Saturday, June 17, 2017

Equifax, Experian, and TransUnion will no longer provide information regarding civil judgments and tax liens on reports as of July 1, 2017.

New Credit Report Changes Coming Soon for Kentucky Rural Housing Mortgage USDA  Loans and Fico Scores for 2017

In an effort to make credit reports more accurate, all three credit reporting agencies of Equifax, Experian, and TransUnion will no longer provide information regarding civil judgments and tax liens on reports as of July 1, 2017.  The impact to credit scores is anticipated to be minimal.  There are no changes to the current reporting of foreclosure and bankruptcy data. 

There will be no updates to HB-1-3555 and the following will continue to apply for Single Family Housing Guaranteed Loans:

  • Lenders must secure a marketable first lien as required in 7 CFR Part 3555, 3555.204 and HB-1-3555 Chapter 16. 
  • USDA’s current policy regarding judgments and tax liens in 3555.151(i)(5) and HB-1-3555 Chapter 10:  10.10 and Attachment 10-B will apply. 
  • If a lender identifies a judgment or tax lien for a GUS “Accept” loan file, the manual entry of the debt on the “Assets and Liabilities” application page will not require the file to be downgraded.  The GUS “Accept” recommendation remains valid and the lender must appropriately underwrite the loan file under the requirements of 7 CFR 3555 and HB-1-3555. 

USDA will continue to monitor the performance of guaranteed loans to determine if any future policy changes may be necessary.

Monday, June 12, 2017

What are the income and employment guidelines for a Kentucky Rural Development Loan Housing Approval?

What is an acceptable income and employment for a KY USDA Loan Approval?

 There is no minimum length of time an applicant must have held a position to
 consider employment income as dependable.
 Lender must verify the applicant’s employment for the most recent 2 full years
& verify that the applicant’s income has been stable.
 The applicant should not have any gaps in employment of more than a month
 within the 2 year period prior to making the loan application.
 Applicants that have not been employed for 12 months with their current
employer or have experienced a significant earnings increase are considered high

• Second jobs, full 2 year history
• Unearned income, 3 year continuance
• Self‐employed applicants, 2 year history

Newly Employed:

Less than a 2-year employment & income history can be considered when documentation = applicant was attending school immediately prior to current employment.
School Program/Classes must correlate to job!
For those applicants about to start a new job:
Firm offer letter from new employer indicating the job will begin within 60 days of loan closing

Re-entering the Workforce:

Applicants who re-enter the workforce after an absence to care for a family member or minor child,
extended medical illness, or other reasonable circumstances & less than 2-year employment &income history: May be considered for repayment income if the applicant has been at the current employer for a minimum of six months and there is evidence of a previous employment history

Significant increases or decreases in income level:

Experienced a Significant Decrease?

Previous higher income cannot be averaged for repayment purposes
 unless there is documentation of a one-time occurrence (e.g. injury)
that prevented working or earning full income for a period of time & proof that the applicant
is back to the income amount that they previously earned. Focus on the most recent earnings
and income that is likely to be received at the level used for qualifying.

 Experienced a Significant Increase?

 Proposing to qualify the applicant at the higher amount?

 NEED: sufficient documentation to confirm the increased income is stable and likely to
continue at the level used as part of the written analysis

Fixed Income like Social Security, SSI, non-taxable income:

• May be grossed up 25% for repayment
• Do not gross up for annual income
• No other adjustments are authorized

If you have questions about qualifying as first time home buyer in Kentucky using the USDA Home Loan Program, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.

I have successfully originated over 200 USDA Home loans in Kentucky. Put my experience to work for you. Your Kentucky USDA Rural Housing Loan Expert.

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 views of my employer. Not all products or services mentioned on this site may fit all people

100 percent Financing Kentucky USDA Rural Development Loans

Kentucky Rural Housing Loans for 2017

USDA home loans in Kentucky are also known as the Rural Development Loan or RHS Loans. It is one of the best options for homebuyers that are currently looking for a home outside the urban areas of Lexington, Louisville, Bowling Green and Northern Kentucky that requires No Money Down. 
Another major advantage of this home loan is it’s fixed interest rate.  The fixed interest rate insulate buyers from interest rate fluctuations. You’ll have the same monthly loan repayment throughout the life of your loan.
100 percent Financing Kentucky USDA Rural Development Loans will allow you to roll up some of your closing cost into your monthly mortgage. While it is impossible to avoid closing costs of the home purchase, it is possible to have the seller pay for some of these cost and or arranged for them to be added to your total loan with minimal impact on your monthly payments.

