- USDA ELIGIBLE 100% FINANCING FOR SELECT AREAS OF KENTUCKY
- FIND OUT IF YOU QUALIFY
How much income do you need to qualify for on Kentucky USDA Mortgage Loan.
They look at two ratios on qualifying your for a mortgage loan going USDA, the front end ratio and the back-end ratio, also called the total debt to income ratio.
When looking at your qualifying repayment income, they will use your base gross income, not your net income.
The first ratio is called the piti ratio, which stands for principal, interest, taxes, mortgage insurance and home insurance, namely your new house payment.
See example below of what goes into your front-end ratio or piti ratio:
A. PITI: 29% The Ratios
• Real estate taxes
• Homeowners insurance
• Annual fee
• Additional assessments, HOA fees, e
The second ratio is called the total debt to income ratio, or sometimes called the back-end ratio. This consist of your new house payment along with your current monthly bills listed on the credit report. If you pay child support or have a 401k loan, this counts into your total debt to income ratio. What is not listed in your total debt to income ratio is car insurance, utility bills, cell phone bill, etc. --just strictly what's on credit report.
See example below of what goes into your total debt to income ratio:
B. Total Debt (TD): 41%
• Regular assessments
• Long‐term obligations (10 months or more repayment)
• Revolving accounts
• 30 day accounts
• Student loans
• Previous mortgage (divorce, sale, trade, transfer)
• Co‐signed debts
• Business debts
• Non‐Purchasing Spouse debts, as applicable
• Collections, as applicable
• Self‐employed loss
• Auto allowance and expense payments
• Rental loss
• Short‐term obligations (significant impact on repayment)
• Deferred payments
If your have certain credit scores that are higher, sometimes you can go higher than the standard 29 and 41% ratios for a loan approval. This is called a waiver. See debt ratio waiver guidelines below
Debt Ratio Waivers 101
• GUS Accept = no waiver required
• GUS Accept with full documentation = no waiver required
• GUS Refer, Refer with Caution, or manual uw = waiver
*GUS stands for the USDA automated underwriting engine that lenders use to pre-approve you for the loan. All USDA loans are ran though this online automated system for initial pre-approval requirement .
Debt Ratio Waivers: Purchases Manual UW
• All applicants = 680 credit score or higher
• Maximum ratios: 32% PITI / 44% TD
• 1 compensating factor with supporting documentation
– Proposed PITI less than or equal to previous 12 months of
verified housing cost with no late payments
– 3 months or more of PITI in reserve post loan closing
– All applicants employed with current employer for 2 years
• 680 credit score for all applicants
• Continuous employment with primary job
• Ability to accumulate savings
• 12 months mortgage paid as agreed