USDA APPRAISAL REQUIREMENTS FOR KENTUCKY MORTGAGE LOANS

 --Kentucky USDA appraisals can take home buyers by surprise. That’s why we've put together some good-to-know info about the process. Feel free to use this to help educate your clients. 

The property must pass an FHA appraisal, so USDA and FHA have the same appraisal requirements, which determines the current market value and makes sure the house meets certain safety standards. Here is a list of items an FHA appraiser may look for:

 

General Health and Safety

• Foundation or structural defects
• Whether the utilities (water, sewage, heat, and electricity) all work
• Chipped or peeling paint in homes built before 1978
• Incomplete renovations
• Water damage
• If the property is accessible to vehicles, especially emergency vehicles
• Exposed wiring and uncovered junction boxes
• Whether the house is too close to outside hazards, such as a leaking oil tank or a waste dump
• Excessive noise, such as being close to an airport
• Missing handrails

Exterior

• Leaky or defective roof and holes in the siding
• Leaning or broken fencing 
• Doors that don’t properly open or close
• Condition of gutters, chimney, stairs, railings, and porches
• If swimming pools are up to code 

Every Room

• Whether each room has electricity
• Whether each room has a window or door to the exterior to be used as a fire escape

Kitchen

• Missing or broken appliances usually sold with a home, including stove and refrigerator
• Broken or leaking sink

Bathrooms

• Broken or leaking toilet, sink, or tub/shower
• No ventilation (either an exhaust fan or window)

Crawl space or basement

• Basement moisture
• Evidence of past or present standing water

Heating and Plumbing

• Inoperable HVAC
• Major plumbing issues and leaks

 

These are some common items an FHA appraiser looks for, but other issues that might make a house unsafe could keep it from passing. An FHA appraisal is not the same as an independent home inspection. It’s still a good idea to get a separate home inspection to make sure you’re making a wise investment! 

  

Joel Lobb  Mortgage Loan Officer

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

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

http://www.mylouisvillekentuckymortgage.com/

Kentucky USDA Mortgage Lender for Rural Housing Loans Property Changes for Eligibility for 2024

 

Kentucky USDA Rural Housing Changes to properties in Ashland, Paducah and Georgetown, KY areas

 

USDA Rural Development has completed its 2020 decennial United States census review for all areas under its jurisdiction to identify areas that no longer qualify as rural for USDA Rural Housing programs. Based on the review of the areas within the state of Kentucky, using 2020 US census data, and rural area guidance located in Handbook HB-1-3550, Chapter 5, rural eligibility designations have changed.

 

Areas whose rural eligibility designations are changing from ineligible to eligible (these areas now qualify as rural for USDA Housing Programs):

• The area/towns currently outside the city of Ashland, KY (Catlettsburg, West Fairview, Fairview, Westwood, Russell).
• The areas/towns currently outside the city of Paducah, KY (Hendron and Farley).
• The cities of Ashland, KY, and Paducah, KY, will remain ineligible.

 

Areas whose rural eligibility designation is changing from eligible to ineligible (these areas no longer qualify as rural for USDA Housing Programs):

• Georgetown, KY – The city of Georgetown, KY, will no longer be eligible due to the population exceeding 35,000.

 

Changes became effective Oct. 1, 2023.

 

The updated rural area map can now be viewed on our eligibility website. Users will need to click on the program, for example: “Single Family Housing Direct”, and then click on “Proposed Eligibility Areas” from the menu options.

Kentucky USDA Property Eligibility enter address below: 👇👇👇👇

Kentucky Rural Housing USDA Loans A full list of income limits by county and household size are available on the Rural Development website at   www.rd.usda.gov/ne under the Guarantee Loan Program and Direct Loan programs. USDA Property Eligibility Text Description County List for Kentucky Select your county from the list below (Non-hyperlinked counties are all eligible). Joel Lobb  Mortgage Loan Officer American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364 Text/call: 502-905-3708 fax: 502-327-9119 email: kentuckyloan@gmail.com http://www.mylouisvillekentuckymortgage.com/ NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574 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).

Can you do a USDA Loan or Rural Housing Loan on a manufactured home / mobile home in Kentucky?

