Kentucky USDA Rural Development Loan Credit Score and Bankruptcy Guidelines

Kentucky Rural Housing Credit Score Requirements

What kind of Credit Scores Do you need for a USDA Loan in Kentucky?

Kentucky USDA Rural Development Loan, I am providing you with a series of informational emails on the Kentucky No Money Down USDA Rural Loan Program. I will like to discuss Kentucky USDA Loan’s credit score requirements.

Theoretically or on paper , Kentucky USDA Loans are not credit score driven. Borrowers with no credit scores are even eligible for this loan program. However, most investors that fund USDA Loans want to see a minimum middle credit score of 640. A 640 middle credit score is preferred, since this is the minimum credit score required for a Kentucky USDA loan to receive an automated underwriting approval through the USDA Guaranteed Underwriting System or GUS.

Better yet, a borrower with a 680 middle credit score, can obtain a "credit waiver" on all minor derogatory credit items, such as late payments on the credit report and small collection accounts. Borrowers with major credit issues such as bankruptcies, short sales, or foreclosures within the last three years will not be eligible for a Kentucky USDA Loan regardless of the credit score.

If a borrower has a middle credit score less than 640, the loan request will be manually underwritten. As long as the borrower meets a more rigorous approval process, they still may be eligible for a USDA Loan. Borrowers with a middle credit score less than 640 will need to ensure that:
Total debt-to-income ratio for their housing expense cannot exceed 29% of the borrower's gross income, and total debt load including the housing expense cannot 41% of the borrower's gross income.

No credit card late payments within the last 12 months
No accounts placed in collections status with the last 12 months
All judgment must be paid off for at least 12 months
Verification of rent required

A Rural Development Kentucky USDA loan is special type of a zero down payment mortgage that eligible home buyers in rural and suburban areas can get through the USDA Loan Program, which is backed by the United States Department of Agriculture (USDA). It’s one of the government’s least-known mortgage assistance programs available.
The main type of Kentucky USDA home loan program is called a USDA Guarantee Loan. These loans work like how an FHA or VA home loan would in terms of low or no down payment. Keep in mind, you may be required to pay private mortgage insurance each month.

Who can apply?

Applicants for a USDA Home Loan must*:

How do you know if a USDA loan works for you?

If you live (or are looking for a home) in a metropolitan area, a USDA loan is not for you. There are some suburbs that have USDA loan opportunities, but most of these loans are for homes in rural areas. This doesn’t mean you have to live on a farm by any means or be a farmer. It does mean that you have to meet specific income and location requirements.

If you’re interested in applying for a USDA-backed home loan, reach out to one of our

Meet income eligibility

Agree to personally occupy the dwelling as their primary residence

Be a U.S. citizen, U.S. non-citizen national or qualified alien

Have the legal capacity to incur the loan obligation

Have not been suspended or debarred from participation in federal programs

Demonstrate the willingness to meet credit obligations in a timely manner

Purchase a property that meets all program criteria

Joel Lobb (NMLS#57916)

American Mortgage Solutions, Inc.

10602 Timberwood Circle Suite 3

Louisville, KY 40223

Company ID #1364 | MB73346

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender. NMLS#57916

-- Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.