Monday, September 30, 2019

Kentucky USDA Rural Development Loans Program Guidelines



Kentucky USDA Rural Development Loans Program Guidelines

Loan Purpose of Kentucky Rural Housing Loans

  • Purchase
  • One-time Close Construction Loan (very few lenders do this)
  • Rate-term refinance for existing USDA Loans Only. Cannot refinance a Conventional loan, FHA, VA, or other loans into an USDA loan. 

Credit Profile for a Kentucky Rural Housing Buyer


  • 581 minimum middle credit score for all borrowers on the loan – purchase
  • No score allowed with alternative trade lines
  • Most Kentucky USDA lenders will want a 620 or 640 score or higher. A 640 middle score is required for a USDA loan through GUS, the automated underwriting system used by rural development to determine the max lending limits for a loan. 
  • No foreclosure, short sale, or Chapter 7 bankruptcy discharge within three years of contract ratification date on credit report not permitted
  • Minimum of two tradelines on credit, with a positive pay history within the most recent 12-month period. Accounts can be open or closed
  • If two tradelines aren’t on credit, alternative tradelines can be
  • No mortgage delinquency in the last 12 months for a USDA-to-USDA Refinance

Loan Amount limits for USDA loans in Kentucky. 

  • No maximum loan amounts. A lot of borrowers think they're max limits on this because there is max limits on total household income by county in Kentucky, but there actually is no limit as long as the borrower gets approved on the ability to repay the loan. 

Mortgage Insurance Requirements and Premiums for USDA Loans:  

  • USDA charges a 1% Commitment Fee that is financed into the loan. Not paid out of pocket but can be
  • Commitment Fee can be financed into the loan 
    Example: 
    Purchase price - $100,000 
    Base Loan amount - $100,000 
    Commitment Fee - $1,010 ($100,000 [purchase price] /.99 - 100,000) 
    Maximum financed loan amount = $101,010
  • USDA requires a monthly Annual Fee (i.e. mortgage insurance premium) with an annual factorial of .35%
  • This is much lower than FHA's upfront 1.75% and the monthly mi of .85% so keep that in mind.

Ratios for USDA Loan Approval in Kentucky

  • 33.99/45.99% (DTI) with GUS Accept/Eligible underwriting findings
  • 29/41% debt-to-income (DTI) with GUS Accept/Refer underwriting findings and credit score less than 679
  • 31.99/42.99 with GUS Accept/Refer underwriting findings and credit score greater than 680 and with compensating factors such as:
    • 680 or higher credit score
    • No or low "payment shock" - less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses
    • Fiscally sound use of credit
    • Ability to accumulate savings
    • Stable employment history with 2 or more in current position or continuous employment history with no job gaps
    • Cash reserves available for use after settlement
    • Career advancement as indicated by job training or additional education in the applicants profession
    • Trailing spouse income - as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area
    • Low total debt load

Property Type for USDA Loan Approval in Kentucky

  • Must be located in an eligible USDA Rural Development Location
  • Owner-occupied properties---no rental properties or second homes
  • Existing attached and detached single-family residences
  • New construction with permanent financing only
  • PUD's (i.e. Townhomes)
  • Condo-units. HUD, VA, FNMA or FHLMC approved project
  • Log cabin homes, provided Appraisal Report lists other comparable log cabin homes that have recently sold in the area
  • No used or old mobile homes allowed. Only allows new mobile homes from dealer setup on land with mobile home land package deal...Kentucky only. ..

Documentation for loan approval on income/job history for a Kentucky Rural Housing Loan: 


  • All loans must be fully documented per Agency Guidelines. USDA likes to see a 2 year job history with stable employment. Does not have to be same employer, just a contiguous 2 year work history with no gaps over 30 days. 
  • If recently graduated form college, sometimes they will waive the 2 year job history rule if show transcripts and be on your job for 6-12 months. Case by case here. 
  • For Self Employed borrowers, in addition to Agency Guidelines, two years of the tax returns (personal and business) along with a year-to-date profit and loss (unaudited)
  • If overtime or bonus income or second job is used to qualify, you can take a 2 year avg and as long as stable and not decreasing, you can usually this income to qualify. 
  • They usually will take your base gross income to qualify you on the mortgage loan. They don't qualify you off your net income.

