Thursday, December 31, 2015

Kentucky Interest Rates for the USDA Rural Housing 502 Direct Programs for 2016

 

The following interest rates, effective January 1, 2016, are reported as follows for the Kentucky 502 Direct Rural Housing USDA Loan Program: 
**Please note this program is different than the 502 Guaranteed Loan Program backed by USDA and offered by Mortgage Banks and Lenders in Kentucky.

See link below about the differences between the 502 Direct Loan Program and the 502 Guaranteed Program.
JAN Interest Rates
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What does this program do? 
Also known as the Section 502 Direct Loan Program, this program assists low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.
Who may apply for this program?
A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house and they must demonstrate a willingness and ability to repay debt.
Applicants must:
  • Be without decent, safe and sanitary housing
  • Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet
  • Agree to occupy the property as your primary residence
  • Have the legal capacity to incur a loan obligation
  • Meet citizenship or eligible noncitizen requirements
  • Not be suspended or debarred from participation in federal programs
Properties financed with direct loan funds must:
  • Generally be 1,800 square feet or less
  • Not have market value in excess of the applicable area loan limit
  • Not have in-ground swimming pools
  • Not be designed for income producing activities
Borrowers are required to repay all or a portion of the payment subsidy received over the life of the loan when the title to the property transfers or the borrower is no longer living in the dwelling.
Applicants must meet income eligibility for a direct loan.  Please select your state from the dropdown menu above.
What is an eligible area?
Generally, rural areas with a population less than 35,000 are eligible.  Visit the USDA Income and Property Eligibility website for complete details.
How may funds be used?
Loan funds may be used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.
How much may I borrow?
The maximum loan amount an applicant may qualify for will depend on the applicant’s repayment ability. The applicant’s ability to repay a loan considers various factors such as income, debts, assets and the amount of payment assistance applicants may be eligible to receive. Regardless of repayment ability, applicants may never borrow more than the Area's Loan Limits (plus certain costs allowed to be financed) for the county in which the property is located.
What is the interest rate and payback period?
  • Fixed interest rate based on current market rates at loan approval or loan closing, whichever is lower
  • Interest rate when modified by payment assistance, can be as low as 1%
  • Up to 33 year payback period - 38 year payback period for very low income applicants who can’t afford the 33 year loan term
How much down payment is required?
No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets.


Joel Lobb
Senior  Loan Officer
(NMLS#57916)

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