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Can you have a Kentucky Rural Housing Loan and own another house?
Can I Use a USDA Loan To Purchase a House When I Already Own a House in Kentucky?
The Kentucky Rural Housing USDA Loan assumes a very conservative perspective on financing homeowners who already own a home, unless the borrower can prove that the current home is not “adequate or suitable” for the borrower’s needs. Owning a house can be defined as not only being on the mortgage loan but also being on title to the property without being on the mortgage loan for that property. Factors that can determine when a house is not “adequate or suitable” include the following
Household size change in which the borrowers family size now exceeds the living quarters (i.e. bedrooms) of the current house. The assumption being made here is that there must be one bedroom for the Parent(s), each child, and any other family member living in the house.
In the case of divorce where the borrower remains on the mortgage loan, but the Courts have awarded the house to the ex-spouse.
Job transfer in which the borrower has relocated more than 50 miles away from the current residence.
Manufactured houses (i.e. doublewides) not on a permanent foundation.
The current house is not suitable due to documentable health and safety related issues.
Under no circumstances will the borrower be able to obtain another Kentucky Rural Housing USDA Loan if the existing home is already financed using a USDA Loan in Kentucky
When qualifying for a USDA Loan in Kentucky and the borrower already owns another house, the costs associated with the current house, including the mortgage payment, property taxes, homeowner insurance, condo or Homeowner Association Fees, and lot rent in the case of a manufactured home, will be considered a liability to the borrower when calculating their debt-to-income ratio.
If the borrower has two years of rental history, as documented on their tax returns, the mortgage liability can be offset by the rental income. Also, in the case of a court ordered divorce settlement where the borrower can document 12 months of on-time mortgage payments being made by their ex-spouse, the liability can be excluded.
Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA