Friday, September 13, 2013

How do I Qualify for a Kentucky Rural Housing USDA 502 Home Loan Program?

How do I Qualify for a Kentucky Rural Housing USDA 502 Home Loan Program?


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DIFFERENCES BETWEEN THE KENTUCKY RURAL DEVELOPMENT SECTION 502 GUARANTEED AND DIRECT LOAN PROGRAMS 

There are several other Section 502 loan programs, but the only one that approaches the guaranteed 
program in number of loans made is the Homeownership Direct Loan Program.
 The important differences between the Section 502 guaranteed and direct loan programs are 
as follows: 
The lender for Section 502 guaranteed loans is a private savings and loan institution, bank, or 
mortgage company which also handles all the loan servicing. The lender for the direct program is the 
Rural Housing Service; Rural Development handles the servicing. 


Income levels for Section 502 guaranteed borrowers are capped at 115 percent of the area 
median income. Income levels for the direct program must be no more than 80 percent of the 
AMI. 

Payment assistance subsidy is not available through the guaranteed program. Payment 
assistance, which can reduce the interest paid on the mortgage to as low as 1 percent, is available 
for borrowers in the direct program and is based on the borrower’s income as a percent of AMI. 
Borrower protections differ between the programs. 

Applicants for guaranteed loans do not have the rights of moratorium or of appeal that accompany 
the direct program. Also, in the case of default, Section 502 guaranteed loans are liquidated by 
the commercial lender, while direct loans are liquidated by the government. 




--
Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell

kentuckyloan@gmail.com