MANUFACTURED HOMES AND KENTUCKY USDA LOANS FOR RURAL HOUSING REQUIREMENTS

Purchase of an eligible new unit, transportation and set-up costs, and purchase of
an eligible site if not already owned by the applicant. Manufactured units must be
less than 12 months old and never occupied and will include the site. The date of
the purchase agreement must be within one year of the manufactured date
displayed on the plat attached to the unit. The following criteria outlines an
eligible unit for guarantee with the SFHGLP:
 To be an eligible unit, the new unit must have a floor area of not less
than 400 square feet.
 The unit must meet the Federal Manufactured Home Construction and
Safety Standards (FMHCSS).
 The unit must be placed on a permanent foundation built to FHA
guidelines in effect at the time of certification. Guidelines are
presently published in the “Permanent Foundation Guide for
Manufactured Housing” (HUD-4930.3G) which is found at
http://www.huduser.org/portal/publications/destech/permfound.html.
 Certification the foundation design meets HUD Handbook 4930.3,
“Permanent Foundations Guide for Manufactured Housing
(PFGMH).” The foundation certification must be from a licensed
HB-1-3555
13-7
(03-09-16) SPECIAL PN
professional engineer, or registered architect, who is
licensed/registered in the state where the manufactured home is
located and must attest to current guidelines of the PFGMH. The
certification must be site specific and contain the engineers or
registered architect’s signature, seal and/or state license/certification
number.
 The manufactured home must be classified and taxed as real estate.
Lenders are responsible for ensuring the title has been purged and the
manufactured home has been officially converted from chattel to real
property, as state law allows.
 The mortgage must cover both the unit and its site.
 Purchase of a unit on hand that has not been installed, or occupied at any other
site or location. Manufactured units may be moved only from the manufacturers
or dealer’s lot to the site on which the unit will be guaranteed. This type of unit is
eligible as long as the purchase agreement is dated within 12 months of the date
the unit was manufactured. The date of manufacture is available on the factory
installed plate on the unit. Manufactured home units with a manufacture date
exceeding 12 months of the purchase agreement contract will be ineligible for a
guaranteed loan.
 The Agency will not guarantee the purchase of an existing manufactured home
that has been moved from another site.
 Alteration or remodeling of the unit when the initial loan is made (i.e. garages).
All alternations and modifications must meet FMHCSS.

13.7 LOAN RESTRICTIONS

The Agency will not guarantee loans to finance the following:
 The purchase of a site without also financing a new unit;
 A unit that does not meet FMHCSS;
 Repairs not associated with a transfer, Real Estate Owned (REO) sale, or unit that
is already financed with a Section 502 loan; or
HB-1-3555
13-8
 Furniture, including movable articles of personal property such as drapes, beds,
bedding, chairs, sofas, divans, lamps, tables, televisions, radios, stereo sets, and
other similar items of personal property. Furniture does not include wall-to-wall
carpeting, refrigerators, ovens, ranges, washing machines, clothes dryers, heating
or cooling equipment, or other similar equipment.
13.8 ADDITIONAL LOAN PROCESSING PROCEDURES FOR PROPOSED
CONSTRUCTION INVOLVING A NEW MANUFACTURED HOME
For the purpose of underwriting and for payment of the guarantee fee, a newly
constructed manufactured home is considered a purchase loan transaction and is subject
to the fee further outlined in Chapter 6 of this Handbook.
In addition to the documents required for a guaranteed loan, the lender must obtain
the following prior to loan approval. The documentation will be retained in the lender’s
permanent loan file. Lenders may utilize Attachment 13-A as an option in support of
applicable documentation.
 An itemized cost breakdown of the total package, including the base unit, eligible
options, site development, installation, set-up, lot costs, and any credit for wheels
and axles.
 A statement signed by the dealer indicating that any cash payment or rebate as a
result of the purchase will be deducted from the price of the unit and not paid to
the applicant.
 A statement signed by the dealer that the proposed cost is the full price of the unit
and if furniture is being purchased by the applicant with personal funds, that a
lien will not be filed against the security property.
 The label number of the unit shown on the FMHCSS data plate on the exterior of
each section.
 A signed statement by the dealer confirming thermal requirements in effect at the
time of purchase are met.

