existing manufactured homes
  • Construction draws
  • Furniture and personal property
  • Income producing property
  • Non-essential buildings and land

 

Additional resources:

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7 thoughts on “Kentucky USDA Loans | Rural Housing Loans Kentucky”

  1. Louisville Ky Mortgage Lender FHA/VA KHC USDA Kentucky Mortgage: Kentucky FHA HUD Back to Work Program for FHA Borr…
    Louisville Ky Mortgage Lender FHA/VA KHC USDA Kentucky Mortgage: Kentucky FHA HUD Back to Work Program for FHA Borr…: Kentucky FHA HUD Back to Work Program for FHA Borrowers in Kentucky W h at is Back t o W o r k ? FHA i s c o nt i n u …

    Louisville Ky Mortgage Lender FHA HUD Kentucky Mortgage: Kentucky FHA HUD Back to Work Program for FHA Borr… http://www.mylouisvillekentuckymortgage.com/2013/09/kentucky-fha-hud-back-to-work-program.html?spref=tw

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