Eligibility for Kentucky USDA Loans

When applying for eligibility for 100% USDA loans, There are six factors taken into account:
  • Loan income restrictions Most household income limits are set between $75k for a family of four, and up to $98k for a family of five or more see map >>>>>
  • Credit score  You have three credit scores, they throw and the high and low score and take the middle score of each of the three main credit bureaus, experian, equifax, and transunion.Most lenders will want a 640 middle credit score due to the fact that GUS (Guaranteed Underwriting System) will not give you an automated approval upfront if the middle score is below the 640 threshold. You may get a refer eligible on the initial pre-approval but a lot of lenders will not honor a refer eligible USDA file. 
  • Property Ownership (Do you own other Property) In most cases, USDA will not allow you to use their program to purchase another home if you already have a home in your name. In some extreme cases, they will waive this if certain exceptions are met. You can call or email me for more details on this matter. The USDA loans are only available for single family primary residences. No rental homes or working farms are allowed on the USDA Home Loan Program
  • Residential Location (USDA Eligibility:  to checkk click here ) Is the property located in a Eligible area. See link above for eligibility boundaries for counties in Kentucky
  • Debt to Income Ratios: If your credit score is above 640, GUS will typically limit your backend ratio to 45% of your total gross income. The front end ratio, or the housing ratio, usually is centered around 30% to 35% range, with compensating factors such as assets or money in bank to cover your new house payment, disposable income, high credit scores, and no rent payment shock. Rent payment shock is where your new house payment is much larger than your current rent payment. This only comes into play on lower credit scores.
  • Assets  I have noticed that with 3 or 4 months reserves you can typically get a loan approved with lower credit scores with payment shock on the new loan. Additionally, if you have access to 20% down payment in your checking or savings account, they will make you use your own money. If the money is in a 401k or other tax deferred savings accounts this will not factor in and you can use the USDA loan program.
  • I can explain this more in detail if you want to call or email me. 


Joel Lobb
Senior  Loan Officer

 phone: (502) 905-3708
 Fax:     (502) 327-9119

Kentucky Rural Development Guidelines for Pools, credit scores, debt ratios.

Kentucky Rural Development Guidelines for Pools, credit scores, debt ratios. 

1. Is the property in an eligible area? Check address at:
Click on ‘single family’ under the link “Property eligibility”. Type in address or go to map.

2. Is their household income within the Agency limits? See the chart. Use the fast easy
calculator at Click on ‘single family’ under ‘Income Eligibility’

3. Do they have reasonable credit? Your lender’s underwriter makes the credit decision. Our
streamlined processing does not require credit explanations if the FICO is 640 or higher (EXCEPT with recent  Bankruptcy in last 3 years or a foreclosure in the last 3 years). Alternate credit is acceptable. 580 and below would be rare. A 670+ score is a stand-alone  compensating factor. The lender’s underwriter makes the final decision on creditworthiness.

Do they have reasonable repayment ability? Ratios are 29/41% (31%/43% for homes built after
Jan 1, 2001) but can be waived when it makes sense.: .5% (.005) annual fee will be assessed. Rural Development is a direct guarantor. There is no mortgage insurance and the Guarantee remains at the  maximum of 90% of original principal borrowed. Fee cannot be prepaid and is billed annually to the servicing lender. Rate and Term: 30 year fixed, very competitive conventional rate

Other eligibility criteria:

.• No co-signors residing outside of the household.
• In-ground swimming pools. The loan, not including RD fee, is limited to the appraised value WITHOUT the pool. The FHA appraiser must justify value ‘as is’ AND a value as if the property had no pool. The value of the  pool must be established and justified

Joel Lobb
Senior  Loan Officer

American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223

 phone: (502) 905-3708
 Fax:     (502) 327-9119

 Company ID #1364 | MB73346