Wednesday, October 9, 2013

Kentucky USDA Rural Housing Single Family Housing Loan Guarantee Income and debt to income ratio requirements

Kentucky USDA Rural Housing Single Family Housing  Loan Guarantee Income and debt to income ratio requirements



Effective May 1, 2013, Agency concurrence of a debt ratio may be granted if all of 
the following conditions are met: 

1. The PITI is between 29 and 32 percent or the TD ratio is between 41and 44 
percent; 
2. The credit score of all applicant(s) is 680 or greater; and 
3. At least one of the acceptable compensating factors listed below is identified and 
supporting documentation is provided to the Agency. 

Acceptable Compensating Factors and Supporting Documentation: 

 The proposed PITI (proposed housing expenses) is equal to or less than the 
applicant’s current verified housing expense for the 12 month period preceding loan 
application. Verification of housing expenses may be documented on a Verification 
of Rent (VOR) or credit report. The VOR or credit report must include the actual 
payment amount due and report no late payments or delinquency for the previous 12 
months. Rent or mortgage payment histories from a family member will not be 
considered. 

 Accumulated savings of liquid assets or cash reserves available post loan closing are 
equal to or greater than 3 months of PITI payments. A Verification of Deposit or two 
consecutive bank statements, dated within 45 days of loan application, that document 
the average balance held by the applicant is required. Cash on hand is not eligible for 
consideration as a compensating factor. 

 The applicant(s) (all employed applicants) has been continuously employed with their 
current primary employer for a minimum of 2-years. A “Request for Verification of 
Employment” (VOE) (Form RD 1910-5, equivalent HUD/FHA/VA or Fannie Mae 
form, or other equivalent), or VOEs prepared by an employment verification service 
(The Work Number, etc.) must be provided. This compensating factor is not 
applicable for self-employed applicants. 



 
Debt Ratio Waiver Request and Agency Approval: 

Debt ratio waivers must be requested and documented by the approved lender, otherwise 
the loan file will be denied. The Agency will review the debt ratio waiver request when 
all of the following conditions are met: 

1) The lender requests Agency concurrence with the debt ratio waiver by submitting 
a signed underwriting analysis that captures one or more of the above 
compensating factors. Lenders may utilize Fannie Mae 1008 / Freddie Mac 1077, 
“Uniform Underwriting and Transmittal Summary,” or similar form; 

2) The PITI is between 29 and 32 percent or the TD ratio is between 41 and 44 
percent; 

3) The underwriting credit score is 680 or greater for all applicants; and 

4) The lender provides evidence of the compensating factor(s). 

The Agency will notify the lender of concurrence with the debt ratio waiver request by
issuance of Form RD 1980-18, “Conditional Commitment for Single Family Housing
Loan Guarantee.” The Agency must check the ratio waiver box in the Guaranteed Loan
System for manually underwritten loans or on the USDA Administration page in GUS for
“Refer” or “Refer with Caution” underwriting recommendation files. All supporting
documentation of the compensating factors must be imaged as an essential document in
the Rural Development Imaging Repository

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
kentuckyloan@gmail.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*

Louisville, KY 40222*