What are the qualifications for a Kentucky Rural Housing USDA Mortgage Loan Approval?

When it comes to qualify for a Kentucky Rural Housing Development Loan backed by USDA,  these are the things to keep in mind so you can know what to expect once you make that step to get pre-approved :

The income limits for all household members that currently have an income limitations (maximum family income of a family 1-4 people is roughly $75,000 in Kentucky and 5 or more up to $98,000 roughly), and location (house must be located in an approved area).

In Kentucky  the main counties of Jefferson, Fayette are not eligible for USDA financing, while like smaller counties of Warren, Mccracken, Daviess, Hopkins, Boone, Kenton, Campbell  and Bullitt only part of the county is eligible for USDA financing.  Bottom line, the closer you get to a major metropolitan area, your chances decrease of qualifying due to the eligibility maps. 
To see if a home is eligible simply click this link enter in your property address and it will tell you whether or not that address is eligible for a Kentucky USDA guaranteed home loan.
Here’s the link to the maximum Kentucky  income limits for 
In addition to the income limits and property maps, these are the other things to consider:

  • Monthly mortgage insurance to begin fiscal 2016, which October 1, 2016.  The Guarantee fee will drop to 1% and a monthly MI premium of .35 will be added to all USDA loans.  It currently stands at 2.75% upfront mi premium with .50 monthly fee. This is a BIG SAVINGS for Kentucky USDA Rural Housing Home Buyers and Owners.
  • Education for first-time homebuyers is no longer required by USDA in Indiana.  Some investors overlays may still require it, however.
  • Can finance closing costs up to 100% of appraised value, not including Guarantee Fee. the Guarantee Fee can finance 102.750% of appraised value
  • seller contributions allowed
  •  gift funds, can come from any source other than an interested party.
  • Extra ways you can stay under the maximum income:  Can deduct child care costs dollar for dollar from household income for children 12 and under. You can deduct $480 per dependent under 18. You can also deduct $400 per household member over 62 off of the annual household income.
  • Bankruptcies and Foreclosure require 3 years seasoning; if the mortgage was in the bankruptcy, then you can go off the discharge date and not sale date of home. This is different from FHA and Conventional because they go off sale date of home.
  • A mid 640 score with two trade lines for 12 months will be required for a Automated GUS Approval. Some lenders will go below that on a refer eligible basis with compensating factors such as not payment shock, low debt to income ratios, and a lot of reserves with a 12 month verifiable rent history. Cancelled checks allowed but no cash payments.
  • No Pest Inspection will be required unless addressed in appraisal.
  • A Water test and Septic test sometimes  is  required on private wells and septics tanks  for a Kentucky USDA home loan.

Questions about qualifying? CAll or text, email me below your questions. 
I have been doing Kentucky USDA Rural Housing Loans since 1998. 

Joel Lobb

Senior  Loan Officer


 Text or call phone: (502) 905-3708

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 views of my employer. Not all products or services mentioned on this site may fit all people