USDA Mortgage Loans
The United States Department of Agriculture (USDA) has developed several loans to help low- to moderate-income borrowers to purchase or refinance a home in a designated rural area. The mission of USDA Rural Development’s Single Family Housing Guaranteed Loan Program is to assist rural homebuyers achieve their dream of homeownership. For those who qualify, 100% financing is available, bringing the dream of home ownership within reach. With low interest rates and flexible guidelines a USDA home loan could help you achieve your financial goals. Many homeowners are surprised to find out how many properties just outside major cities qualify for a USDA loan even though they are anything but “rural”.
Why Are USDA Loans So Great?
USDA loans are a very attractive option for borrowers who want to purchase a home or refinance their current USDA mortgage. USDA loans are for rural areas but rural does not necessarily mean remote. Do not assume that the eligible properties are all located miles and miles from civilization. A quick eligibility check will allow you to track down homes that meet the USDA guidelines. Guess what? Many of them are in close proximity to some of the nation’s fastest growing metro areas. USDA financing is one of the only mortgages available other than those for members of the US military that offer zero money down. It is an excellent option for those with low to moderate incomes or less than perfect credit. Payments are kept affordable, thanks to the fact that the loans are 30-year fixed rate mortgages.
What Are the Advantages of USDA Loans?
No down payment
No USDA minimum credit score
No maximum purchase price
Debt ratios set by your GUS findings
Easy to use gifts for closing costs
Allows for 6% seller paid closing costs
What Are the Waiting Periods After a Hardship?
36 Months from Foreclosure, Deed-in-Lieu or Short Sale
36 Months from Discharge of Chapter 7 Bankruptcy
12 Months of on-time plan payments in a Chapter 13, with trustee permission
What Are the Eligibility Requirements for a USDA Loan?
As part of the American Recovery and Reinvestment Act that came about in 2009, the requirements for USDA home loans have become more streamlined and opened the door for higher eligibility rates. Borrowers must still meet certain income requirements and provide a credit report; however, the guidelines are not as strict as they were previously. Below are the top eligibility requirements to get familiar with before you consider a USDA loan.
Geographic Area. The home you are buying must be in one of the geographically qualifying areas which are designated as Rural for USDA Loans. *********TODO NEED LINK FOR THIS -> to quickly find out if the property is located inside an eligible area.
Property Type. The home you are buying must be a single family residence. It must also be your primary residence
Credit. USDA does not publish a minimum credit score. Your GUS recommendation drives the file. A 640 middle score usually earns a GUS Accept, and below 640 the loan is manually underwritten, which is still possible. Most lenders apply their own 640 overlay.
Debt Ratio. Your GUS findings drive the ratios. On a manually underwritten file the limits are 29% housing and 41% total debt, and those can be waived to 32%/44% when every applicant has a 680 or higher credit score plus a compensating factor.
Income Limit. USDA Loans have a maximum income limits for the median income in your area. If you make more money than the limit, you will not qualify. There are different brackets for determining the maximum income allowed. Those are determined by your geographic area and the number of people living in the household. Effective July 13, 2026 the limits in most Kentucky counties are $122,800 for a 1-4 person household and $162,100 for a 5-8 person household. In Boone, Bracken, Campbell, Gallatin, Kenton and Pendleton counties the limits are $128,600 and $169,800.
What Are Some Popular USDA Programs?
Standard USDA Purchase
Up to 101% LTV (100% plus the 1.00% upfront guarantee fee)
30 year fixed only
No maximum purchase price
Closing costs can be financed
USDA Streamline Refinance
No appraisal needed
No income verification
Reduced documentation
Must lower your rate by 1%
Be sure to take a close look at USDA and their programs to find out which one is right for you.
—
Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
EVO Mortgage
10602 Timberwood Cir, Ste 3
Louisville, KY 40223
Company NMLS #1738461
click here for directions to our office
Text/call: 502-905-3708
email: kentuckyloan@gmail.com
https://www.mylouisvillekentuckymortgage.com/
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