Down Payment/Closing Costs for a USDA loan in KY

  • 0% down payment required, but if you have available 20% down payment in checking or savings, they will make you use that..If the money is in a tax-deferred or 401k plan, retirement plan, they will not hold this against you. 
  • Seller contribution toward buyers closing costs up to 6% of the purchase price
  • Closing cost help can come from flexible sources including family member gifts and loans against a 401k retirement account
  • If the appraised value of the property exceeds the purchase price, the difference can be used to cover closing costs---This is a key benefit of Kentucky USDA loans. This is the only type of loan that will allow this. 

Terms

  • Amortization period: 30-year fixed rate-They do not offer any other terms. Just a 30 year fixed rate loan with no prepay penalty. 

Existing Properties Owned

  • USDA primarily often won't allow applicants to own other properties
  • Exceptions include when the other property owned is:
    • Not owned in the local commuting area as the new property; or
    • Not structurally sound and/or functionally adequate
    • Manufactured home not on a permanent foundation







-- 
Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.
10602 Timberwood Circle 
Louisville, KY 40223
Company NMLS ID #1364





Phone: 502-327-9770
Cell:      502-905-3708
Fax:      502-327-9119

Company NMLS ID #1364  MB73346


 
 CONFIDENTIALITY NOTICE: This message










What are the qualifications for a Rural Housing Loan in Kentucky?


Kentucky USDA Guaranteed Rural Housing Loans Qualifying Criteria


This program offers Kentucky home buyers that meet income and credit requirements to buy a home with zero down payment and get a 30-year fixed-rate loan.

What are the Kentucky USDA Loan Eligibility Requirements


Basic qualifications for a Kentucky USDA Home Loan include:
  • The property being purchased must be in a rural area of Kentucky as defined by the USDA.
  • The property must be owner-occupied. Investment or vacation properties are not eligible for USDA loans.
  • You must meet the income restrictions for the county the property is located in. Each county has a maximum income limit defined by the USDA. This maximum income limit depends on the cost of living, median income and other economic characteristics of the county the property is located in.
  • Credit score requirements set by USDA are as follows below:
  • 581 minimum middle credit score for all borrowers on the loan – purchase
  • No score allowed with alternative tradelines
  • Most Kentucky USDA lenders will want a 620 or 640 score or higher. A 640 middle score is required for a USDA loan through GUS, the automated underwriting system used by rural development to determine the max lending limits for a loan. 
  • No foreclosure, short sale, or Chapter 7 bankruptcy discharge within three years of contract ratification date on credit report not permitted
  • Minimum of two tradelines on credit, with a positive payment history within the most recent 12-month period. Accounts can be open or closed
  • If two tradelines aren’t on credit, alternative tradelines can be
  • No mortgage delinquency in the last 12 months for a USDA-to-USDA Refinance
  • Income limits for rural housing areas of Kentucky center around $86,000 for a household family of four and up to $115 for a household family of five or more. Northern Kentucky Counties of Boone, Kenton, Campbell, Pendelton, Bracken, can make up to $93,000 for a household family of four and up to $123,000 for a household family of five or more. 
  • No used manufactured homes. Only new mobile homes that meet FHA standards. 
  • No working farms or income-producing farmland with the property. 
  • All loans must be fully documented per Agency Guidelines. USDA likes to see a 2-year job history with stable employment. Does not have to be the same employer, just a contiguous 2-year work history with no gaps over 30 days. 
  • If recently graduated from college, sometimes they will waive the 2-year job history rule if show transcripts and be on your job for 6-12 months. Case by case here. 
  • For Self Employed borrowers, in addition to Agency Guidelines, two years of the tax returns (personal and business) along with a year-to-date profit and loss (unaudited)
  • If overtime or bonus income or second job is used to qualify, you can take a 2-year avg and as long as stable and not decreasing, you can usually this income to qualify. 
  • They usually will take your base gross income to qualify you on the mortgage loan. They don't qualify you off your net income.


