QUICK GUIDE for Kentucky USDA Rural Development Housing Loan « Kentucky First Time Home Buyer Mortgage Loan

No Down Payment Required
30 year fixed rate
100% LTV plus the guarantee fee, if financed
Finance Closing Costs, if market value is sufficient
Expanded Ratios of 29/41%
No Mortgage Insurance
No cash contribution required from borrower
Unrestricted gifts
No Maximum Loan Amount – loan amount based on repayment ability of applicant
No Reserve Requirement
High earnings potential
Competitive rates (set by underwriting lenders)
Available secondary markets: wholesale lenders as well as Fannie Mae and Freddie Mac.
Utilize in Conjunction with State Housing Authorities, if available

Kentucky Rural Development designated rural area:

Homes must be located in rural areas. Rural areas include open country and places with a population of 10,000 or less and-under certain conditions-towns and cities with between 10,000 and 25,000 residents.
Acceptable credit history:

Have a credit history that indicates a reasonable willingness to meet obligations as they become due
Lender underwrites the loan
No minimum credit scores
Lack of credit is not derogatory
Caution for applicant(s) with multiple layers of risk such as:
- payment shock; low credit scores; ratio waiver; credit waivers; 2-1 buy downs

Check maximum income for eligibility:

Applicant(s) have an adjusted household income that does not exceed the moderate income limit established for the area. A family’s income includes the total gross income of the applicant, co-applicant and any other adults in the household. Applicants may be eligible to make certain adjustments to gross income-such as annual child care expenses and $480 for each minor child-in order to qualify. Kentucky USDA Rural Development field offices can provide information on the moderate income limits for the areas that fall within their jurisdictions, and can provide further guidance on calculating household income. There is an automated eligibility calculator at:

Applicant(s) repayment ability:

The ratio limits are 29 front (housing, PITI), 41 back (total debt, MOTI). Rural Development allows expanded repayment ratios if the applicants have sufficient compensating factors. The underwriter must recommend the expanded ratio(s) and provide compensating factors to Kentucky Rural Development. Kentucky Rural Development must concur with the underwriter’s recommendation in order to expand the ratios.

Other eligibility criteria:

Do not own a dwelling
Insufficient resources to secure conventional financing without the guarantee
U.S. citizen or permanent resident or qualified alien
Legal capacity
Primary residence

Loan-To-Value (LTV) and Loan Limit:

100% LTV plus the amount of the guarantee fee, if financed
Loan amount can exceed appraised value by the amount of the guarantee fee

There is no loan limit

-Limiting factors will be ratios and income limit

Property requirements:

New or proposed home construction – stick built, modular, townhouses, condominiums, new manufactured homes.
Existing homes: Meet requirements of HUD Handbooks 4905.1 and 4150.2
New and existing: Private well water quality must meet local and state code.

Existing (previously occupied) manufactured home financed under limited circumstances when home presently financed by USDA.

New manufactured homes: Kentucky Rural Development will finance new manufactured homes through approved dealer-contractors.

Modular homes: New or existing modular homes can be financed the same as stick built homes.

Condo: Kentucky Rural Development can finance if it meets the standards forKentucky Fannie Mae, Freddie Mac, VA, or FHA.

Town home: Same as condo. A town home must have provisions for maintenance such as HOA.

Flood Zone:

Any existing improvements located in a special flood hazard area must have federal flood insurance coverage. New construction is not permitted until a Letter of Map Revision/Amendment is issued by FEMA.

One time guarantee fee based on the final loan amount

This fee can be financed along with other closing costs. The first mortgage guaranteed loan cannot exceed appraised value by more than the amount of the fee financed. No mortgage insurance requirement.

Term: 30 year fixed

Interest Rate:

Kentucky Fannie Mae 90 day delivery plus 60 basis points rounded to the nearest quarter percent or
The lenders published KentuckyVA rate with no discount points

Prohibited Loan Purposes:

In-ground swimming pools – unless value is deducted from the loan request
Existing manufactured homes
Construction draws
Furniture and personal property
Income producing property
Non-essential buildings and land

THIS IS A QUICK GUIDE OF THE Kentucky RURAL DEVELOPMENT GUARANTEED RURAL HOUSING PROGRAM. FOR ADDITONAL INFORMATION, CONTACT us 502-905-3708 or email us your questions at kentuckyloan@gmail.com

QUICK GUIDE for KEntucky USDA Rural Development Housing Loan