Frequently Asked Questions
Are only first-time homebuyers eligible?
No, you do not have to be a first time home buyer. The USDA Loan program has no restrictions that prevent previous homeowners from using the program.
What is the maximum amount that I can borrow?
There isn’t a limit to the amount a homeowner can borrow; however, most lenders cap the loan at the conforming loan limit set by Fannie Mae and Freddie Mac, and that limit is reset every year. What actually caps you on a USDA loan is the income limit and what your ratios will carry.
How much are the closing costs for a USDA mortgage?
Closing costs vary from lender to lender and state to state. The charges from the USDA are a Guarantee fee of 1% of the loan amount. Additionally, there is a monthly mortgage insurance factor of .35% of the principal balance.
Can closing costs be financed into a USDA Loan?
Yes! The USDA home loan has the ability to finance closing costs up to the appraised value or to get a 6% seller contribution to closing costs from sellers on the contract.
What are USDA eligibility requirements?
USDA requires that the borrower demonstrates a reasonable ability and willingness to repay the mortgage loan. USDA lenders will view your credit history, income, and assets to verify your ability to repay the mortgage.
What is the USDA’s minimum credit requirement?
USDA publishes no minimum credit score. What drives your file is the recommendation that comes back from GUS, the USDA automated underwriting system. A 640 middle score will usually earn a GUS Accept. Below 640 your file goes to a manual underwrite, and it can still be approved. Any hard 640 floor you run into is a lender overlay, not a USDA rule.
Can you qualify for a USDA loan if your credit score is below 640?
Yes. A 640 minimum is a lender overlay, not a USDA requirement. Under 640 your loan is manually underwritten instead of run to a GUS Accept, and it can still get approved. It helps your case if the derogatory credit is temporary in nature, beyond the applicant’s control, and the circumstances that caused the adverse credit are no longer a factor.
What does the USDA require for employment eligibility?
You must have established employment to be eligible for a USDA Loan. Almost all lenders will require a minimum of two years of steady employment or schooling prior to your current employment if less than 2 years. If you are self-employed, you are eligible but will be required to provide two years of federal tax returns to verify your income.
Do USDA home loans have PMI?
USDA mortgages do have a guarantee fee and monthly PMI. The rate for the mortgage insurance is .35% of the outstanding principal balance and the current guarantee fee is 1% of loan amount. For example, if you borrowed a full $150,000 from your lender, the guarantee fee would be $1,500, which you can finance into your mortgage. The monthly PMI would be about 44.00 dollars a month on a 151,500 loan amount. (which includes the guarantee fee of 1%)
Can I get a USDA Mortgage after bankruptcy?
Yes. USDA wants a Chapter 7 discharged at least 36 months. On a Chapter 13 you need at least 12 months of on-time plan payments, verified, plus written permission from the trustee. You can still be in the Chapter 13 when you buy.
How soon can you qualify for a mortgage after foreclosure?
VA Loans: 2 years after foreclosure
USDA Loans: 36 months after a foreclosure, deed-in-lieu, or short sale
FHA Loans: 3 years after foreclosure
Conventional Loans (Fannie Mae and Freddie Mac): 7 years after foreclosure
Can I use a USDA Loan on investment property or Second Home?
No, the USDA Rural Housing Program is for primary residences only. Furthermore, any property that is income producing (farms, multi-family, over 30 acres, etc.) cannot qualify for the 502 Guaranteed Rural Home Loan.
Can a USDA loan finance a condominium?
Yes, you can use a USDA loan to finance a condo; however, there are requirements that will need to be met.
Does a USDA home loan finance modular or manufactured homes?
Yes, both. Modular homes have always been financeable. On manufactured homes, a federal rule effective May 5, 2025 extended existing manufactured home financing to all 50 states, so you are no longer limited to a brand new unit off a dealer lot or to a handful of pilot states. An existing manufactured home has to be built within 20 years of your closing date, sit on a permanent foundation, have never been installed at another homesite, be at least 400 square feet, and carry both the HUD certification label and the HUD data plate. No alterations after it left the factory, other than an engineered porch or deck. New units off a dealer lot are still eligible. Some lenders still will not do existing manufactured homes, but that is their overlay, not a USDA rule. EVO Mortgage originates these. The difference between a modular and manufactured is how and where the home is constructed. A manufactured home is already fully built and put on a foundation and modular homes are built in pieces, and then taken to the site to be constructed.
How fast can you close a USDA loan?
USDA loans have a 2 prong process. The loan is first approved by the lender and then sent to USDA for the conditional commitment. USDA is currently running about a week to ten days on that step.
Kentucky USDA Rural Development Loans
- Looking for 100% Financing without the Military Service Requirement?
- Tired of Sourcing Funds for a Down Payment?
- Need a New Product Niche Designed Specifically for Purchases?
100% Financing – If your borrower wants low down payment options, Kentucky USDA Rural Housing is the only widely available zero-down loan (other than VA which includes military service requirements). Plus – reduced MI and no cash reserve requirements! * Not a Farm Loan – It takes just a few minutes to check property eligibility – moving to a farm isn’t required – in fact, many suburban and rural parts of the country are eligible. Visit the USDA Mapping Tool Site (for residential properties only).
| Program |
Minimum Down
Payment |
| Conventional |
3% |
| FHA |
3.5% |
| USDA |
0% |
| VA |
0% |
|
|
|
|
KENTUCKY USDA RURAL HOUSING LOAN
100% Financing
Cities and towns located outside metro areas-see link (
https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp
Do NOT have to be a First Time Home Buyer
No Down Payment
30 year low fixed rate loans
No Prepayment Penalty
No set loan amount limit, though most lenders cap it at the conforming loan limit
Possible to Roll Closing Costs into Loan if Appraises Higher
No Cash Reserves Required
Seller can pay up to 6% toward Closing Costs
100% Gifted Closing Costs allowed
Primary Residents only (no rentals/investment properties)
Debt to income ratios are whatever GUS will accept. On a manual underwrite the limits are 29% and 41%, and you can go to 32% and 44% with a debt ratio waiver if every applicant has a 680 or higher score plus a compensating factor.
No USDA minimum credit score. A 640 middle score usually earns a GUS Accept. Below 640 is a manual underwrite and still possible. A 640 floor is a lender overlay.
Chapter 7 needs to be discharged 36 months. Foreclosure, deed-in-lieu, or short sale also 36 months. On a Chapter 13 you can go after 12 months of on-time plan payments with the trustee’s permission.
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