Friday, October 10, 2014

Kentucky Rural Housing USDA Mortgage Prequalification Guidelines

Kentucky Rural Housing USDA Mortgage Prequalification

Before you start shopping for a mortgage loan, it is important to determine how much home you can afford and insure you meet all the USDA loan eligibility requirements.: These three areas below are what we look at when we approve you for a Ky Rural Housing Mortgage Loan:  

  • Your income - How much you earn through your job and other sources of income. Also insure your household income is below the Kentucky Rural Housing USDA eligibility income limits by County. Typically they will want to see your housing ratios (there are two ratios to consider) to be around 31% of your total gross monthly income, and your new house payment plus total other bills on credit report to be no more than 45% of your total gross monthly income, this is also called your back end-ratio.
For example if you make $3000 a gross month, then your max house payment would be $931.00, and your total monthly bills to include your new house payment would be $1350.00 a month. The total monthly bills does not include your utilities, cell phone bill, insurance etc. It includes only the bills reporting to credit report and child support.

  • Your credit— Your credit score and credit report history will determine the creditworthiness of your loan application. When it comes to credit scores, most lenders are wanting to see a minimum credit score of 640, with some lenders going below that will compensating factors. A compensating factor would be a low debt to income ratio, or no payment shock on your new loan. Payment shock is when your new house payment is substantially more tan your current rent payment. Lenders will use GUS, Guarantee Underwriting System to determine the credit quality of the loan application and anything with an ineligible recommendation will be turned down. If you get an Accept Eligible, or a Refer Eligible then you may proceed with the loan application. Most loan applicants with scores below 640, will be referred or denied, but they can still be done if they are marked refer eligible and there is a verifiable rent history, with no payment shock and rations being 29% and 41% respectively

  • Your assetsIf you have access to 20% down on your new home purchase, then you cannot use the Ky Rural Housing Guaranteed Loan Program. This program is designed for Kentucky Home Buyers with less than 20% down payment.  You don't have to be a first time home buyer in Ky to use the program, but you cannot currently own another home at time of closing.
  • With scores below 680, I have noticed GUS is wanting two months reserves to still get loan approval, so if you do have money saved-up, it is still a good idea to show it in your checking and savings account. 
Ky Rural Housing Loans, along with VA loans, is still the best 100% Financing option for Ky Home buyers in my opinion. It require no down payment, has low mortgage insurance requirements, and can be closed in a regular 30-45 day time like most other secondary market loans (FHA, VA, Fannie Mae etc)

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