Site Requirements:
Located in rural area.
Contiguous to public street.
Streets to be paved or all-weather surface.
Site must not be large enough to subdivide.
Value of site must not exceed 30% of the as-improved market value of the property.
Finish grade beneath the home or the habitable floor, whichever is lower, must be above the 100 year flood plain.
Site must have adequate water and wastewater disposal systems.

Loan Purposes:

Purchase of an eligible site, if not already owned by the applicant.
Purchase of an eligible New manufactured unit, including transportation & set-up costs.
Reasonable site development work, i.e., foundation, driveway, walks, well, septic system, utility connections, etc.
Purchase of the unit and all development work must be done under a single contract.
Rural Development PA (5/08) (1)

Rural Development - Manufactured Housing Fact Sheet

Loan Limitations:

Existing units can not be purchased, only New manufactured units.
Sites can not be purchased without also financing the unit.
Units that do not meet FMHCSS and the Agency’s Thermal Performance Standards can not be financed.
Loan funds can not be used to finance furniture, including movable items of personal property, i.e., drapes, beds,
bedding, chairs, sofas, divans, lamps, tables, televisions, radios, stereo sets, etc.
Amortization period - 30 years.

Dealer-Contractor Participation in the Program:

A Dealer-Contractor may apply to participate by submitting Form RD 1944-5, "Manufactured Housing Dealer Contractor Application", to the Loan Originator in the Rural Development Area Office, along with a current financial statement prepared by a Public Accountant and certified by the Dealer-Contractor. A Dealer-Contractor must be able to provide the full service of sales, service, erection, and warranty of manufactured units and developing sites for them. To qualify to participate, a Dealer-Contractor must be:
 1. financially responsible,
2. qualified and equipped to set up the unit on a site-built permanent foundation and develop the site,
 3. willing to provide a Warranty acceptable to the Agency.
The Warranty must identify the unit(s) by serial number(s). The Dealer-Contractor must certify that the manufactured home/property substantially complies with the plans and specifications and that the
manufactured home sustained no hidden damage during transportation, and if manufactured in separate sections, that the sections were properly joined and sealed according to the manufacturer's specifications.

The Dealer-Contractor will also furnish the applicant with a copy of all Manufacturer's Warranties.
The attached "Dealer-Contractor Application - Processing Checklist" can be used to assemble information to be submitted to the local Rural Development Office for program participation.

To Qualify, the Rural Housing Applicant Must: Be income eligible, credit worthy and be in need of adequate housing. The applicant should refer to the Section 502 Housing Fact Sheet (available in any Rural Development Office) for specific eligibility requirements. The attached "Manufactured Housing 'Supplemental' Loan Application Checklist" itemizes some specific documents needed for a Manufactured Housing Loan Application.