Benefits of a Kentucky USDA Loan

USDA loans offer a number of unique benefits that set them apart from standard home loans. USDA loans require no down payment, so qualified individuals can finance up to 100% of the home’s total purchase price. This makes them one of the more desirable loans available to homeowners.
The United States Department of Agriculture (USDA) created a loan program that allows borrowers to purchase a home with a zero percent down payment. More commonly, this mortgage product is known as the USDA loan program or Rural Development Guaranteed Housing Loan Program. USDA loans are issued through the USDA loan program and has helped over thousands of families buy and upgrade their homes in rural suburban areas.
Kentucky USDA Loan Property Eligibility Map

Kentucky USDA Loan Property Eligibility

enter address below:

👇👇👇👇






Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

Text/call:      502-905-3708
fax:            502-327-9119
email:
          kentuckyloan@gmail.com











Thursday, September 26, 2019

Kentucky USDA Rural Housing Repair and Grant Program.






Kentucky USDA Rural Housing Repair and Grant Program.


Section 504 Repair Loan and Grant Program for Kentucky USDA RHS Loans
If you missed the live webinar to learn about recent changes to the Section 504 Single-Family Housing Repair Loan and Grant Program, the presentation slides from the webinar are available on the U.S. Department of Agriculture  (USDA) Rural Development’s website. This information is for individuals and organizations, including nonprofits and public agencies, who work with affordable housing products such as weatherization, home repairs, and Section 504 application packaging.


For additional program Information, please visit the following USDA webpages:

Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
Text/call:      502-905-3708
fax:            502-327-9119
email:
          kentuckyloan@gmail.com


Tuesday, September 24, 2019

Kentucky USDA Rural Housing Loan Program changes to the Single-Close Construction program

Kentucky USDA Rural Housing  Loan Program changes to the Single-Close Construction program
On June 20, 2018, the Single-Family Housing Guaranteed Loan Program (SFHGLP) published a proposed rule with changes to the Single-Close Construction program.   After considering public comments on the proposed rule, a final rule was published in the Federal Register on July 22, 2019, that will adopt the proposed changes. The effective date has been extended until October 1, 2019. The regulation and changes to Hand Book-1-3555 will be revised with the following:

  • Single-Close Construction
    • The pilot program which has been in effect in 27 states will now be permanent on a nationwide basis. The final rule allows lenders who use warehouse line of credit to charge a temporarily higher interest rate during construction to recoup financing costs. It also provides lenders the option to establish a reserve account for principal, interest, taxes and insurance (PITI) payments during the construction period. In addition, it expands the single-close process to include rehabilitation loans with the purchase of an existing dwelling. The revisions to the new rule will be published under 7 CFR 3555 §3555.104, §3555.105, and §3555.202.
  • Elimination of Maximum Interest Rate Cap
    • The final rule eliminates the maximum interest rate cap for all SFHGLP loans effective October 1, 2019.
  • Form RD 3555-21, Request for Single Family Housing Loan Guarantee
    • Form RD 3555-21, with revision date of October 2019, eliminates the fields for the interest rate, lock and floating dates. An advance copy of the form has been posted to the USDA LINC Training and Resource Library under Loan Origination – Document and Resources. USDA will discontinue use of the Form RD 3555-21 (revision date October 2018) 30 days after the effective date.
  • HB-1-3555 Chapter Revisions
  • Sample Worksheet for Calculating Maximum Loan – Rehabilitation Single Close Loans










Joel Lobb
Senior Loan Officer

(NMLS#57916)



American Mortgage Solutions, Inc.


10602 Timberwood Circle, Suite 3


Louisville, KY 40223


text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com





The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.


All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.