Wednesday, August 31, 2011

USDA Rural Housing RHS Mortgage Guidelines in Kentucky

USDA Rural Housing RHS Mortgage Guidelines in Kentucky



First time homebuyers allowed

Maximum 2 borrowers allowed

Non-occupant co-borrowers NOT allowed

Commitment Fee

USDA Rural Developmet charges a 3.5% Commitment Fee

Commitment Fee can be financed into the loan

Example:

Purchase price - $100,000

Loan amount - $103,626

Commitment Fee - $3,626

Maximum financed loan amount = $103,626 ($100,000 [purchase price]/.965)



Downpayment Requirement

No down payment is required

If borrower has adequate assets (i.e. 20% of the property purchase price) to obtain conventional financing the borrower may be ineligible for the USDA Rural Development Loan

Eligible Properties

Must be in an eligible USDA Rural Development Location

Owner-occupied properties

Existing attached & detached single family residences

New construction with permanent financing only

2-4 unit properties

PUD's (i.e. Townhomes)

Condo-units. HUD, VA, FNMA or FHLMC approved project

Ineligible Properties

Co-ops

Mixed-use

Condotels

Manufactured homes

Log cabin homes

Single Family Homes:

The property must be "Modest" residential lot that can't be subdivided

Land value exceeds 30% of the appraised value



Maximum Income Amount

County specific. Reference the USDA website for adjusted household income limits

Maximum Loan-To-Value

Maximum loan-to-value is 103.50%

Maximum Mortgage Amount

None

With in-ground swimming pool

Minimum Credit Score

Middle Credit Score - 640 for each applicant

Monthly Mortgage Insurance Premium (MIP) Requirements

0%. USDA Loan doesn't require a monthly mortgage insurance premium

Multiple Property Ownership

USDA Rural Development primarily doesn't allow applicants to own other properties

Exceptions include when the other property owned is:

Not owned in the local commuting area as the new property; or

Not structurally sound and/or functionally adequate



Occupancy Type

Owner occupied only

Qualifying Ratios

29/41% debt-to-income (DTI) - Target

39/49% debt-to-income (DTI) - With compensating factors such as:

680 or higher credit score

No or low "payment shock" - less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses

Fiscally sound use of credit

Ability to accumulate savings

Stable employment history with 2 or more in current position or continuous employment history with no job gaps

Cash reserves available for use after settlement

Career advancement as indicated by job training or additional education in the applicants profession

Trailing spouse income - as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area

Low total debt



Seller Contribution

Unlimited Contribution towards closing costs, prepaids, discount points, buydown fees, and upfront Commitment Fee

Transaction Types

Purchase

Rate/Term Refinance on existing Kentucky USDA loan


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