GUS approval required. No manual underwrites allowed. 640 Credit score no bankruptice last 3 years or foreclosure last 3 years.
• Second review/signature of the property appraisal is required by USDA
• Refinances and  purchase loans. If a purchase must be brand new and from an approved USDA lender dealer
• Manufactured home must be existing construction (permanently affixed to the
foundation and titled as real estate).
•  2-4 unit properties located in a PUD are not allowed.
• No non-occupying co-borrower allowed
• No paying off debt to qualify allowed
• No Mortgage Interest Differential payment income allowed
•  Singlewide manufactured homes are not eligible
• Manufactured Housing Condo units eligible
• Manufactured Housing PUD units eligible
• In general, max two acres allowed, but up to five acres allowed only if appraisal
reflects no more than 40% land value
• Must meet all USDA agency requirements
• The following eligibility requirements must be met for all manufactured homes:
• Site development work must conform to standards imposed by the state and
local government.
• The manufactured home must have been built and installed in compliance with
the Federal Manufactured Home Construction and Safety Standards that HUD
established June 15, 1976 and additional requirements that appear in HUD
USDA Product Profile 11 of 46 03/30/17
Guidelines Subject to Change
regulations at 24 C.F.R. Part 3280 as evidenced by the presence of both a HUD
Data Plate and the HUD Certification Label (Tag). Manufactured homes built
prior to June 15, 1976 are ineligible.
• If the original or alternative documentation cannot be obtained for both the
Data Plate/Compliance Certificate and HUD Certification Label (tag), the loan
is not eligible.
• If the HUD tag is missing, a recent "HUD Certification Verification" letter
issued by the Institute for Building Technology and Safety (IBTS) or a copy of
the Data Plate from the In-Plant Primary Inspection Agency (IPI) or
manufacturer must be in the loan file.
• Additional property eligibility requirements for manufactured homes:
• The manufactured home must be secured by both the manufactured home and
the land and both must be classified as real property under applicable state law
and subject to taxation as real estate.
• The manufactured home must be attached to a permanent foundation system in
accordance with the manufacturer's requirements for anchoring, support,
stability, and maintenance. The foundation must be appropriate for the soil
conditions for the site and must meet local and state codes.
• The manufactured home must be attached to a permanent foundation system in
accordance with the manufacturer's requirements for support, stability, and
maintenance. The foundation must be appropriate for the soil conditions for the
site and must meet local and state codes.
• If the manufactured home was installed prior to October 20, 2008, the anchoring
system must comply with the manufacturer's design or a design by a licensed
(registered) professional engineer, otherwise, the anchoring system must comply
with HUD Codes.
• The manufactured home must be built on and remain on a permanent chassis
with the towing hitch, wheels and axles removed.
• Must be a 1-unit dwelling.
• Incomplete items, such as a partially completed addition or renovation, or
defects or needed repairs that affect safety, are not eligible until the work is paid
for and complete. Exceptions may be made for minor items that do not affect the
ability to obtain an occupancy permit – such as landscaping, a driveway, walkway
etc.
• The finished grade level beneath the manufactured home is at or above the 100-
year base flood elevation.
Manufactured Home Ineligible Property Types
• A manufactured home that is not titled as real estate.
• A manufactured home that was installed or occupied previously at any other site or
location. The home may only have moved from the manufacturer's or dealer's lot to
the current site of the home.
• Manufactured home is not classified and titled as real property at time of
application.

August 16, 2023

USDA Proposed Rule - Manufactured Housing Provisions

On August 16, 2023, a Proposed Rule was published in the Federal Register seeking comments on proposed changes to Handbook 1-3550 and Handbook 1-3555 that would make existing manufactured homes, which meet specific criteria, eligible for financing.

Used manufactured homes and mobile homes used Kentucky USDA loan may be possible in near future for the Kentucky USDA Rural Housing Loan Program.

In addition, the proposal reduces regulatory burdens related to manufactured housing requirements and provides flexibilities for energy efficient manufactured and modular homes located in land lease communities operating on a non-profit basis.

Comments on the proposed rule must be received on or before October 16, 2023. Comments are invited through the Federal eRulemaking Portal at www.regulations.gov.

Joel Lobb (NMLS#57916)
Senior Loan Officer


American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3

Louisville, KY 40223
Company ID #1364 | MB73346


Text/call 502-905-3708
kentuckyloan@gmail.com

USDA Rural Housing Guaranteed Loans and Escrow for Repairs in Kentucky

The Kentucky Mortgage  USDA Loan Repair Escrow program is intended to help Kentucky  borrowers utilizing the Rural USDA Housing Loan Programs to  save money by rolling in the cost of the purchase plus the repairs in the same loan, but cannot exceed 10% of the final loan amount. To qualify for this program, borrowers must meet the standard income, locations, size and additional factors set forth by USDA. The funds for the repairs can be used for both exterior and interior repairs.

Examples of Eligible Repairs

• Replace HVAC
• Repair and paint rotted facia boards
• Repair holes in kitchen floor
• Install safety eyes on garage door
• Install a stove and dishwasher that are drop in
• Install hot water heater

Repair escrows, post issuance of the Loan Note Guarantee, are acceptable provided the home is habitable, as determined by the lender. All items of new construction or repairs must be 100 percent (100%) complete in accordance with plans and specifications except for minor items not affecting the livability of the structure or that cannot be completed due to weather conditions.

The lender assumes responsibility for completion of repairs in accordance with the conditions set forth in this Section for any repair escrow established. The combination of both exterior AND interior repair escrows cannot exceed 10 percent of the final loan amount.

 Most repairs items will be required to be completed within 180 days of loan closing. This period may be extended, at the discretion of the Agency, for homes that need exterior repairs but are in an area experiencing inclement weather conditions. The maximum exterior repair escrow period when an extension is granted is limited to 240 days. Extensions may be granted beyond 180 days for exterior escrows only.

 Escrow for Exterior Development When exterior development work is planned and cannot be completed because of inclement weather, material shortages, or other acceptable reasons, an escrow account Evidence of thermal standards for new construction.

 The Lender’s file must contain evidence thermal standards meet or exceed the International Energy Conservation Code (IECC) in effect at the time of construction.

 Documentation of conformance may be by one of the following options:

1. The builder may certify confirmation with the IECC standards.
 2. A qualified, registered architect or a qualified, registered engineer may certify confirmation with IECC standards. HB-1-3555 12-24 may be established. The Agency may issue a Loan Note

Guarantee prior to the completion of repairs provided all of the following conditions are met:

  The cost of any remaining work is not greater than 10 percent of the final loan amount, provided an interior escrow is not required;
  The livability of the dwelling is not affected; 
 A signed contract between the borrower and the contractor is in effect for the proposed work;
  The funds to be escrowed are not less than the repair cost contract. The loan underwriter may determine the escrow amount, which could exceed the repair cost;

  The Closing Disclosure 1 reflects the holdback;
  The development will be complete within 180 days of closing, unless an extension is granted by the Agency for inclement weather conditions; 
 The escrow account is established in a federally supervised financial institution. 
 An inspection report certifying the defect/repair has been properly repaired. Certification of completion is required to verify the work was completed and must: 
 Be completed by the appraiser;
  State that the improvements were completed in accordance with the requirements and conditions in 

.Personal funds of the applicant utilized to fund the repair escrow (excluding loan funds or a seller concession) may be returned to the applicant. A seller’s personal funds utilized to fund the repair escrow (excluding a seller concession as part of the sales contract) may be returned to the seller. Escrow for Interior Development Repair escrows for interior repairs are subject to 10 percent when an exterior escrow for repairs has not been established. Otherwise, the combination of both an interior AND exterior repair escrow is subject to a maximum of 10 percent of the loan amount.

When the dwelling is complete with the exception of minor interior development work, the Agency may issue the loan note guarantee on the loan if the following conditions are met when establishing an interior escrow:

  The cost of any remaining interior work is not greater than 10 percent of the final loan amount provided an exterior escrow is not required ;
  The livability of the dwelling is not affected;
  A signed contract between the borrower and the contractor is in effect for the proposed repair work; 
 The funds to be escrowed are not less than the contractor’s repair contract. The loan underwriter may determine the escrow amount, which could exceed the repair cost ;
  The Closing Disclosure reflects the holdback;
  The development will be complete within 180 days of closing; and
  The escrow account is established in a federally supervised financial institution;
  An inspection report certifying the defect/repair has been properly repaired. Certification of completion is required to verify the work was completed and must:
  Be completed by the appraiser, 
 State that the improvements were completed in accordance with the requirements and conditions in the original appraisal report, and HB-1-3555 12-26
  Be accompanied by photographs of the completed improvements
;  The individual performing the final inspection of the property must sign the completion report.

The lender is responsible for monitoring the completion of the work and the release of funds to pay for the work. All documentation supporting the development and confirmation of the completion will be retained in the lender’s permanent mortgage file and is subject to the certification of Form RD 3555-18/18E.

Any funds remaining in the escrow account upon completion of the work, that are representative of loan funds or a seller concession as part of the sales contract, will be used to reduce the unpaid principal balance of the mortgage.

Personal funds of the applicant utilized to fund the repair escrow (excluding loan funds or a seller concession) may be returned to the applicant. A seller’s personal funds utilized to fund the repair escrow (excluding a seller concession as part of the sales contract) may be returned to the seller.

Escrow completion for interior or exterior repairs on an existing dwelling – without the assistance of a contractor

When a borrower will complete the planned interior or exterior development on an existing dwelling without the services of a contractor, the requirement for an executed contract noted in this section is waived when these three conditions are met:

  The estimated cost to complete the work is not greater than 10 percent of the total loan amount; an
  The escrow amount is less than or equal to $10,000; and
  The lender has determined the borrower has the knowledge, skills and time necessary to complete the work within the maximum 180 day limit.

       

—

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

 Company ID #1364 | MB73346

http://mylouisvillekentuckymortgage.com/

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). USDA Mortgage loans only offered in Kentucky.

All loans and lines are subject to credit approval, verification, and collateral evaluation